The Business of Agriculture: Event Review

My team at the Institute of Directors put on another fantastic event last night, around the business of agriculture. It was something that we'd wanted to do for some time, based here in the green rolling pastures of dairy-farming Cheshire, but not personally knowing much about the practical business issues of this sector. I'm sure it's something we'll want to follow-up on too.

Most of the work on the event was handled by IoD stalwart Ian Walton, thanks again Ian.

We were hosted by Nunsmere Hall, always a friendly and beautiful venue and because the weather was good, could take our pre-meeting food and drink on the terrace.

Unfortunately, something in the local pollen caused a reaction in my throat and instead of doing my usual Chairman's welcoming speech I had to ask my colleague Andy Duxbury to step in; what a star he is!

First we heard from Julie Richards, an accountant from agricultural specialists Howard Worth, who confessed herself a 'farm-daughter'. Julie took us through the business of agriculture with some excellent insights into the types of financial and business issues this important sector faces. Highlights for me included:

• 2008 saw the first net imports to the UK of raw milk (how and why did we allow that?!)
• as a farmer, you'll get a premium from Tesco if you use their accounting software/tool - but that means they know your profit margins to the penny; ouch!
• in 2004 the number of farms in the UK was around 65k, just six years later that figure has reduced by 10k
• the gap between the most financially successful and the struggling farms continues and will continue to widen
• strategically, the middle-of-the-road is a dangerous place to be positioned in this sector, probably meaning you need to be really big, or really cheap, or very specialised (or probably all three!) to compete long-term
• well-managed diversification is a possible route to boost profitability (& Julie did a great analysis of the different routes to diversification, which I won't reproduce here).

Next, we heard from Liz Sutton. With her husband Roger, Liz founded well-known Cheshire-based Delamere Dairy 25 years ago. With a long-held dream to become farmers and an awareness that, starting from scratch, they would need to do something different, these two entrepreneurs decided to get into farming goats' milk. 25 years later and they have the largest market share in most of the key UK goats' milk products, a thriving own-brand range, including many award-winning cheeses and a turnover of £15m. Their story is inspirational in many ways, a classic case of starting with a dream, working like crazy to turn it into a business and then being flexible and determined to make that business successful. Some great highlights for me included:

• buying a copy of the 'Grocer's Directory' early in the business' development, in order to telephone potential buyers for their goats' milk, and starting at A for Asda. They got the deal!
• deciding to outsource much of the work, particularly packaging. Although this narrows profit margins, it seems to have allowed them to focus on a real depth of understanding about the product and to successfully exploit that
• planning at the right stage to bring in management support and a sensible exit strategy for the founders.

After Liz' presentation we got to sample some of the tangy goats' milk itself and equally delicious cheeses and butter.

For me, this was a great example of what we should focus on with IoD events - the chance to hear it straight from local businesses now successful in national and international arenas, about the issues they have faced and dealt with, in a way you probably don't get anywhere else, and in great surroundings with the company of 30 or so other like-minded business-people. Excellent!


Pictured, from left to right:
Richard Barnett (Howard Worth), Roger Sutton (Delamere Dairy), Ian Walton (IoD), Liz Sutton (Delamere Dairy), Julie Richards (Howard Worth)