20 May 2020

Five-star B&B – for pigs

Every week, pigs take to the roads of East Yorkshire to reach their new homes in a chain of high-spec B&B sites. It’s an arrangement that benefits arable farmers as well as a major pig producer.

When pig producers first began to strike finishing agreements with neighbouring farmers, the pigs were typically housed in straw yards formerly used for cattle.

In many cases this is still normal practice, but elsewhere the sector has advanced at pace.

One big producer, Yorkwold – part of the Dewhirst Farming Group in East Yorkshire – has 18 so-called B&B contracts in place. All but four are based in purpose-built accommodation on the contractors’ land, involving the construction of fully-slatted, environmentally-controlled buildings.

“These facilities are easy to keep clean, and so offer excellent animal health and welfare standards,” says Joe Dewhirst, Group Managing Director. “They are also great places to work, and the design cuts the labour hours required to a minimum.”

The benefits of this more structured type of partnership are clear. Yorkwold is able to set high specifications for the buildings and the pig inspection regime. This in turn provides reassurance for its customers.

Besides the pigs themselves, Yorkwold provides the feed, any medication required and a dedicated production manager who advises the finishing contractors. Each B&B contractor supplies the land and buildings, electricity, water and labour.

From the farmers’ perspective, the arrangement offers a new income stream, in return for the sacrifice of just half an acre of land on the edge of their holding. With BPS payments set to decline in coming years, this could be a valuable proposition for other arable farmers.

Weighing up the commitment

The contractors who have joined forces with Yorkwold have generally spent up to a year in discussions before plunging into the world of pigs.

Joe understands why. “It’s a big investment for the arable farmer, and often something new to them,” he says.

“Some have had no experience with livestock whatsoever, and need a bit of hand-holding in the early days. The contracts we offer are 15-year terms, so it’s a lot of commitment too. However, most see the long-term contract as a positive, and it helps with any bank funding application.”

The capital outlay is a major factor. Farmers meet the cost of building the pig accommodation – currently £300 per pig place – in the expectation of a 10-year payback.

This normally isn’t a stumbling-block, with bank funding available in most circumstances. HSBC, Yorkwold’s banker, has funded building costs for several of the company’s partners, including the most recent facility on a tenanted farm close to the Yorkwold base in Driffield.

Like the other B&Bs, this farm will now play host to four batches of 2,000 pigs per year. The pigs arrive aged 12 weeks at 40kg, and are sold 13 weeks later after reaching 115kg liveweight.

Sweet spot for capacity

Once the accommodation is in place, the partnerships run smoothly, Joe says.

“In reality, looking after finishing pigs isn’t too technical. Our production manager visits the farms at least fortnightly, and an independent vet carries out quarterly inspections. And we’re always on the end of a phone so the finisher can discuss any issues.”

Yorkwold has evolved its contract terms with experience. “Initially the payment structure was based on how many pigs the finisher had on site. To give the B&B farmers a bit more security, we changed it to reflect the size of the building and now pay the farmers on a ‘per pig place’ basis,” says Joe. “There’s also a bonus structure to incentivise best practice.”

The standard capacity for B&B accommodation is no accident: “Space for 2,000 is the sweet spot. Above that, you need an environmental permit, which adds cost and red tape,” Joe explains. “From a health viewpoint, we wouldn’t want too many more pigs on one site anyway.”

The B&B arrangements have been driven by Yorkwold’s commitment to modernise its pig accommodation, originally built in the 1970s and early 1980s. At the same time, the arrangement has enabled the operation to grow in line with increasing demand from its major customer.

“We have a finite amount of arable land, so to be able to develop the business we needed to export some of the pigs to expand the sow herd using the same footprint.”

HSBC has always been very proactive in helping us to expand or improve the business

Feeding a renewables business

Over the past decade, the Yorkwold herd has grown by 50% to 9,000 sows, yielding over 200,000 slaughter pigs each year. Meanwhile turnover has risen from £15m to £25m.

HSBC has supported Yorkwold’s growth. The bank has funded projects to the value of £6m over the past five years, including the purchase of a neighbouring arable farm. “HSBC has always been very proactive in helping us to expand or improve the business,” says Joe.

HSBC funds also helped to get the group’s renewables project up and running. Established in 2015, the anaerobic digester plant is a joint venture with the neighbouring Burton Agnes estate. The gas and electricity it produces provide a growing income stream.

The digester fits perfectly within the group’s other operations. It is fed by energy crops from Dewhirst’s arable land, manure from its chicken farms, and of course Yorkwold pig manure.

Naturally, however, it doesn’t get pig slurry from the B&Bs – that’s put to good use by the arable farmers themselves. A reduction in expensive artificial fertiliser costs and a boost to soil organic matter is another valuable benefit for pig finishers.

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