Tom Rawson’s start in farming was conventional enough.
Now aged 35, he had joined his parents on a West Yorkshire dairy farm in 1999, milking 50 cows.
His parents had been in competition with 150 other applicants to gain the tenancy.
By 2008 the family had built up to 300 cows producing and processing organic milk.
A chance meeting at the Oxford Farming Conference with fellow Yorkshire dairy farmer Oliver Hall led to them joining forces to create what was to become known as Evolution Farming.
“Within two years of that first meeting we were borrowing half-a-million pounds” said Mr Rawson.
“Oliver doesn’t like spending money but I do, so we manage to balance out quite well.”
They now run 1,000 cows across a number of sites with 10 full-time staff, run a consultancy business with clients around the UK, and have just started a machinery contracting business.
Raising sufficient capital might seem to be a real challenge, but this had not proved to be the case. They had some trading history with banks through their existing family businesses, and a good track record with machinery finance companies.
More capital was needed, however, and the answer was to hire the cows, initially mainly from family members.
This is structured to give a return on capital of 10%, based on a 22% replacement rate. Currently the annual replacement rate is around 16% so return on capital is around 12%.
“It is fair to say that availability of capital is not a limiting factor. We now have a waiting list of investors,” Mr Rawson said.
“Two of our managers are now putting most of their salary into buying cows to hire to the business. They are building up capital and within a few years I reckon they will be running their own businesses.”
The hire agreements are carefully structured, with agreed culling and replacement rates laid out in a contract.
Payments are made monthly on a £ per head basis after the milk cheque has been received.
Mr Rawson added: “It is becoming more fashionable now to have your farm farmed by someone else, and that has helped us expand.
“We have had interest recently from tenant farmers who want to wind down and are quite happy to hire us their cows, and also receive a small return on their machinery.”
The business had very actively sought media exposure through entering competitions and appearing in articles. This might seem like self-publicity, but it had brought in inquiries which had led to new business, especially for the UK wide consultancy part of the business.
Managers were also given the opportunity to be share farmers. The concept is common enough in New Zealand, but could work equally well in the UK with the share paid on a pence per litre basis or a percentage typically 12% to 18% of the milk cheque.
“As to the future, we want to become more professional and profitable. We also need to be the first choice partner for employees, partners and investors.”