An Agricultural Land Loan for an Entrepreneurial Sheep Farm
By Louise Old – North and Scotland BDM
For an entrepreneurial couple navigating the challenges of sheep farming with rare breeds, diversification and innovative sales strategies have been key to sustainability. This blog explores how a well-timed shift in business strategy and an agricultural land loan helped this couple overcome the profitability issues within the sheep farming sector.
This clever couple managed to elevate their modest farm into a thriving venture. Incorporating a caravan and camping business, a pet grooming service and direct meat sales, they crafted a multifaceted approach to farming. Supported by UK Agricultural Finance, they embarked on a strategic shift towards “commercial” sheep to enhance productivity and profitability, showcasing the potential of agricultural land loans in transforming farm operations.
Clever farm diversifications support a thriving business
The borrowers had successfully farmed sheep for nearly a decade, including over three years at their current farm property, and they also both run other subsidiary businesses. One runs the caravan and camping site (which also has a farm shop) and a pet grooming business, whilst the other plays an active role in the farming and is a partner in a fabrication business.
The camping and caravan site is well established. The borrowers took it over from the previous owner who had built the business up from scratch into a well-known and thriving holiday site. The business recovered strongly after the Covid lockdowns and benefits from the trend of more people holidaying in the UK, and particularly with the explosion in caravanning and camping holidays.
Their innovative approach also encompasses seasonal ventures, such as selling Christmas trees and breeding turkeys for the festive season. The farm diversification endeavours have not only enhanced their income but also fortified their farm against the fluctuations of agricultural markets. Their dedication is evident in their hands-on management and strategic planning, aiming to balance tradition with innovation for sustainable growth.
Manx Loaghtan Sheep: A Rare Breed with Rich History
Sheep farming’s traditional model faces profitability challenges, especially when dealing with rare breeds known for lower productivity compared to commercial breeds.
Until recently, the borrowers had focused on Manx Loaghtan sheep, a rare British breed. Manx Loaghtan sheep, originally from the Isle of Man, are a distinctive breed known for their brown wool and multiple horns, often sporting two, four, or even six horns. This rare breed, which dates back to the 16th century, is prized for its hardiness and ability to thrive in harsh landscapes.
Historically, Manx Loaghtan sheep played a crucial role in the local economy, providing meat, wool and even hides for the community. Today, they are celebrated for their contribution to biodiversity and sustainable farming practices in the UK, embodying a heritage of agricultural resilience and ecological stewardship.
The Manx Loaghtan sheep business showcases an innovative approach to livestock farming. The couple has strategically bypassed traditional auction sales, opting instead for private slaughter to supply meat directly to individuals and through their farm shop. This direct sales method enhances the value of their product by catering to a niche market looking for sustainably sourced meat.
Additionally, the unique horned heads of these sheep are sold to taxidermists, fetching a premium due to their rarity and spectacular appearance. Expanding into the realm of eco-friendly products, the borrowers have begun collaborating with local craftspeople to create garments from Manx Loaghtan wool, tapping into the demand for unique and sustainable textiles. This diversified business model not only maximises the potential of their sheep farm but also contributes to the broader eco-products market.
Expanding the flock calls for an Agricultural Land Loan
However, it is the borrowers plan to scale back the number of Manx Loaghtan sheep and replace them with conventional “commercial” sheep. The borrowers are transitioning from Manx Loaghtan to “commercial” sheep to enhance farm productivity and profitability.
This strategic shift, driven by commercial sheep’s higher lamb productivity and efficiency, is expected to significantly boost turnover and speed up revenue generation for the farm. With the introduction of commercial sheep, the farm’s flock will expand to around 100 sheep, poised to produce approximately 150 new lambs by next spring. These lambs are projected to fetch around £100 each at auction and will be ready for market much quicker than the Manx lambs would be.
Cultivating Success: An Entrepreneurial Journey with an Agricultural Land Loan
To achieve their plans, the couple would need to purchase additional grazing land for their expanded flock of sheep. This is when their broker, Paul Miller, who has worked with us many times turned to UK Agricultural Finance for help. Paul has brought a number of interesting agricultural cases to us over the years and is always a pleasure to work with. Paul often explains to us that he appreciates our hands-on approach and keen understanding of the nuances of the agricultural sector.
UK Agricultural Finance played a pivotal role in supporting the farmers’ vision by providing an agricultural land loan. This financial assistance enabled the purchase of an additional 20 acres of grazing land adjacent to their existing property, including a large, modern barn. The loan amount was around £150,000 with a loan-to-value (LTV) of approximately 50%. This strategic investment facilitated the expansion of their sheep farming operations, allowing them to transition towards a more commercially viable flock and diversify their farm’s income sources.
Along with the increased flock and commercial sheep income, the fabrication business has had an increase in demand for their specialised metal products which lead to a need for extra storage space.
The newly purchased barn, included with the agricultural land loan, is large enough to both house the flock and provide the additional storage for the fabrication business. In exchange, the fabrication business will pay the farm £1,000 per month rent for the storage space.
With the new flock and additional land, the couple’s farm is poised for growth.