Farm Diversification

Background

Connage Highland Dairy is situated at Milton of Connage Farm, Ardersier which is located approximately 10 miles east of Inverness. This family dairy farm is managed by brothers Callum and Cameron Clark and their wives, and around 140 cows are milked.

Why Diversify?

Like many other dairy farms, the business experienced low returns from milk production in the late 1990s. As a means of increasing revenue, conversion to organic production was considered. Visits were made to other organic farms across the country to gather information on organic production. At that time, there was a good premium for organic milk. The decision was made to convert to organic production and the three year conversion process began in 1999. Unfortunately, by the time the farm became fully organic, the organic premium had fallen substantially and action was required to achieve an acceptable income to meet financial objectives. Advice was sought from a consultant on various possible options to add value to the milk (e.g. ice cream, yoghurt and cheese).

Researching the Idea

It was decided that cheese making offered the most potential. Ice cream and yoghurt making enterprises were considered to be easier to establish, but the relative ease of developing such enterprises means there was a risk of more competition developing. Also, the aim of diversifying was to utilise as much of the milk production as possible and cheese making fulfilled this objective. Various farmhouse cheese makers throughout the UK were visited to gain information and advice and the employed consultant also provided information. Prior to making the grant applications cheese wholesalers were also consulted as to possible market opportunities.

Funding

The initial organic conversion was carried out with the assistance of the Organic Aid Scheme. A successful application was made to the Processing and Marketing Grant Scheme (now included under the Scottish Rural Development Programme) for grant aid towards the cost of developing the cheese making facilities on the farm. Funding was also received from Highlands and Islands Enterprise.

Business Establishment

At the initial planning stage the partners decided that the facilities should be large enough from the outset to utilise as much of the milk production as possible. The rationale for this decision was that it would be more expensive to start at a smaller scale and increase capacity later. Cheese making began in 2006. The decision was also taken to establish the cheese making enterprise as a separate business from the farming operation, with Callum Clark and his wife managing the cheese production and Cameron Clark and his wife managing the farm. Cheese making courses were attended to gain expertise and a specialist consultant in cheese making was employed for the first couple of years to help establish the business. One full time and three part time staff were employed at the start. As part of the grant application process detailed three year business plans and costings had to be produced; these provided the new business with some initial targets to aim for and also helped support applications for bank funding for the project. Callum comments that the establishment process took longer than originally envisaged and obtaining finance was also a longer than expected process. At the outset, the business opted to produce four cheeses. These were initially marketed through local delis and speciality food shops in the area and Farmers’ Markets. Promotional material was produced and a website was also developed.

Problems Encountered

The Clarks believe that thorough planning helped to reduce the number of problems when establishing the business. The overall process of getting the enterprise up and running did take longer than expected. For instance obtaining finance agreements and grants was not as quick as anticipated. Business growth was also not quite as quick as originally planned with sales through wholesalers slower than planned.

Where the Business is Now

The business has moved on significantly since 2006. The business now employs two full time and three part time staff. In the four years since starting the proportion of cheese sold through wholesalers has increased to around 80-90% of production, with the balance still being sold in local outlets and Farmers’ Markets. A Farm Shop was opened in 2008 selling Connage and other cheeses. As part of the marketing strategy the business uses Trade Shows to promote its produce. The wholesale market is still being built up and other, export markets are being explored. The business has also gained various accreditations (e.g. SALSA standard and Investors in People ). Advice on different aspects of the business is still sought from sources such as Scottish Food and Drink and Highlands and Islands Enterprise

Critical Success Factors

The Clarks put the success of the business down to a number of reasons. Primarily, they feel it was important “to get the job right from the start” by means of careful and thorough planning. Having the right personalities to drive the business forward is also important. The willingness to “buy in” expertise such as the cheese making specialist, marketing advice from Scottish Food and Drink and other design consultants was also important in accessing the appropriate skills.