Farmer Uses Financial Background to Make Sound Decisions for Farm
At 24 years old, Adrian Ivory left his picturesque farm in Perthshire, Scotland, for a job in the London, England, financial sector.
“I had always planned to go back to farming,” he says. “This was a chance to see how a different sector worked and to see if I would enjoy living in a big city. Frankly, sitting behind a desk was not my cup of tea!”
Despite this, Ivory’s time in London was hardly a waste. He learned critical business lessons that now influence how he manages his family’s farm.
“The financial background enabled me to understand what is important in a business and what some of the key benchmarks are,” explains Ivory. “The crucial key was that whatever I do, it must be run as a business and not as a lifestyle or hobby.”
A vast ocean may separate your farming operation from Ivory’s, but the lessons he learned about evaluating finances, making smart changes and solid investments, and building strong relationships are universal.
Ivory’s first job back on Strathisla Farms, the operating partnership for the farms owned by members of the Ivory family, wasn’t in the field. It was in the office. He took a hard look at balance sheets, examining income and expenditures, to decide where the farm should focus and where it should cut back.
“Although office work is not the most fun part of working on a farm, it is probably where you can make the most difference to your profit by sorting out your production costs, looking at market movements for grain prices, and deciding when to sell or to sit tight,” says Ivory. “Achieving an adequate scale is essential to obtaining a commercial return in farming. I have set the financial targets at 10% on operating assets.”
This numbers-driven approach has paid off. Since Ivory returned to the operation in 2000, the farm has tripled in size with the focus on beef, breeding, and cereals.
Right now, grain sales account for 32% of income, cattle 30%, contracts 15%, and subsidies 15%. Ivory and his wife, Katie, also have three holiday cottages that contribute to farm income.
Ivory continually reexamines the production and profitability figures with and without subsidies.
“The financial sector also taught me that no matter what my forebears have done, it must make financial sense to me,” explains Ivory. “Otherwise, I need to adapt and make changes to what I’m doing.”
With this mentality, Ivory not only evaluates past practices but also considers future ones.
Strathisla Farms’ cattle operation includes 90 pedigree cows, Simmentals and Charolais, and 140 commercial cow-calf, a mix of Simmental, South Devon, and Shorthorn crosses. The commercial herd calves in April or May, and the bull calves are taken through to finishing. Bulls are finished as close to 12 months as possible with a liveweight of 1,500 pounds.
In 2009, following the advice of a customer, Ivory castrated half of his commercial bulls. From 2009 to 2013, he evaluated the grade and carcass weight of the steers vs. the bulls.
Noticing a significant drop in the quality of the meat and the weight, Ivory decided bulls were more profitable. “Bulls would average 837 pounds deadweight, but steers only averaged 683 pounds, losing us $215 per head,” explains Ivory. “It should be noted that the steers were finished intensively and only took a month longer than the bulls, but it does not suit our system to finish them off grass.”
While bulls bring in bigger profits, they do require higher levels of management. “Bulls have to be managed correctly,” he adds. “Once you have weaned and separated them into lots, they cannot be mixed again, as this is where the fights start, which leads to poor-quality meat and deaths. This can be frustrating when there is a pen with only three bulls in it, but you just have to be patient.”
Maintaining stress-free handling of cattle is beneficial to stock and stockmen, says Ivory. “It also has a positive impact on the quality of the meat produced.”
With this knowledge in mind, Strathisla Farms invested about $185 per cow on a new cattle-handling system based on the animal-behavior concepts of Temple Grandin. The curved chute and large collecting pens, built in 2005, have eased the flow of cattle and made routine tasks, such as vaccinating, much easier.
“All finishing bulls are weighed every three weeks to assess growth rates and to let us assess exactly when they are ready for slaughter,” explains Ivory. “This was not possible before the cattle-handling system was installed.”
Relationships are an integral part of Strathisla Farms, including family partnerships and relationships with customers, neighboring farmers, and farm employees.
Ivory maintains close contact with his customers, British supermarket chain Asda and Anglo Beef Producers. He even opens up his books to make sure fair prices are set for the farm’s beef.
“With a long-standing relationship, you can start to make suggestions as to what you think might work better for both you and the customer,” says Ivory. “Due to the nature of the relationship, the customer does listen and will think about your suggestions.
“I also find that relationships are important as we work together on finding better solutions. We can be innovative by using their expertise as well as mine,” he adds. “By putting our ideas together, we can hopefully arrive at something more profitable for us both.”
Ivory has open and frequent discussions with his neighbors and landlords to achieve fair prices. “The rents we pay are always linked to the price of the product being produced,” he explains. “In bad years, we both suffer; in good years, we both benefit.”
Ivory’s efforts to improve his family farm operation have not gone unnoticed. In 2008, he was named Young Farmer of the Year and Overall Farmer of the Year by Farmer’s Weekly, a British publication. Now at 40 years old, it’s certain Ivory will continue to strengthen Strathisla Farms for years to come.