Houghton Lodge strategic farm launch

Houghton Lodge Farm becomes AHDB's first strategic farm as they take over a redundant dairy unit with the aim returning it to its former glory through close management of all operations and processes.

Tom Rawson and Charlie Crotty gave anoverviiew of Houghton Lodge Farms history, and the wider operations and ambitions of Evolution Farming. 

Evolution Farming has only been selling milk from Houghton Lodge, Leicester, for five months but the company’s ambition and low cost approach made it an ideal strategic dairy farm. The 635-cow cross-bred herd is currently challenged to perform on total cost of production budget at 28 pence per litre, to then run at 24p/litre.

Ultimately, the aim is to run at a COP of 22 pence per litre under herd manager Mark Housby, who is currently feeding 4kg of meal/day, aiming to reduce this to 1-2kg a cow/day.

The joint venture dairy brings dairy farming back to the widerr Stoughton Estate, with large buildings still standing from the previous higher output herd.

The partnership sees Evolution Farming (directed by Tom Rawson, Oliver Hall and Charlie Crotty) pay a rent to Farmcare (the subsidiary farming arm of the Welcome Trust), itself a new company formed in 2014. Farmcare oversees the arable operation at Houghton Lodge, with Evolution Farming recommencing milk production on the estate.

The arable operation has been running with a £120/ha Blackgrass control cost on wheat. An additional issue has been falling soil quality, indices and organic matter after the cows left Houghton Lodge in 2004.

Now 250ha of the farm is in grass, either as permanent grazing or as three-year leys, which is a major change from the wheat/rape rotation of the last ten years.

Tom Rawson and Charlie Crotty answer ten key questions

How does the rent work?

“Farmcare was created two and a half years ago and manages the Stoughton Estate,” explains Mr Crotty. “Evolution Farming will run the dairy herd on a 15-year Farm Business Tenancy. We don’t get any subsidy, Farmcare receives this and we pay a rent of £120 an acre.”

Are costs greater and will you see profit this year and next?

“Setting up means we have fiddly jobs and lots of sorting out to do,” admits Mr Crotty, who has budgeted labour costs at 4.5p/litre, aiming to push this below 4p/litre

“Another cost has been the fertiliser as there is no residual Nitrogen on the farm. Ultimately, we look to sell around 2.6milion litres from Houghton Lodge. Next we hope to make a pre-rent and finance profit of nearly £800/acre.”

How did you build up the herd?

“Relatives and friends owned cows and they hired them to Evolution Farming,” explains Mr Rawson. “In a bad milk price year, we suggested they put the capital of the cows into the company.

“We were a new company, only starting in 2010, and we needed to put cows as assets on the balance sheets and we’ve been able to tell the bank we are now worth £1 million more than we were a year ago as a starting point to then borrow.”

How do you pay for the cows?

We pay a 5% fixed return for the cows no matter what,” says Mr Rawson. “At the end of the five-year agreement, if they want the money back you can sell the cows and they are reimbursed or you can return the cows. They may even say that they want to go for another five years and go again.

Are there effectively two levels of shares in the farm?

“Yes, there are two different levels of shares, once which is variable i.e. the big stuff in the company and once which is very much fixed, which is like a bank loan. However, the difference is that people like dairying and want to be involved without having to deal with cows.” 

Was it difficult finding a processor last year?

Mr Rawson explains: “We were an existing member of Arla on our Lincolnshire farm. Long Clawson was approached, being in that area, but Arla gave us an extension. It was a case of expanding our Arla contract after we initially approached them back in March 2015.”

You needed autumn calvers to kick production off – will this continue?

“No, personally I don’t think you get enough reward for autumn calving,” says Mr Rawson. “We acquired mature cows and heifers and manged them into an autumn and spring block so we could start producing at least some milk.

“The autumn block is handy for managing empty cows and running culls another year. Longer term though the plan will be to spring calve everything. A cull cow might be worth £250 but an autumn cow with a beef calf in her is worth nearer £1,000.”

What are you challenging your cows to do?

“Mature cows should be matching their body weight in kg of milk solids,” explains herd manager Mark Housby. “We currently have a lot of bigger older cows on the farm due to how the herd was built up.

“Their longest walk will be a 1.5km walk to the parlour. They will walk a maximum of 3km a day on a twice a day milking system. We foot bath daily and the little bit of lameness we have had is white line disease.”

How is grass being managed in your first spring?

“We aim to enter covers at 2,700-2,800kgDM/ha and leave covers of 1,500kg, working to a wedge,” says Mr Housby. “Currently there is a big surplus but with silaging we hope to manage this. We measure grass growth weekly.”

“The cows went out on March 2 and are currently split 185 spring milkers and 200 autumn milkers. We don’t think we will be outwintering here.”

How will you breed replacements?

"Heifers are currently reared on contract for 90p/day plus medicine and vaccine costs," says Mr Rawson. "We will start rearing heifers here. Our breeding is done through Genus and we use Jersey on heifers, swept up by Hereford stud bulls. We then use Irish Frisians on the cows. We bull for 12 weeks split into six weeks of AI and six weeks of natural service."