With 430 cows milking in three different locations, Co Down dairy farmer Gregg Somerville speaks from experience when he gives advice about farm expansion.
He has also studied the subject as part of a Nuffield Farming Scholarship where he visited businesses in the UK, Ireland, the US and Australia.
“You have to be efficient on the home farm first. Expansion is the result of achieving efficiency, not the cause,” Gregg told visitors to his farm last week.
In particular, he urges farmers to be aware of “dis-economies of scale” where the cost of production per unit increases as a business grows.
Gregg suggests that this can happen easily in NI as blocks of land that come up for sale or rent tend to be small in size and located far apart.
Costs with hauling silage, slurry, and livestock, plus time wasted travelling between outfarms, leads to an “efficiency drain” which can take away from, or even outweigh the extra output coming from expansion.
“I am convinced that fragmented land is the biggest hidden cost facing NI farmers,” Gregg said.
The Somerville family has a novel approach to managing a 40ac outfarm which was purchased in 1997. The original plan was to run the farm as a beef unit, but the BSE crisis caused a rethink.
Instead, the farm has been managed as an “overflow unit” where 50 autumn-calving cows from the home farm are grazed and milked in a separate parlour for four months each year.
“We have 90 acres available for grazing cows at home.
“The overflow unit is used when we don’t have enough grazing during the summer. It allows the home farm to operate at a bigger scale for the other eight months,” Gregg explained.
In 2012, Gregg took on the running of a 185-cow spring calving herd near Hillsborough. This involved buying stock and taking out a long-term lease on the land.
Initially, labour was shared between the two farms, but Gregg has gradually moved away from this.
A farm manager is now in place on the Hillsborough farm and the two units are effectively run independently.
For example, the farm manager receives a pre-agreed budget from Gregg which he uses to cover his wages plus the cost of additional labour.
“There is no right answer for how to manage staff and their pay on a second unit. You have to find something that works well for the person that you are dealing with,” Gregg maintained.
The same thinking seems to apply to overseeing the second unit and monitoring performance.
“Some people will want a regular sit-down meeting at the table. Others will prefer a more casual approach by having a chat hanging over a gate or on the phone,” he added.
Gregg advises expanding farmers to focus on keeping systems simple so that staff can quickly learn how things work and they can be trusted to run the farm on their own.
“Your first unit should run without you needing to be there. If you can’t do that on your home farm, you won’t be able to do it on another unit,” he said.
He points out the second unit has given scope for further expansion as parcels of land that become available near it would not be feasible to take on if cows were just being milked on the home farm.
Aside from expansion, Gregg is clear that his eye should never go off trying to improve performance of the cows and land that he has at present.
“I am a firm believer in the saying ‘the day we think we can’t improve what we are doing is the day we start going out of business’,” he said.