Martin Lovegrove – Written evidence (FPO0003)

 

I write in a private capacity as a businessman, who also owns a farm of roughly 500 acres of land near Sevenoaks.  My wife and I acquired the Henden Manor Estate in June 1997 when it was a dairy farm.  Over the 20 year period to this March we tried to make the dairy business work, but ultimately found that it was not possible to make even a modest return on our commitment and investment.  We sold our milk over most of that period to M&S, which offered the best possible milk price to reflect that it also had the strictest controls across all areas of operation.  The latter is something we embraced and we received the M&S Gold Award in the years leading up to our closure.

Our farm was something we were proud of and did our best to operate to the highest possible standards.  We had five key tenets for our business, these being, in order of priority:

1)    Staff welfare and safety;

2)    Livestock welfare and safety;

3)    Protection and care of the environment;

4)    Financial sustainability;

5)    Transparency in all that we did with meticulous records kept.

Every year we took on student interns, mostly vet students from the UK and Europe, so that they could learn how a good farm operated.  We had perhaps some 20 to 30 such interns each year and had a waiting list.  We developed a wholly transparent web-site, which regularly received 30-40 hits a day, mostly it would seem from students in the UK, Europe, North America, Oceania and China.

Over the past 20 years we:

A)    Had four managers, the first who lasted for 11 years and the last who lasted for 8 years;

B)    Invested £4.25 mm gross, £3.50 mm net when disposals are taken into account;

C)    Started with a herd of around 160, which increased to around 260 in 2018;

D)   Sold 1.1 mm litres of milk in 1997/98, which increased to 2.7 mm litres in 2017/18;

E)    Saw the milk price peak at 34.5ppl in 2014 and bottom at 18.76 ppl in 2001;

F)     Saw an average milk price of 27.2 ppl against costs pre depreciation of 31.4 ppl;

G)   Saw an average milk price of 31.0 ppl in 2018/19;

H)   Recorded depreciation of 4.9 ppl against a national average of less than 1 ppl.

I)      Recorded a total operating loss before depreciation of £1.66 mm;

J)     Recorded a total loss after depreciation of £4.30 mm;

K)    Employed directly six people and several indirectly;

L)     Had one significant pollution accident in July 2012, which was sorted with the EA;

M)   Had no major personal accidents and eight minor accidents;

N)   Gave several pro-active presentations to the M&A, the EA and all of the regulators.

We tried to create a sustainable business and in so trying regularly challenged M&S to pay us more for our high quality milk.  A problem is that supermarkets use milk as well as bread and eggs as “loss leaders” to encourage people into the stores so that they will also buy higher margin produce.  They also compete with each through the weekly food basket data.

It was and remains my firm belief that the superstores should pay something around 4-6 ppl more for the milk, such price being tied to investment in the farm’s infrastructure as well as looking after the staff, livestock and the environment.  It is important to note that our average depreciation charge was around five times the national average.  This reflects our investment in high quality infrastructure and equipment.  The national figure suggests a significant problem is developing with regard to the quality of our dairy farms.

It is worth noting, too, that at Henden we did all that we could to promote staff safety given that the farming industry has, I understand, the worst track record of any industry in the UK for safety.  It is interesting to note that supermarkets constantly claim to promote the looking after the welfare and safety of livestock.  They do not actively promote the same for the farmers and their employees.

That said, I am pleased to note that as we left the M&S pool this year we were successful in getting the company to start promoting safety.  This is a passion I have had over my business years.

Given our experience at Henden the core concern I have for your consideration is that, if high quality basic food is not properly priced in the supermarkets, our country will over the years ahead see the quality and traceability of such food decline significantly in volume.  It will be replaced by food from overseas where traceability and standards are unknown or even questionable.

Along with an increase in price farmers should be compelled to invest more in infrastructure and in the care of the staff and livestock.    Saying this is simple.  Achieving this will be more difficult.  This is because most farmers rent their land and infrastructure from third parties.  There is, therefore, an inherent reluctance to invest.  This matter needs to be looked intoThe operations of farms should also become more transparent.

The public should be educated more into what the cost of creating food really cost.  One cannot help but think that the priorities of the public when it comes to spending what money they can are not appropriate given the importance of their health, which in good part is derived from good food.

In writing this short paper I am not seeking in any way for people to even consider feeling just a little sorry for us at Henden for having invested so much time, effort and money in our dairy business to ultimately no effect.  It was a business investment and in the end we felt compelled to call time on the business.

Today, we have a modest beef cattle and arable operation and will be renting out some of our properties.  We hope our life will be a little less stressful!  Over time we have received partial amelioration through personal tax relief and have seen the value of our land grow (although over the past three years it has fallen).  I am simply writing because I had a real passion for the business and have serious concerns for our country’s future when it comes to high quality, safe food supply.

Thank you for your kind attention.

 

Martin Lovegrove

 

19 August 2019