Power Farming, October 1969

GUY FAULKNER looks at a new type of landlord/farmer relationship that can be profitable to both sides.

Some 500-600 acres of cereals harvested in a season by each combine and 1,700 hours work done in a year by each tractor are the impressive rates of machinery use being achieved by Velcourt Ltd., a consortium of five farmers who are operating a rapidly expanding partnership farming service. Started 2 and a half years ago, when the original four directors put their farming resources together to create a 1,700-acre business, the company now owns several combines and tractors; the total acreage farmed has expanded to 5,200 acres.

The principle of the services is that the company undertakes to carry out all the farming operations for a landowner, including the necessary buying and selling of materials and crop. Velcourt also provides all working capital.

At the end of the farming year all the costs (except rent) are deducted from the gross return from the crop and the resulting margin is split 50/50 between the landowner and Velcourt. Last year the divisible profit on the 5,200 acres averaged £16.98/acre.

If, through exceptional circumstances, the return from the crop does not cover costs, Velcourt accept the loss and do not carry it forward to be deducted from the future profits.

Detailed records and accounts are kept and an average breakdown of costs and returns is as follows; (see ‘Table’).

To date Velcourt has considered itself a specialist cereal producing company. However, 1696 has seen the introduction of more varied cropping programmes including higher output arable crops such as potatoes and sugar beet.

"We reckon we can earn 30 per cent on the capital we employ, without difficultly,” I was told by Mr. Robin Malim, one of the directors of Velcourt Ltd. He estimated that the capital employed worked out at around £24-£28/acre and thought that the figure would be significantly reduced as more land was taken on. Chairman of Velcourt, Mr. John Rhys Thomas, said that, "once we get up to introduce staff between the board and the foreman. If this transition is successful, then the sky is the limit to the size of the business.”

Rates have to be paid by the landowner out of his 8 and a half acre share but he can expect an annual return of about four per cent on his investment if he paid £200/acre for the land, or a two per cent return £400/acre. Seldom, however, is the annual return on capital a primary consideration with investment in land. Normal income tax would in any event have to be deducted from the net return- the rate depending on the liability incurred from the landowner’s other sources of income.

Velcourt has streamlined the job of growing cereals to such as extent that only one foreman and a 70 h.p. tractors are stationed on each 500-700 acre unit-usually made up of two or three neighboring farms. No other regular labour is employed, but where potatoes and vegetables are grown there are usually three men at each unit.

Overall management responsibility for the units is divided among the directors and, during peak periods, each director has the ability to build up a team of men to travel round the farms and tackle the work on a ‘blitz’ basis. A director can also call upon services of other directors. Student and casual labour is employment where necessary.

For cereals the aim is to avoid ploughing wherever possible. Autumn stubble cultivation is held to be the most important operation of the year and on medium light soils the land is spring-tine cultivated about five or six times before Christmas. Wide tines are used for the last pass to ridge up the land for the winter.

With this system only one pass with a Vibratiller or similar cultivator is required in the spring to get the land ready for drilling. This season two drilling teams, each with two 70 h.p. tractors, Vibratiller and 15-row drill prepared and drilled 600 acres in four days. On stronger land chisel ploughs are used for deep cultivation in conjunction with normal stubble cleaning operations; sun-soiling is also carried out at regular intervals. Shift work is used extensively for round the clock operation of the machinery.

Combines may be driven anything up to 80 miles in the late evening and early morning and be ready for work on another farm when the dew clears next morning. “The men enjoy being part of a team that is achieving something,” Mr. Malim said.

A rotation of cereal crops is employment to help keep the upper hand over disease and weed problems. “With winter barley you can start cultivating the stubble in August.” I was told. “This is worth about three cultivations in October.” Spring oats and winter wheat are also included., in addition to spring barley. The company is not the least interested in straw, which is either burnt or baled by a neighboring farmer while combining is in progress.

On their land on the Cotswolds Velcourt have carried out direct drilling experiments collaborations with I.C.I. and some fields are now carrying their tenth white straw crop. The upshot of the work is that a Mechanaid drill will be purchased this year.

When the company takes on a new farm for a landowner and there are no grain storage facilities, an existing building is converted for on-floor drying where possible. “Our maxim is if it can’t be written off in five years- don’t build it” Mr. Malim said. The aim is to spend not more than £2/ton stored. Whether Velcourt or the landowner pays for the adaptation, the money is recouped at the rate of 25 per cent of the outlay over 5 years, which therefore provides some interest.

Owner’s decision

The basic thinking behind the business is that while there is an increasing definition between land ownership and farming the land, the rigors of the 1947 Agriculture Act are contributing towards the disappearance of the landlord/ tenant system. With this system of partnership farming , the landowner maintains complete control over his investment as he is free to dispense with the services of Velcourt at the end of the year if he wishes to. Because the price of land is now so far beyond what is a purely agricultural value, most of the money for land ownership will come from the outside farming and in this event partnership farming on the lines pioneered by Velcourt is certain to increase at a rapid rate in the future.