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Better-quality farming

Modernising the family business

Beef farmer Stephen Rowe sought expert guidance to get past a cashflow challenge, allowing him to boost stock levels following investment in new infrastructure.

When Stephen Rowe took over the running of his dad’s farm, he saw an opportuntity to modernise the business and strengthen supplier relationships by raising animal welfare and production standards.

However, after investing millions of pounds in new buildings and machinery, a cashflow challenge left him struggling to maintain stock levels, potentially putting valuable contracts at risk.

Improving standards

Stephen’s cattle farm lies near the western border of Northern Ireland. It is part of a supplier quality assurance scheme called Select Farms, operated by M&S, which Stephen supplies via a local processor.

The Select Farm assurance standards for beef cover a wide range of criteria, such as traceability and integrity of meat, animal health and welfare, facilities for housing animals, environmental protection, plus safety and welfare.

“I was the only monitored farm on this scheme in Northern Ireland,” says Stephen. “It means adhering to specific rules and standards, including the process for weighing and finishing the animals. We were also the first to do a benchmarking on emissions.”

Five years ago, he decided to invest in new infrastructure that would help him meet new environmental standards and improve the quality of meat his farm supplies. The funding ensured that he could put up new buildings and buy new machinery.

However, while the first two tranches of funding were provided by his previous lender as agreed over the subsequent years, there were complications with the final tranche of the loan. It meant Stephen was left without the funding he needed to buy new stock.

“The infrastructure was all in place, the buildings were there, but the third and final drawdown that I was expecting didn’t materialise. We found ourselves in the position of being stocked to 50% or less,” Stephen explains.

With limited working capital, his stock levels fell from 800–1,200 animals to around 350–400 animals.

Stephen searched for a new lender to help with his cashflow crisis, and worked through potential solutions with the Barclays Agriculture team, including agricultural relationship director James Trotman.

“James understood that stock levels were a critical issue, and that we needed the cash injection,” says Stephen. “His knowledge of the business and its potential, and his understanding of the pitfalls of having low stock levels, was what was needed to push us forward.”

We gave Stephen a £500,000 overdraft to allow him to build up the necessary levels of stock, giving him support to push ahead with his plans.

“We were coming from a very difficult base because we’d let our stock numbers down quite low, but with this support, we’re getting there.”

Expert support

With the extra finance, Stephen could work towards supplying the required 30 to 40 cattle a week continually throughout the year, which will also improve cashflow on an ongoing basis.

“We agreed the funding based on my projections and the business plan, and James suggested I undertake a sensitivity analysis to understand how the business could be affected by different scenarios in the future, which was very helpful,” says Stephen.

The experience has given Stephen useful guidance to pass on to other farmers facing similar issues. “Number one would be to get outside support and don’t be afraid to ask for help,” he says. “The second point is to act straightaway and don’t sit on the problem. Also, look at other farming options for income, and other financial options.”

“The experience has helped me to be a stronger person and I can’t speak highly enough of James. He’s given me a renewed appetite to grow the business, and it doesn’t feel like such a daunting task,” says Stephen.

If you're looking to improve your cashflow or to develop your agriculture business, speak to one of our Agriculture Managers today.

You can find your local Agriculture Manager here.