Rural Business Funding
A Case Study: Innes Cheese
Highfields Farm, at Thorpe Constantine in south-east Staffordshire is home to cheese makers Joe Bennett and Amiee Lawn. Joe’s mother, Stella Bennett, began making cheese for the Inge-Innes-Lillingston family at the Thorpe estate when the farm converted from dairy cows to goats in 1987. Joe and Stella took over the estate’s fledgling cheese making business from them in the early 1990s. Twenty years on with careful management and good marketing under the brand name ‘Innes Cheese’ has now grown to a herd of over 200 goats, producing and supplying high quality goats cheese to top London retailers. Stella has now retired from cheese making. Joe and his partner Amiee now run the business, employing a small team.
Joe had always rented the farm from the estate, which includes an attractive but high-maintenance Georgian farmhouse and two beautiful brick & tile barns, one of which houses the cheese production, together with a range of modern livestock buildings and milking parlour. However, in August 2018 the landowners offered Joe and Amiee the opportunity to buy the farm as sitting tenants in order to free up some capital for them to invest elsewhere on the estate.
Business Funding
Joe asked Howkins & Harrison partner James Collier to visit the farm to advise on a figure that Joe could then put forward to the landlord as an offer. James is an agent for the Agricultural Mortgage Corporation (AMC) and having seen the farm and discussed figures, James was also able to discuss with Joe and Amiee the options for financing the purchase. The business needed to borrow a large proportion of the purchase price, and normally this might have been a problem, but in recent deals on other tenanted farms James was aware that the AMC had been willing to lend on the basis of the vacant possession value, and not necessarily only the purchase price. The purchase price was lower than the vacant possession value in this case due to Joe’s tenancy of the farm.
James’ advice on the present value of the property, plus the potential discount negotiable by the Bennetts with the landowner as existing farming tenants, in addition to the potential value of the farm once the tenancy was removed, would bring the loan under the AMC’s 60% maximum loan to value threshold.
Business Plan Preparation
Joe negotiated with the landowner and was able to agree a price that both parties were happy with. Working in conjunction with the AMC’s regional manager, Andrew Connah, James put together a robust loan application to the AMC, which included an in-depth analysis of the business accounts and a detailed forward projection in terms of budget and projected income. The loan application also included a report which gave detailed background information on the farm, a commentary on its history, the business plan moving forward and an overall synopsis of the current business model of Innes Cheese. Supplementary commentary was researched and written to appease any concerns over the security of the business as a long-term concern for the AMC as the funding partner.
The loan application was granted, and the sale was able to proceed.
Contract Negotiations
Further challenges were faced during the purchase process, surrounding listed building consent for the farm and buildings, which required James and his team at Howkins & Harrison to work closely with Joe’s conveyancing solicitors, to whom complex farm transfers were not a specialism. These communications also included the negotiation and drafting of a clawback clause requested by the estate. This agreement, similar to an overage, was negotiated between James and the landowner’s agent to give comfort to the estate that if the two large traditional barns were developed for housing, the estate would get a proportion of the increased value.
In March 2019 the sale was completed, and Joe & Amiee are very pleased to have been able to secure the future of the business by buying the farm.
About Innes Cheese
Innes Cheese have a holistic approach to farming. Milking their own herd of goats everyday, gives Joe and Amiee the control they need to produce high quality milk for their cheese.
They produce raw milk lactic cheese everyday of the year. The cheese is all hand ladled, salted and turned by hand in the slow traditional way. Innes Cheese also produce a hard cheese, which at a week old, is sent to the famous Neals Yard Dairy to mature.
For further information about Innes Cheese, please visit their website: Innes Cheese.
If you are considering a farm purchase or sale, require assistance in funding, grant or planning applications, are looking for advice about farm diversification or development or require support in any other area of rural business, land management, property agency or professional or agricultural services, please contact the Howkins & Harrison rural team on [email protected].
For more news, please visit our website: Howkins & Harrison
You can read this update from Howkins and Harrison on TFF's AGVendor...
Highfields Farm, at Thorpe Constantine in south-east Staffordshire is home to cheese makers Joe Bennett and Amiee Lawn. Joe’s mother, Stella Bennett, began making cheese for the Inge-Innes-Lillingston family at the Thorpe estate when the farm converted from dairy cows to goats in 1987. Joe and Stella took over the estate’s fledgling cheese making business from them in the early 1990s. Twenty years on with careful management and good marketing under the brand name ‘Innes Cheese’ has now grown to a herd of over 200 goats, producing and supplying high quality goats cheese to top London retailers. Stella has now retired from cheese making. Joe and his partner Amiee now run the business, employing a small team.
Joe had always rented the farm from the estate, which includes an attractive but high-maintenance Georgian farmhouse and two beautiful brick & tile barns, one of which houses the cheese production, together with a range of modern livestock buildings and milking parlour. However, in August 2018 the landowners offered Joe and Amiee the opportunity to buy the farm as sitting tenants in order to free up some capital for them to invest elsewhere on the estate.
Business Funding
Joe asked Howkins & Harrison partner James Collier to visit the farm to advise on a figure that Joe could then put forward to the landlord as an offer. James is an agent for the Agricultural Mortgage Corporation (AMC) and having seen the farm and discussed figures, James was also able to discuss with Joe and Amiee the options for financing the purchase. The business needed to borrow a large proportion of the purchase price, and normally this might have been a problem, but in recent deals on other tenanted farms James was aware that the AMC had been willing to lend on the basis of the vacant possession value, and not necessarily only the purchase price. The purchase price was lower than the vacant possession value in this case due to Joe’s tenancy of the farm.
James’ advice on the present value of the property, plus the potential discount negotiable by the Bennetts with the landowner as existing farming tenants, in addition to the potential value of the farm once the tenancy was removed, would bring the loan under the AMC’s 60% maximum loan to value threshold.
Business Plan Preparation
Joe negotiated with the landowner and was able to agree a price that both parties were happy with. Working in conjunction with the AMC’s regional manager, Andrew Connah, James put together a robust loan application to the AMC, which included an in-depth analysis of the business accounts and a detailed forward projection in terms of budget and projected income. The loan application also included a report which gave detailed background information on the farm, a commentary on its history, the business plan moving forward and an overall synopsis of the current business model of Innes Cheese. Supplementary commentary was researched and written to appease any concerns over the security of the business as a long-term concern for the AMC as the funding partner.
The loan application was granted, and the sale was able to proceed.
Contract Negotiations
Further challenges were faced during the purchase process, surrounding listed building consent for the farm and buildings, which required James and his team at Howkins & Harrison to work closely with Joe’s conveyancing solicitors, to whom complex farm transfers were not a specialism. These communications also included the negotiation and drafting of a clawback clause requested by the estate. This agreement, similar to an overage, was negotiated between James and the landowner’s agent to give comfort to the estate that if the two large traditional barns were developed for housing, the estate would get a proportion of the increased value.
In March 2019 the sale was completed, and Joe & Amiee are very pleased to have been able to secure the future of the business by buying the farm.
About Innes Cheese
Innes Cheese have a holistic approach to farming. Milking their own herd of goats everyday, gives Joe and Amiee the control they need to produce high quality milk for their cheese.
They produce raw milk lactic cheese everyday of the year. The cheese is all hand ladled, salted and turned by hand in the slow traditional way. Innes Cheese also produce a hard cheese, which at a week old, is sent to the famous Neals Yard Dairy to mature.
For further information about Innes Cheese, please visit their website: Innes Cheese.
If you are considering a farm purchase or sale, require assistance in funding, grant or planning applications, are looking for advice about farm diversification or development or require support in any other area of rural business, land management, property agency or professional or agricultural services, please contact the Howkins & Harrison rural team on [email protected].
For more news, please visit our website: Howkins & Harrison
You can read this update from Howkins and Harrison on TFF's AGVendor...
