David Hellier publishes his report into collaboration on large scale dairy farms

The successful management of large scale dairy farms

Executive Summary


I farm in partnership with my parents on the Longleat Estate in Wiltshire, where we are tenant dairy farmers. Since my return home in 1998, the farm has grown from 300 acres with 200 cows to 600 acres with 400 cows and young stock. As the farm continues to grow in the future, I want to make sure that I am running my business, rather than my business running me. 
At the start of my study I posed this question to 20 people in the UK dairy industry: What is a successful large scale dairy farmer? Is it the person who has 200 cows, 500 cows or 1000 cows? Or is it the person who makes sure they have one completely cow-free day each week to spend with their family? Is it the person who takes a couple of weeks holiday a year? Is it the person who takes a leading role in the local community or becomes an industry leader? The reality is that there is no right or wrong answer; it is about achieving a balance for yourself and the people around you. 
My study started with three weeks spent in the USA, ten days looking at the large high input, housed dairies in Wisconsin, followed by 10 days looking at large grazing-based dairies in Missouri. During the winter of 2011-2012 I spent 10 weeks in the southern hemisphere visiting Tasmania, Victoria, and the South Island of New Zealand. This was followed by a month in South America travelling with fellow Nuffield Scholar Paul Lambert from Tasmania. Together we visited Chile, Uruguay and Argentina. During my Nuffield Scholarship I have been away from my business for four months in total. This has been a pleasant surprise to me, and a complete shock to anyone who knows me. 


Key findings

The successful large scale dairy businesses that I visited were profitable at both high and low milk prices. Profit was a decision and not an outcome. Profit always covered personal drawings, tax and interest payments. These businesses did not just have some of their costs of production under control; they had all of their costs under control. Typically a top 10% producer did not have a massive cost advantage in any one area; instead that producer was marginally better than the rest on all costs. This often added up to a significant difference. The operational and technical performance of the most successful businesses was always very good.  These businesses set goals and targets for the operational and technical performance of the business that they knew were driving its profitability. These businesses were employers of choice with reasonably low levels of unplanned staff turnover. They knew how to attract staff, how to retain staff and how to get the best out of staff.  Managers had realised that as cow numbers grow and therefore staff numbers grow, the manager is no longer a cow manager but becomes a people manager.  
The successful dairy business managers had a good work life balance. Key to achieving a good work/life balance is a simple production system. The more complex the production system, the greater the chance of the manager being tied to the business.  Seasonal block calving makes it easier, particularly for the smaller to medium sized family farms.  Successful businesses employed the right amount of staff, with the right attitude. Performance and skills can be influenced; however it is much harder to influence attitude. Staff were given clear responsibilities, they knew what was expected of them and what they were trying to achieve.  Staff followed clear systems, processes and protocols that were repeatable and interchangeable between different people. 
The most successful businesses that I visited had a well thought out strategic plan that was implemented and regularly reviewed. All the key stakeholders in the business had to agree on the plan. They had to understand where the business is currently, where the business is going, and how it is going to get there.  Strategic business plans worked well when they ran alongside the personal goals of all the key stakeholders in the business, particularly partners. The benefit of a strategic plan is that it creates a united focus. When all the key stakeholders are in perfect alignment, all going in the same direction, then the business will make rapid progress. As soon as one of the key stakeholders is off alignment, it is like throwing out an anchor and the progress the business makes is reduced.   
I asked the successful business managers what they thought was their most important dairy business asset. The really modest business managers thought it was their staff. The really smart ones told me it was their partner, but most realised it was themselves. Time and time again I found it was not the cow or the production system that dictated the success of the business; instead it was the person leading the business.  However, there needed to be a level of governance and scrutiny over the business leader, to make the business leader accountable for his/her decision making and to quite frankly ask some awkward questions. Periodically there is a need to keep the business manager focused, motivated and on track. Discussion groups, focus groups, bench marking groups, consultants, accountants and boards of Governance all offered various levels of scrutiny over the business and influenced the direction of the business.  
A well thought out succession plan takes away any uncertainty. Putting together a succession plan will take time and may require some outside facilitation. A succession plan does not necessarily have to be equal; it just needs to be fair. Ideally it should be put into place before the next generation joins the business. In some circumstances it may be better to sort out a succession plan early on in people’s lives.  A one off payment to family members not involved in the dairy businesses may be far more useful at the age of 25, rather than a much larger payment at the age of 50. 
The top businesses managers had a number of characteristics in common.  Time management was one of the key factors in their success. They were always looking and organising well in advance, often two or three months ahead. They made sure they were dealing with important jobs the majority of the time and minimising the amount of time they were dealing with urgent jobs. They were not continually fire fighting. Their timing of farm operations was nearly always at the optimum time and the time it had taken for them to learn from their mistakes was usually short. They did not wait for their ship to come in; instead they went looking for opportunities. They did not wait to deal with an issue or problem at the edge of the cliff. Instead they went to meet the problem or issue, to give themselves options.  
Possibly the most important characteristic I saw was exceptional leadership capabilities. I saw some exceptional managers leading some average teams of staff, yet producing some excellent results. I also saw some exceptional teams of staff lead by a poor leader, producing some very average results.
 

Conclusions

As my study evolved it become apparent that the successful management of large scale dairy businesses was not simply about good cow management. The most successful and profitable dairy businesses all had excellent technical performance from their cows, but excellent technical performance on its own was no guarantee of success or profitability. It is equally important to make sure the business is profitable, the costs are under control, the business manages staff well, the business leader has a good work/life balance, a strategic business plan is in place, and all with an appropriate level of governance over the business.  
I would like to take this opportunity to thank the Nuffield Farming Scholarships Trust and my sponsor, the Trehane Trust, for giving me this wonderful opportunity.

See the full report here


I farm in partnership with my parents on the Longleat Estate in Wiltshire, where we are tenant dairy farmers. Since my return home in 1998, the farm has grown from 300 acres with 200 cows to 600 acres with 400 cows and young stock. As the farm continues to grow in the future, I want to make sure that I am running my business, rather than my business running me. 
At the start of my study I posed this question to 20 people in the UK dairy industry: What is a successful large scale dairy farmer? Is it the person who has 200 cows, 500 cows or 1000 cows? Or is it the person who makes sure they have one completely cow-free day each week to spend with their family? Is it the person who takes a couple of weeks holiday a year? Is it the person who takes a leading role in the local community or becomes an industry leader? The reality is that there is no right or wrong answer; it is about achieving a balance for yourself and the people around you. 
My study started with three weeks spent in the USA, ten days looking at the large high input, housed dairies in Wisconsin, followed by 10 days looking at large grazing-based dairies in Missouri. During the winter of 2011-2012 I spent 10 weeks in the southern hemisphere visiting
Tasmania, Victoria, and the South Island of New Zealand. This was followed by a month in South America travelling with fellow Nuffield Scholar Paul Lambert from Tasmania. Together we visited Chile, Uruguay and Argentina. During my Nuffield Scholarship I have been away from my business for four months in total. This has been a pleasant surprise to me, and a complete shock to anyone who knows me. 
Key findings The successful large scale dairy businesses that I visited were profitable at both high and low milk prices. Profit was a decision and not an outcome. Profit always covered personal drawings, tax and interest payments. These businesses did not just have some of their costs of production under control; they had all of their costs under control. Typically a top 10% producer did not have a massive cost advantage in any one area; instead that producer was marginally better than the rest on all costs. This often added up to a significant difference. The operational and technical performance of the most successful businesses was always very good.  These businesses set goals and targets for the operational and technical performance of the business that they knew were driving its profitability. These businesses were employers of choice with reasonably low levels of unplanned staff turnover. They knew how to attract staff, how to retain staff and how to get the best out of staff.  Managers had realised that as cow numbers grow and therefore staff numbers grow, the manager is no longer a cow manager but becomes a people manager.  
The successful dairy business managers had a good work life balance. Key to achieving a good work/life balance is a simple production system. The more complex the production system, the greater the chance of the manager being tied to the business.  Seasonal block calving makes it easier, particularly for the smaller to medium sized family farms.  Successful businesses employed the right amount of staff, with the right attitude. Performance and skills can be influenced; however it is much harder to influence attitude. Staff were given clear responsibilities, they knew what was expected of them and what they were trying to achieve.  Staff followed clear systems, processes and protocols that were repeatable and interchangeable between different people. 
The most successful businesses that I visited had a well thought out strategic plan that was implemented and regularly reviewed. All the key stakeholders in the business had to agree on the plan. They had to understand where the business is currently, where the business is going, and how it is going to get there.  Strategic business plans worked well when they ran
alongside the personal goals of all the key stakeholders in the business, particularly partners. The benefit of a strategic plan is that it creates a united focus. When all the key stakeholders are in perfect alignment, all going in the same direction, then the business will make rapid progress. As soon as one of the key stakeholders is off alignment, it is like throwing out an anchor and the progress the business makes is reduced.   
I asked the successful business managers what they thought was their most important dairy business asset. The really modest business managers thought it was their staff. The really smart ones told me it was their partner, but most realised it was themselves. Time and time again I found it was not the cow or the production system that dictated the success of the business; instead it was the person leading the business.  However, there needed to be a level of governance and scrutiny over the business leader, to make the business leader accountable for his/her decision making and to quite frankly ask some awkward questions. Periodically there is a need to keep the business manager focused, motivated and on track. Discussion groups, focus groups, bench marking groups, consultants, accountants and boards of Governance all offered various levels of scrutiny over the business and influenced the direction of the business.  
A well thought out succession plan takes away any uncertainty. Putting together a
 
The successful management of large scale dairy farms   by David Helliar A Nuffield Farming Scholarships Trust report     generously sponsored by The Trehane Trust                                                3
succession plan will take time and may require some outside facilitation. A succession plan does not necessarily have to be equal; it just needs to be fair. Ideally it should be put into place before the next generation joins the business. In some circumstances it may be better to sort out a succession plan early on in people’s lives.  A one off payment to family members not involved in the dairy businesses may be far more useful at the age of 25, rather than a much larger payment at the age of 50. 
The top businesses managers had a number of characteristics in common.  Time manage-ment was one of the key factors in their success. They were always looking and organising well in advance, often two or three months ahead. They made sure they were dealing with important jobs the majority of the time and minimising the amount of time they were dealing with urgent jobs. They were not continually fire fighting. Their timing of farm operations was nearly always at the optimum time and the time it had taken for them to learn from their mistakes was usually short. They did not wait for their ship to come in; instead they went looking for opportunities. They did not wait to deal with an issue or problem at the edge of the cliff. Instead they went
to meet the problem or issue, to give themselves options.  
Possibly the most important characteristic I saw was exceptional leadership capabilities. I saw some exceptional managers leading some average teams of staff, yet producing some excellent results. I also saw some exceptional teams of staff lead by a poor leader, producing some very average results.
Conclusions As my study evolved it become apparent that the successful management of large scale dairy businesses was not simply about good cow management. The most successful and profitable dairy businesses all had excellent technical performance from their cows, but excellent technical performance on its own was no guarantee of success or profitability. It is equally important to make sure the business is profitable, the costs are under control, the business manages staff well, the business leader has a good work/life balance, a strategic business plan is in place, and all with an appropriate level of governance over the business.  
I would like to take this opportunity to thank the Nuffield Farming Scholarships Trust and my sponsor, the Trehane Trust, for giving me this wonderful opportunity.