By Paddy Terry, Partner Success Manager
Jaci and Tristan are born and bred farmers running Hatton Farm, an Organic grass-based Dairy farm in Shropshire, and Proper Good Dairy - supplying their proper good 100% organic pasteurised milk to local communities through vending machines and outlets.
Last time we talked you mentioned that you've rolled out some diversification on farm in the form of milk vending machines - how did that come about?
Milk vending machines have been around for a while and we've always liked the idea of it, but one on its own wouldn't have been worthwhile doing. We were informed that there was some grant money up for grabs before the U.K. left Europe, so we came up with some proposals - we've got quite a unique proposition as we are a grazing based organic dairy operation.
Tristan doesn't do anything by half measures and he straight away said we are not going to have just one vending machine - we are going to have enough to justify employing someone. We put in the application for four vending machines, the required pasteurising equipment, and modifying the building to do it. We started pasteurising milk in September last year with our first vending machines, and we had the other 3 operational by early December.
Has it been well received by the community?
It's been really well received, and it's also been really lovely to speak to your customers - typically when you're dairy farming you don't know who your customer is, the milk goes on the lorry and you never see it again. This way we can actually build a relationship with local customers which has been really nice. During lockdown, we also delivered to collection points in some local villages so that people didn't have to travel too far to get their milk. We added on some cheese, butter and vegetable boxes that we sourced locally, and it was well-received! It was nice to be able to provide a service to the local community.
It sounds like there was a lot involved in that - was it challenging to get that up and running as a viable operation?
There was a lot to do! The grant application, the actual building and infrastructure, the food hygiene certification, and ensuring it logistically works - there's a lot of thought involved. You have to be open-minded and open to new ideas. You also need to be open to the customer service side and talking to the public. There is a lot of this sort of diversification popping up now but you've got to be prepared to commit to it, so it's not for everyone I suppose.
There is an increasing trend of farms diversifying from only traditional farming income streams. With what you've done by creating Proper Good Dairy - do you have any insight into why you think the rate is increasing?
I suppose Brexit is one of the issues, the changing subsidies and things. For us, we have two kids and one farm, and we were thinking about succession planning. 20 years ago you might have gone out and bought another farm for your kids, this diversifying is almost like having a second farm for our kids. We were lucky that we have some great staff on the farm, which freed up Tristan to explore other options, whereas if he was doing both milking and all of the farm work then he wouldn't have had the headspace to look at this.
You've been using Figured for some time now - what made you get on to Xero and Figured?
We used to use Sage when I took over the books, and it was not at all farmer-friendly, it was really clunky not nice to use. We then used spreadsheets for a few years but we decided we needed something more. We had come across Figured in our research and knew we wanted to use it, and knew we had to use Xero with Figured. In a roundabout way, it was actually Figured that made us choose Xero.
We started using Xero in 2014, and it's given us a much better handle on what we're doing. Going paperless was one of our goals, and it has the option to attach a document to the invoice. I love that part - I don't need a physical copy, and I don't even have to go to my accountants at the end of the year. I just ring them up and say it's ready. I find the automation so useful, I send invoices straight from my emails through to Hubdoc, which flows through into Xero.
You do a lot of budgeting in Figured, have you always been strong on planning?
Yes, we've always done some planning but we started to fine-tune it with our consultant. He really held us to account on our budgeting and forecasting. Xero didn't quite give us the functionality that we needed to forward plan our cash flow and capital requirements, which we really needed. There's nothing worse than setting the overdraft with your bank manager and then having to ring up halfway through the year and ask for more money - not a nice feeling!
Having that budget in place puts us in a powerful position to say to the bank 'this is our plan, this is where we want to be and this is where our cashflow requirements are' - to have that information is really valuable and it makes us feel more in control.
What Figured gives us is a good or bad day once a month, not a good or bad day once a year - it's no good sending everything off to the accountant at the end of the year and then finding out down the track that you didn't make any money last year - you need to know that during the year to be able to say 'Okay it's not going well, we need to be pulling the reins in a bit for the rest of the year'.
That's true - most businesses have a budget or a plan in place, why do you think in general agricultural businesses lag behind when it comes to planning?
It's hard to say - I suppose historically there has been less of a need for a plan as you could borrow money against the land asset. Subsidies come into it as well, because they provided a bit of a cushion and they do go a long way to keeping things moving on-farm If you didn't have subsidies then you'd definitely need to budget. In New Zealand for example, farm subsidies were dropped and following that farmers had to work a lot harder to show a profit. I think it's complex. It also comes back to succession a little bit - you get into farming because you want to be a farmer, not because you want to run a business. So as farmers we all have to work at it!
I'd like to say a big thanks to Jaci for sitting down for a chat, it was great to hear about their operation in Shropshire and how Proper Good Dairy is serving the community!