Henden Manor Estates A milk producing business The opportuni5es and - - PowerPoint PPT Presentation

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Henden Manor Estates A milk producing business The opportuni5es and - - PowerPoint PPT Presentation

Henden Manor Estates A milk producing business The opportuni5es and challenges January, 2016 1 Overview Henden is ~500 acres (~370 acres arable & grazing), the land being undula5ng clay The strategy is to produce high quality milk


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SLIDE 1

A milk producing business

The opportuni5es and challenges

January, 2016

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Henden Manor Estates

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SLIDE 2

Overview

  • Henden is ~500 acres (~370 acres arable & grazing), the land being undula5ng clay
  • The strategy is to produce high quality milk over the long term with regard to:

– High standards of both staff and animal welfare and safety – Working well within all regula8ons imposed, including caring for the environment – Being transparent in all that we do – Being financially sustainable

  • Henden is not an organic farm, although it puts all organic waste back into the ground
  • In 2015/16, we will average some 470 livestock in a closed farm:

– 260 cows in the herd (vs. 140 as a UK average), of which 230 are milked twice daily – 210 “followers” – We calve through the year to try and achieve level produc8on; we do not “block” calve

  • We will produce 2.574 mm litres of milk for sale this year (7,032 litres per day)

– Yield per cow in milk should average some 31.4 litres per day (~10,100 litres per cow per year)

  • M&S is the exclusive buyer of our raw milk, pick up being every other day
  • Our herd will consume 4,700 (wet) tonnes of feed this year (1.84kg per litre of milk sold):

– 1,440 tonnes of concentrates & minerals (0.56kg per litre) – 3,300 tonnes of bulk feed (1.28kg per litre)

  • We employ six and a half people on the estate:

– 4.7 work exclusively for the dairy business – 1.3 work on the estate – 0.5 provides the administra8ve support needed

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SLIDE 3

Henden Manor Dairy Farm

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Offices Straw & Sand storage Liquid waste (slurry)

>5mm litres capacity

Bulk Feed clamps

(grass & maize silage and wholecrop)

Dry food store Cow barns Se^lement ponds Solid waste Parlour & milk tank

19,000 litres capacity

Heifers & calves area

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Hospital Dirty water tank Separator

84 stalls 88 80 stalls 86 stalls

Reservoir

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SLIDE 4

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Reservoir Drainage direc8on Reservoir

Land use & drainage pa^erns

Farm

Key:

Approx estate boundary Approx main courses Approx other courses Main feed growing areas Grazing areas (summer) Underground courses

Note:

Henden also owns 18 acres

  • f arable land over two

fields a quarter of a mile to the east of its boundary

We prac5ce crop rota5on Ground is undula5ng clay

  • rock hard in dry months
  • very so\ in wet months

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SLIDE 5

Focus on milk quality & herd health

Herd size 260 140 = na5onal average * Average yield per cow in the year 10,100 litres 7,870 = na5onal average Average bu^erfat 3.85% 4.0% = na5onal average Average Protein 3.35% 3.3% = na5onal average Bacteria Count (BAC) 6 24 = na5onal average Soma5c Cell Count (SCC) 133 165 = na5onal average Water 518 Saturated Fat Analysis 68 Fresh cows & cows with mas55s ~2.7% of cows milked (had a bad year, but good now) Mobility Score 88% Score 0 & 1 10% Score 2 <2% Score 3

(“lameness” at Henden = 12%; na5onal average = ~36%)

Bovine Viral Diarrhea Virus free through vaccina5on – always being monitored Infec5ous Bovine Rhinotrachei5s free through vaccina5on – always being monitored Johne’s disease very low levels – aiming to be free within two years Leptospirosis free through vaccina5on – always being monitored TB free

* England

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Investment has been key to Henden

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  • £4.335 million has been invested on Property (65%) and Equipment (35%) (Losses not included)
  • For the next few years there will largely be an investment freeze on property:
  • Farm is now in reasonably good shape
  • Economics don’t jus8fy more investment (e.g. robots replace parlour, heifers/calves housing renewed)

farm years

Pre 1990 1998-2006 2007-2009 2010 2011 2012 2013 2014 2015 2016 Parlour Milk Tank Cow barns & aprons Lighting & fans Heifer barns Calving barns Bulk feed clamps Dry food store General storage barns Drainage in farm yard Solid waste area Liquid waste area Reservoir Land drainage Office Equipment

(£'000)

Property £183 £395 £185 £852 £682 £118 £155 £19 £225 Equipment £159 £224 £323 £139 £193 £157 £217 £74 £35 Total Investment £342 £619 £508 £991 £875 £275 £372 £93 £260

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SLIDE 7

2 4 6 8 10 12 14 F e e d L a b

  • u

r O t h e r D a i r y P r

  • p

e r t y M a i n t e n a n c e V e t & M e d i c i n e s B e d d i n g U B l i B e s O ffi c e / A d m i n A I / S e m e n

Illustra5ve dairy economics in 2015/16

7 * Es5mated for the year 2015/16 (revenue and costs do not include Estate management ac5vi5es and related income) ** Sample guided from data for 2014/15 provided by an outside source, but updated by Henden for 2015/16 using Farmgate price for milk sales and hopefully educated guesswork for costs

< Most farms are losing money at the opera5ng level < Most farms have not invested in property & equipment Notes:

Henden’s costs

37% 17% 14% 8% 6% 5% 4% 4% 3% 2%

ppl

Henden * UK Sample **

ppl ppl

Milk sales 32.18 23.89 Livestock sales 2.54 2.15

Total Dairy Income 34.72 26.04

Purchased feed

  • 9.02
  • 7.60

Bulk feed

  • 3.26
  • 2.02

Bedding

  • 1.34
  • 0.84

AI/ Semen

  • 0.59
  • 0.52

Vet & Medicines

  • 1.52
  • 1.34

Other Dairy costs

  • 4.73
  • 6.65

Total Dairy costs

  • 20.46
  • 18.97

Labour & "Drawings"

  • 5.54
  • 5.22

Utilities

  • 1.16
  • 1.29

Property

  • 2.71
  • 0.80

Machinery/Maintenance

  • 2.08
  • 1.18

Office/Administration

  • 0.95
  • 0.89

Total non Dairy costs

  • 12.44
  • 9.38

Total costs

  • 32.91
  • 28.35

Operating cash flow 1.81

  • 2.31

Depreciation

  • 6.37
  • 1.69

Operating loss before ROC

  • 4.55
  • 4.00
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SWOT review of Henden’s business

Strengths:

  • Loca5on in country (close to most consumers) *
  • Quality of infrastructure
  • Young farm manager
  • Quality & welfare of closed herd *
  • Welfare and safety of staff *
  • Proper, long term business focus *
  • M&S contract *
  • Valuable Estate - compact, pre^y, well located

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Weaknesses:

  • Loca5on in country (expensive region)
  • Quality of land
  • Could do with extra 50-80 acres of arable land

(needs to close by, ideally adjacent)

  • Largely untested team under the Manager
  • Business management not farmers

(s5ll learning!)

  • Needs to start returning capital to owners *

(no money has been taken out to date)

Threats:

  • Milk price vola5lity *
  • Financial viability of suppliers
  • Tax changes that could impact investment *
  • Biological risks *
  • Extreme weather condi5ons *
  • Stores being too short term in their outlook *
  • Lack of effec5ve marke5ng of dairy products *
  • Increasing influence of unrealis5c NGOs *
  • Geopoli5cal events (e.g. Russia sanc5ons) *

Opportuni5es: (we are s(ll on a journey to improve)

  • Expand milkers by 10 head (4%) (115,000 litres pa) *
  • Increase cow yields to ~33 litres pd (140,000 l.p.a) *
  • Team improvement:

– Improve aden8on to detail – Think outside one’s own main role on the farm

  • Improve land management to increase crop yields
  • Improve food buying prac5ces to reduce costs
  • Be more focused on cash flow management
  • Go “downstream”?

(would be a new business) * Of relevance to buyers of milk

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SLIDE 9

Dairy farming is under severe pressure

  • 1. Milk supply is outstripping demand:
  • Insufficient, effec8ve marke8ng of what are a sound, healthy food and related products
  • Too many farmers are producing and cow yields con8nue to improve
  • Exchange rate pressures impact food and other costs as well as scale of imports
  • Russia’s ban on impor8ng European dairy products has increased dairy products available for UK
  • 2. The public and the consumer want different things:
  • The public and some NGOs want “black and white fluffy things” prancing around the fields;
  • The consumer wants to pay for food, which typically only “factory” condi8ons can provide
  • 3. Supermarkets, under pressure to achieve high margins, can forget producers needs
  • 4. There’s been a fundamental lack of investment in infrastructure & equipment on farms
  • 5. There is a wholesale lack of transparency in farming
  • 6. Occasionally one hears of examples of a lack of integrity in farming opera5ons
  • 7. The UK is one of the highest cost na5ons in the world with regard to employment
  • 8. The scale and breadth of regula5ons have significantly increased man hours and costs
  • Their evolu8on has some8mes not been intelligent

Farmers & Stores need to work more intelligently and in partnership

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SLIDE 10

Henden Manor Estates LLP

Address: Henden Manor Estates Ide Hill Sevenoaks Kent TN14 6LA Telephone: +44 (0) 1732 750 758 Managing Partner: Mar8n Lovegrove Partner: Roni Lovegrove Dairy Manager: Diana Guitane Assistant: Jenny Stevens Contact: info@hendenmanor.com Website: www.hendenmanor.com

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