As part of a series of NFU Mutual podcasts called ‘Ahead of the Field’, we heard from the Smith family at their 1,000-acre Leicestershire farm.
Lyndon Farms grew from a 150-acre dairy farm in the 1980s into a large and diverse operation, which includes a successful agri-contracting business.
Simon Smith decided to move out of dairy production and now, with daughters Penny and Becky and his son James, cover a range of contracting operations from foraging to share farming, lime spreading, hedge cutting, plant hire and more.
Here are some of the key things which have helped this family business to evolve and grow, which you might find useful if you’re thinking of diversifying into agri-contracting.
1. Play to your strengths
Simon says it was his passion for machinery that was the starting point for getting into agri-contracting. Already having equipment on the farm meant it was a natural progression.
NFU Mutual’s rural affairs expert Tim Price says agri-contracting is a popular diversification for farmers for these same reasons. He says: “The contracting fits with the farming side. And in fact that's the key to diversification. If you get it right, you can play up all the skills in the family so that everybody can take their own part and also be happy doing so.”
2. Research and plan
“It's not just about getting on your tractor and going down the road and working for your neighbour,” advises Tim. “You've got to be a businessman; you've got to market yourself, you've got to set your prices and you've got to get in the office when you get home. Do all your sums and send your invoices out, and in some cases you've got to chase them as well!”
Tim adds that problems occur for diversifying farmers when they haven’t thought through their goals. He says focusing on the short-term objective of getting some cash isn’t enough, you should:
- plan to develop the business in the longer term
- consider costs to replace machinery or expand the operation
- work out how to fit in contract work with your farming commitments.
“The temptation is to put in quite a low start cost and just think of how much diesel’s costing and your own time at £10 or £20 an hour, and really that's not enough,” adds Tim. “You've got to think of this as a business which has got big overheads.”
3. Offer something different
There’s plenty of competition in agri-contracting, so ensuring you offer customers something unique is vital.
“The key really is individuality and just making your business different to everybody else's,” says Simon. “Don't try and go into competition with your next door neighbour because you’ll just end up in a price war.”
In the case of Lyndon Farms, a unique selling point is its portable weighbridge. As Simon explains: “In the last five years dairy farms around here have all expanded and we are now supplying forage. We use our mobile weighbridge — which is pretty unique around here — so we can weigh every single load onto the farm. We take samples of what we're bringing in to get the dry matter on them, so we know exactly what we're charging the farmer, and the farmer knows exactly what they're getting.”
As your business grows and develops, keeping in tune with what your customers want is important. This is why the family has invested in six-string balers in addition to their four-string machines — to answer a growing demand.
4. Stick to your budget
Farmers interested in agri-contracting may imagine purchasing a fleet of new machinery, but that may not be the best option. Buying second-hand and ex-demonstrator machinery can be a cost-effective option.
“Too many times I see people starting up, and they get too carried away with a brand new shiny green tractor,” says Simon. “They blow all their budget on a tractor and have nothing to put on the back of it.”
He adds: “If you’ve got four bits of equipment and two of them are on hire purchase and two of them are paid for, it helps dilute it down and keeps it all rolling forward. That's what we've always tried to do.”
5. Market yourself
Many agri-contractors will rely on word of mouth to promote their business, but that’s not the only way to attract and engage with new customers.
Lyndon Farms primarily benefits from satisfied customers promoting the business through recommendations — and their branded mugs and stationery also go down well with farmers. But it also has a healthy following on social media where they can communicate directly with existing and future customers.
As well as the business’s Facebook page, Penny Smith has found filming the machinery at work and uploading footage to YouTube has helped gain thousands of views.
6. Put the customer first
Lyndon Farms customer Esther Pritt, partner with her husband in a contract dairying business, and also a local NFU Mutual Agent, said she values agri-contracting as investing in machinery would be too costly.
She said: “When we first moved to the area, Simon and the family were really highly recommended to us. Ever since we started working with them they’ve been incredibly reliable and professional throughout, so it's been a really great working relationship from our part.”
The Smith family says they take pride in turning up when they say they will and staying on site until the job is completed, no matter what the hour — a professional approach and competitive pricing are key reasons for the business’s success.
7. Be prepared for peaks and troughs in demand
Becky Smith says the workload pressures can vary due to seasonal demand. She says: “We have about five full-time staff working all through the winter and then in the summer we have about 14 of us that come. Even ourselves, we sometimes go off and do other work in the winter.”
And when it comes to juggling the agri-contracting business alongside arable farming during the summer?
“That's the skill of being a contractor isn't it?” says Simon. “It's all to do with just knowing your workload and pacing it really.”
8. Don't stand still
Farmers are an entrepreneurial bunch and those who diversify have already demonstrated their ambitious nature. The secret to future success is to continue learning, adapting and growing.
Simon says: “I'm always on the next mission. Yes, I think the contracting will move forward; the plant hire will move forward as well. We've got a farm adjoining us that we purchased about eight years ago that we would like to develop more, to possibly put contract rearing heifers in for one of the customers. So we'd like to develop that into a larger scale business I think.”
And with his children all heavily involved in the business, Simon hopes Lyndon Farms will continue long into the future.
“I'd like to retire one day and leave them to it — I’m not going to do it till the end. Getting new people involved in this business, and any of these other businesses really, is important. That's the future isn't it?”
Hear more farming diversification case studies on our Ahead of the Field podcast hosted by beef farmer and Rock and Roll Farming podcast presenter Will Evans.