farm news
Fodder announces price support for dairy farmers
Fodder, the award winning shop and café at the Great Yorkshire Showground is to give its farmer suppliers a significant increase on the price paid for their milk. In a partnership agreement with supplier Dales Dairies, this initiative takes the price paid to farmers to 32p per litre for milk purchased by Fodder. Both Fodder and Dales Dairies are concerned at the difficulties experienced by dairy farmers and are happy to play their part by paying an increased price for the milk they buy. Based in Grassington, near Skipton, Dales Dairies sells milk from its own farm and from 20 others in the area.
Heather Parry, Fodder’s Managing Director said: “Fodder wants to do what it can to help those 21 dairy farms. The benefit of truly fresh, local milk, should not be under estimated - nutritionally, environmentally and economically.” “The recent over-production of milk on the world market has meant that the price farmers receive has plummeted. Thus the number of UK dairy farms has fallen below the 10,000 mark
The beginning of the year is typically when farmers take stock of their finances - often in readiness for the annual bank manager review. Given the generally poor outlook for farm-gate prices especially in sectors such as potatoes and dairy, the task this year may not be one to be relished. “Finding the time to properly assess the financial status of the business and knowing where the cash pinch-points will be in the future could be the difference between success or failure for some”, says Robert Taylor (pictured) partner in charge of AMC agency at CKD Galbraith who offers the following advice.
for the first time, as farmers struggle to make a profit,” she continued. “If we want the British dairy farms to survive, it’s vital that farmers are paid a sustainable price for their milk and so we are taking this unique step to make a stand on their behalf. We hope that other like-minded retailers will do the same and we also hope customers ‘vote with their feet’ and buy milk that supports our hard working dairy farmers. We know our own customers recognize the value of fresh local milk and we will continue to sell it at the same price happy that we are both supporting the farmers with payments substantially above the current average, whilst offering customers a great product at a fair price.” Dales Dairies’ Managing Director David Oversby, who is also a dairy farmer, has applauded the move saying: “Fodder is the first retailer who has actively said it wants to pay farmers more. We are very happy to support this initiative and I am more than happy to match the commitment that Fodder has made to our farmers.”
Heather Parry, MD of Fodder, David Oversby, MD of Dales Dairies (left) and farmer Mark Smith holding “Iris” a Holstein Friesian, following the announcement of the price initiative for Yorkshire dairy farmers.
Mark Smith of Rookery Farm, Winterburn near Skipton supplies Dales Dairies and will diretly benefit from the announcement. He said: “It’s great that we have a retailer in Fodder who is both supportive and responsible in its purchasing. I really hope that others will follow Fodder’s lead as we all need to make a living wage”. The Fodder shop and cafe is part of the Yorkshire Agricultural Society’s work in supporting the agricultural industry. It was established in 2009 to provide
a market for local producers as well as giving customers the option of shopping locally and ethically. It currently supports over 300 farmers and small producers. Increasingly popular, Fodder has won a swathe of awards including The Guild of Fine Foods Shop of the Year (2014), Taste of England Award (2012) Deliciouslyorkshire’s Independent Retailer of the Year 2009-10, and it was runner up in BBC Radio 4 Food & Farming Programme, Best Retail Initiative.
Assess cash needs and consider restructuring debt
Be realistic and budget honestly
The first imperative is to budget honestly and be realistic with your projections and assumptions. Being over- optimistic on your calculations will not serve you well when it comes to the reality of your cash flow and the requirements for working capital. How much will you need and when? What will this mean to your overall debt position and how will you manage this in the best interests of your business?
‘Hope for the best’ or take the time to plan for the longer term For some the impetus for planning ahead will be to ‘trade through’ the next few months. This may mean some ‘fag packet’ calculations, arriving at a reasonably sensible figure, speaking to the bank manager and adopting a ‘hope for the best’ outcome. It’s a strategy but ultimately could be a costly one and the chances of having to do it all again in six months’ time, and with a poor set of accounts, is likely to be high. Others will invest the time to more fully consider all the key financial drivers of their
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business. This could include the short to medium term cash needs, say for the coming year, but may also include the need to invest in the business over time. Whilst the appetite for this may be low, the reality is that even some level of on-going capital investment will be needed for the business to succeed. When a realistic assessment of cash need is done it’s time to consider the total level of debt and how this can best be structured. With cost management high on the agenda, knowing the total monthly or annual cost of borrowed money becomes a key consideration and one that informs the best option for the business for the future. The overdraft is an obvious starting point but there are other, more secure, alternatives that could provide breathing space for the business to trade successfully through a tough time.
Re-structuring hard core debt over a longer period A long term loan from AMC can provide a way to repay existing hard core debt over a long term, up to 30 years. Loans can be structured to suit your particular
circumstances including interest only or repayment terms at variable or fixed rates of interest. Once in place the loan is un-callable (and can be passed across generations) so long as loan commitments are met. Interest rate margins are agreed for the term of the loan and there are there are no annual reviews.
Guaranteed working capital The AMC Flexible Facility provides a secure source of working capital for a period of 5 years during which time the only person that can ask for the agreement to be changed is you, the customer. It operates on a similar basis to an overdraft and as cash flow needs alter throughout the farming cycle funds can be drawn down and then repaid and then drawn again over the 5 year term. Once in place there are no annual reviews and the loan margin and annual facility fee are agreed at the outset apply for the full five year term and interest is only charged on the amount drawn. For further information on AMC’s shorter term facility or their long term mortgage please call Robert Taylor at CKD Galbraith on 0800 38 99 448.
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