Dairy farming and milk production

Following all the milk price protests earlier in the year, it is interesting to learn that UK milk production continues to fall sharply. I suspect this is a combination of the poor weather conditions, affecting the quality of forage and also the number of dairy farmers exiting the industry. What this means is that in October the UK produced 993m litres which is a 6.5% fall on last year’s production for the same month.

It appears that this phenomenon is not restricted to the UK alone. DairyCo, which is a not-for-profit organisation funded by dairy farmers to work on their behalf commented, "Milk production in the rest of the EU and in the USA is lower than expected, adding support to commodity markets. However, trade remains thin and any small change in market conditions could have a larger effect on prices."

Dairy farmers in the UK will obviously be hoping that the apparent shortage of milk production beyond our shores will have a positive impact on world commodity prices and then on milk prices paid to farmers here. It has to be remembered that one of the factors which was blamed by many milk purchasers for the price cuts which sparked farmers to picket milk factories earlier in the year was the low price of cream on the world markets.

One of the factories which was picketed was in Somerset, being the new Wiseman Dairies facility off junction 24 of the M5 near Bridgewater. Since building the facility Wisemans have now been taken over by Muller and so it will be gratifying to those farmers who supply them with milk that they will get a phased 1.5p/litre milk price increase to 30.5p/litre between 1 December and 1 February.

Ronald Kers, chief executive officer of Müller UK & Ireland Group said, "We want to return a higher milk price to farmers so that we can ensure security of supply for our customers in an environment where on-farm milk production is dropping," He went on to comment, "We are determined to be the leading dairy company in the UK and Ireland and the preferred home for milk produced by Britain's dairy farmers and we will work closely with the farmer board to this end."

These are positive words although they do seem rather hollow in the light of the sudden and dramatic price cuts Muller/Wiseman announced without warning earlier this year. Therefore, from the British Dairy Farmer’s perspective let’s hope this heralds the start of a new and more constructive relationship between dairy farmers and milk processors such as Muller because the problems encountered earlier in the year have done nothing to engender confidence anywhere within the supply chain.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Farming: planning for future generations

Succession planning is one of the most important problems to tackle when any business wants to continue in to the future, but for farmers in particular it can be a very thorny problem because it is not only a business it is also the family home which has often been farmed for generations.

In this context one of the biggest worries is divorce and the effect this may have on the ongoing viability of the family farm. There have been many cases where the cost of a divorce has resulted in part or all the farm having to be sold which not only impacts the husband and wife involved in the dispute but also the rest of the family who may have lived and worked on the farm all their life.

Consequently there has often been reluctance for mum or dad to pass the reigns down to the younger generations until very late in the day which can leave the recipients unprepared to take on the responsibility of running the business or in certain instances result in inheritance tax charges which could have been avoided.

Obviously if the older generation like and trust their daughter or son in law, passing the farming assets to the next generation may not be a problem but where this trust does not exist, concerns still remain. However, increasingly farming families are turning to prenuptial agreements which can be entered in to by the husband and wife prior to marriage which define how assets will be split in the event of a divorce thereby safeguarding the farming business going on in to the future.

It is only relatively recently that the courts have confirmed that such agreements are very likely to be taken in to account if the divorce becomes contentious provided they have been entered in to properly. In general this means the agreement must be in writing, both parties must have taken independent legal advice, both parties must have fully disclosed their assets, the agreement must not have been rushed nor should one or other party have acted under duress.

Ideally a Will for the husband and wife should also be written after the marriage to ensure it does not conflict with the prenuptial agreement in the event of death rather than divorce and also the issue as to how children of any previous marriage or children of the new marriage should be treated needs to be addressed.

In addition postnuptial agreements, which need to comply with the same principles as prenuptial agreements, can be used to unlock inter-generational “log jams” after the younger generation have married, thereby solving the problem of family succession.

Unromantic as such agreements are, they are undoubtedly becoming more important in the world of farming, where divorce has the potential to destroy everything a family may have worked for over several generations but it is clearly important that professional advice must be sought before entering in to such an agreement.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Personal Grooming

Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, is getting up close and personal.

“Give me the child until he is seven and I’ll show you the man” is a quote attributed to the Iberian-born 16th Century Jesuit missionary St Francis Xavier and when you take a look round at our current crop of political leaders, it’s difficult to disagree with his maxim.

I suppose it was ever thus. But, at a time when the certainties of the economic and political systems with which we’ve grown up and come to depend upon to reinforce our position in the world are being challenged on all sides, we do seem to be examining the personal credentials of our leaders and our leaders’ lives rather more than when things were less shaky.

Indeed, the Leader of Her Majesty’s Opposition spent over an hour at his Party’s conference in the autumn giving us a glimpse of his 1980s’ teenage education at a North London comprehensive school. Yet, neither the school nor the personal disclosure were quite as comprehensive as they might have been. The state school in question has the exclusive ‘London NW3’ postcode and, even in the 1980s, many houses in its catchment area would have been nudging the million plus mark.

If the speech had been given in the 1980s by the Leader of the Labour Party, you would think he wouldn’t neglect to mention that his father was one of the leading Marxist’s thinkers of the 20th Century.

Yet in 2012, he did.

I bet Ralph Miliband could tell his youngest son a thing or two about the dangers of the cult of the personality.
   
So it was with some relief that a notable tweet from @BBCSport in that same week appeared to indicate, momentarily and in less than 140 characters, that sportsmen were better equipped than our politicians to sort out the ongoing financial crisis. It read: “ECB and Kevin Pietersen reach agreement”.

Sadly, the ECB of the tweet was the England and Wales Cricket Board and not the European Central Bank. So it was more wickets and bails and than bailouts.

Now then, KP’s relationships with England’s cricket establishment and his team mates are classic examples of both the cult of the personality and the over reliance on one person to deliver the goods.

So while in politics and sport, to focus too strongly on one personality can be fatal, in business to have a strong, charismatic leader at the helm of a company is often seen as beneficial. Not only that, but it appears that to get ahead in business as a bloke these days you don’t need to get a hat but a shaven pate.

That’s what a recent study by an academic at the University of Pennsylvania’s Wharton Business School has concluded. An accompanying newspaper article referenced Jeff Bezos of Amazon, Microsoft’s Steve Ballmer and UK-grown entrepreneur Allan Leighton as if to ‘bullet-head’ proof the theory in contrast to the luxurious mane of Nick Buckles of G4S.

The research, called ‘Shorn Scalps and Perceptions of Male Dominance’, concluded that we perceive shaven-headed men who sport the ‘power buzz’ fuzz haircut as more powerful than those with a full head of hair because the hairstyle (or lack of) is associated with über-masculine images such as soldiers and Hollywood blockbuster heroes.

You see why the only observation I make, by way of a conclusion here, is that the leaders of our three main political parties all have fulsome heads of well-coiffured hair. And then there’s the Boris.


Will Mooney MRICS
Partner
Commercial, Cambridge