A customer story on what we offer
John Pawsey, arable farmer, Suffolk
The specialised nature of John Pawsey's organic farm meant that when he needed a loan, it had to conform to very specific requirements. Fortunately, we were able to draw up a financing plan that allowed John to capitalise on a business opportunity, while giving him the flexible repayment method he needed.
John farms over 2000 acres of arable land in Suffolk, growing a mixture of winter wheat, barley and beans. He is passionate about sustainable farming and responsible countryside stewardship: part of his woodland is protected as a Site of Special Scientific Interest because of its flourishing wildlife.
Dedicated to organic methods, John nevertheless faced fresh challenges when the recession hit. Though prices held up well, the overall organic market shrunk, meaning farmers had to work harder to sell their produce.
Turning adversity into opportunity
In spite of this, John was able to turn adversity into opportunity; tapping into the organic supply chain by bringing together a group of farmers to grow crops for organic pig feed. The pig farm, for whom feed is the major overhead, then sells its meat on to Waitrose and Duchy Originals.
The farming company proved successful, and when John made the decision two years ago to buy out several other shareholders, he decided to raise a loan to do so.
However, only a very flexible scheme would do. The cyclical nature of organic farming means that John's financial planning has to follow a rigid time frame. As he says: "the difference between us and non-organic farmers is that we have a five-year crop rotation. So everything is built around that five-year period."
This means that planning anything in the very short or long term proves difficult. "If we buy a piece of machinery that becomes redundant in the middle of our five year plan, or isn't as useful as we thought it might be, then we're suddenly going to have budgeting issues."
Industry knowledge and fresh thinking
The five-year crop rotation involves a fertility building stage, during which grass and clover are grown to naturally augment the nutrient content of the soil. But, as John explains, "we get very little income during the fertility building period, and at one point our cash flow was looking precarious." So John turned to us for the industry knowledge and fresh thinking required to fulfil his specific expectations.
As he explains, "for my bank at the time it proved too much of a challenge. We felt their offer wasn't competitive enough and so looked at the options from other banks, and soon chose Richard Cook at HSBC as our new relationship manager."
" Right from the beginning HSBC understood the issues we were facing."
In particular, he was struck by Richard's willingness to accommodate the farm's requirements. "Right from the beginning he was incredibly attentive. He came to visit and have a chat on several occasions, and completely understood the issues we were facing, even though he was relatively new to organic methods of farming.
"He grasped it well, then provided me with a loan that completely suited my needs."
Understanding John's need for flexibility, we tailored a loan structured over a twenty-year period, where any amount of the capital can be paid back in the first five years. This is vital for John because, as he explains: "what I'd look to do is pay off large lump sums in those first five years. But, nevertheless, if something comes up which suddenly affects our budget, we don't have to pay anything off in those five years except interest."
Together with his wife Alice, John is continuing to promote sustainable farming: selling organic flour and participating in a scheme to set aside uncultivated farmland for wildlife.
John knows that with our support, he'll have the on-going security to pursue these projects. As he explains "I know if that changes should happen, for example if we have a good harvest, or a bad harvest, and our calculations change, Richard would come and advise us again. From early on I knew he'd be able to help."
To arrange a visit from one of our team, contact your local Agriculture Manager.
The Forward Planning booklet gives you all the insight you need to help prepare your farm budget with confidence.
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