Wil Armitage and Peter Dixon-Smith share their story on why adopting a partnership model has created a business, a friendship and a future. Alistair Driver reports.
If the key to a good working partnership is friendship, mutual respect, trust and well-defined shared goals, it was clearly evident why this one works so well.
Wil Armitage is the younger partner and driving force behind an extraordinary transformation in how the business operates, and did most of the talking during the hour we shared around the kitchen table in his East Leicestershire farm house.
But it was equally clear from Peter Dixon-Smith’s measured contributions their partnership has delivered rich and long-lasting benefits for both parties.
They were deserved winners of the Farming Partnership award at last year’s British Farming Awards, co-organised by Farmers Guardian, and honoured a bond that had its roots back in the late 1980s.
The trigger was when Peter, who had been managing a pedigree Friesian herd on the family farm in Essex since 1953, was forced to re-locate after a bypass literally split the farm in two.
In 1989, he found Keythorpe Lakes Farm in Tugby, Leicestershire, where he was to set about starting again, having sold the bulk of the pedigree herd but retained the youngstock.
He needed a herd manager and Wil - brought up on a beef and sheep in Exmoor but with experience working on high yielding dairy herds - was recommended a former Essex employer, at Mundon Hall in Essex.
“He said Peter and I may get along,” says Will. And get on they did – famously - despite an apparent initial clash of priorities.
During the interview, Wil, who had already enjoyed global success in the show ring, including winning the prestigious Showmanship award at the World Dairy Expo, told Peter he wanted to show cattle.
But Peter had other ideas. “I told him that was not my ambition - it was to have the highest yielding herd and win the Gold Cup,” he explains.
“We would show cows when we have got cows that are good enough,” he says, adding, with a glance at Wil: “He has changed his views since.”
Wil had no second thoughts when the offer came. “I also loved the high yielding herds. It was a brand new unit, a great house and a great job to take on at 22.”
The key to a good partnership is building a partnership is the relationship you have with the other person, says Will.
“It is about being very honest about what both partners want out of the business and life going forward and what can be achieved and what is realistic and what is not.”
Peter reinforces the importance of trust in a relationship. “If family farms are going to survive, there needs to be a good working relationship between the generations to ensure the next generation is given the opportunity.”
While retaining the bulk of responsibility for the new business, but in a sign of things to come, Peter immediately handed responsibility for feeding to Wil.
With a high fibre diet designed to maximise yield and sustain herd health, the herd recorded the highest yields in the UK in 1995 and 1996 and won the prestigious Gold Cup in 1996 and 1997, averaging 11,600 litres from 1995 to about 2000.
In 1996, the farm had its ‘golden year’ – the highest yielding herd, Gold Cup winners, premier exhibitor at the Royal Show, a milk price of 26ppl and 4.2 tonnes of wheat per acre at £126/tonne.
“It was a high cost system that was making a good profit,” says Wil.
But circumstances inside and outside the farm were changing. In 2003 Peter turned 70 and was looking to take more of a back seat.
With none of his three daughters willing to take the farm on, he offered it to Wil on a Farm Business Tenancy.
Without the ‘money or the inclination’ for an FBT, Wil declined but instead a partnership was forged, with parameters clearly set from the start.
Peter explains: “I said I would put up 90 per cent of the money and he could do 90 per cent of the work!” And as Wil echoes in the background he responds: “And that’s how it turned out.”
They agreed to a low rent profit sharing arrangement, which suited their respective position and, Peter says, acted as an incentive for Wil ‘who was going to do the work’.
Wil took on the role fully aware the high cost system the business was operating in a market in decline falling was never going to deliver his aims of earning enough profit to reinvest in the business and grow his capital share.
Prices had fallen by 7p, 28 per cent, between 1998 and 2003, knocking more than £100,000 off the farm’s bottom line.
He initially restocked the farm with lower yielding autumn calving cattle and looked to maximise bonuses available in the contract but the continuing decline of the milk prompted a more fundamental rethink in 2005.
Expansion was no solution where margins were low, there were few costs still to cut and adding value through processing was ‘not realistic’ for the business at the time.
So after some thinking and consultation with Andersons, Wil made a controversial proposal to convert to an organic system.
He stressed the organic switch was an entirely commercial decision. “It was a growing market, a good milk price and we got conversion aid.”
Peter was initially unimpressed but acknowledged he had to put his trust in his partner.
“When we went organic, I didn’t really believe in it. I tended to view organic as a last resort of poor farmers,” he says.
“But Wil had done his homework with Andersons and I had asked Will to run the business on a day-to-day basis and I would be stupid if I was to veto his ideas.”
The decision has paid off. After the first organic milk was produced in 2007, the farm enjoyed its most profitable year in 2008, with high returns from a lower cost base.
Wil acknowledged the farm could have earned more producing conventionally as the price soared between 2011-13, but has since clawed this back over the past two or three years as the conventional price has gone the other way.
His faith was tested when the organic market wobbled and a number of the big dairy players exited a few years ago but a trip to the US as part of a Nuffield scholarship quickly restored it.
He met the chief executive of Organic Valley, the main distributor of organic produce in the US, who outlined the enormous potential for ‘exponential growth’ in the US organic market, given the current focus on health and the ‘backlash against GM technology and chemical farming’.
About 70 per cent of milk from the herd is now going to the US in milk powder form, via OMSCo and Kingdom Cheddar.
“We have got a secure market and huge potential to grow,” says Wil.
The farmers who once prided themselves on running the UK’s highest yielding herd are now happier producing an average to 7-8,000 litres with a twice daily milking system they are adamant is easier on the cow and on the health of the soil.
Peter is now fully convinced of the ‘huge benefits’ of organic. “It can be very profitable and the quality of our grass, it just staggers me how well it grows early in the spring without artificial fertiliser.”
They have managed to grow the business on the back of their success, acquiring a second farm near Oakham, in 2011 – with Wil taking a 60 per cent share - and adding further land to it in 2014.
While Peter still owns all the land, they now have a 50:50 share of the business, as Wil has built his capital.
Despite the difficult time for the wider dairy industry, they both remain optimistic for the future, buoyed by the health of the organic market and the freedom to expand without quotas – and happily acknowledge they would not be where they are without each other.
On reflection of their partnership, Peter responds in his understated manner.
“I’d like to think it’s worked out.
“It has certainly worked very well for me and I would like to think it has worked very well for both of us.”