Supporting a Dairy Farm Through Recovery, Resilience and Diversification

At UK Agricultural Finance, many of the farmers we support are not short of experience, commitment or hard work. What they often need is a funding partner who understands the realities of agriculture, from disease pressure and regulation to family complexity and cashflow volatility, and who can step in with the right solution at the right moment.

This recent case demonstrates how a carefully structured bridging loan can provide breathing space, enable investment and help a strong farming business move forward after a particularly challenging period.

A Lifetime in Farming

Our borrower has worked in agriculture all his life. Prior to 2008, he farmed in partnership with his brother on the family farm. Following a family dispute, he made the difficult decision to leave and take full-time agricultural employment. During this period, he continued to build experience while saving towards the long-term goal of owning his own farm.

That determination paid off. With the support of an agricultural mortgage, he went on to purchase a 90-acre holding and establish his own dairy enterprise. Additional borrowing was used to buy the initial herd and construct modern barns, alongside a four-bedroom agricultural tie cottage. Over time, the business has grown into a well-invested livestock operation.

Today, the farm runs a Jersey dairy herd of around 140 cows, each averaging approximately 4,500 litres per annum. Milk is supplied under contract to a well known cheese brand.

Alongside the dairy herd, the business rears around 170 beef stirks, typically sold at 16–18 months through the market for finishing. The farm also grows maize and winter fodder, supporting both resilience and feed security.

Challenges Outside the Farmer’s Control

Like many livestock farms, the business has not been immune to external pressures. Over recent years, recurring TB restrictions had a significant impact. The borrower was forced to retain stock longer than planned and incur additional costs to purchase replacement cows. At the same time, ongoing health issues affected his ability to operate the business at the level he would have liked.

As a result, personal credit card debt and short-term high-interest borrowing increased, not due to poor management, but as a reaction to prolonged disruption. Despite this, the underlying farming business remained sound, and recent accounts showed clear signs of recovery as TB pressures began to ease.

Compounding matters, a visit from the Environmental Agency highlighted the need to increase slurry storage capacity, creating an additional capital requirement that could not be delayed.

The Funding Requirement

Although the borrower had substantial land assets, his existing agricultural lender was unwilling to advance further funds. A more flexible solution was needed to consolidate expensive debt, invest in compliance and unlock future income streams.

UK Agricultural Finance provided a £100,000 bridging loan over 36 months, with interest prepaid for the first 18 months. This structure removed immediate cashflow pressure and gave the business time to stabilise and improve performance.

The loan was secured against 30 acres of permanent pasture, split across two parcels, each with independent access. With a loan-to-value of approximately 50%.

Strategic Use of Funds

The loan proceeds were allocated with clear intent:

• Repayment of approximately £30,000 of high-interest credit card and short-term borrowing

• Investment into increased slurry storage to meet Environmental Agency requirements

• Purchase of additional dairy cows to strengthen herd productivity

• Completion of renovation works on a one-bedroom annexe to be let as an Airbnb

Diversification is not new to this farm. Several years ago, the borrower introduced a small caravan and glamping operation, comprising five hook-up pitches and two vintage caravans. This has proven to be a successful and reliable supplementary income stream.

The upgraded annexe represents the next step in that diversification journey. Based on conservative occupancy assumptions, the borrower expects this to generate between £12,000 and £18,500 per annum, providing valuable non-farming income to support debt servicing and business resilience.

Looking to the Future

With the TB restrictions easing, the borrower expects to sell around 40 older beef cattle that were previously unable to go to market. Combined with improving trading performance and reduced debt costs as existing loans run off, this should strengthen cashflow over the next 12–18 months.

The primary exit strategy is to refinance with a mainstream lender once updated accounts reflect the improved position of the business. However, a secondary exit also exists.

In 2015, the borrower inherited 55 acres of land from his aunt, whom he had cared for over many years. While he owns the land outright, his brother continues to farm it and pays an annual rent, despite there being no written tenancy agreement. Negotiations are ongoing to reach a settlement that would allow vacant possession of part of the land.

Subject to planning, there is potential for a 13-acre battery storage development on this site. Early conversations with planners have been positive, and a conditional agreement has reportedly been reached with a third party at a value of over £1 million, subject to consent. If progressed, this would comfortably repay both our loan and the borrower’s existing mortgage.

Furthermore, archaeological finds have recently been discovered on his land which could provide a significant windfall which may be used as a capital repayment towards our loan. 

Why UK Agricultural Finance

This was not a straightforward case. Affordability at the end of the prepaid interest period required careful consideration, and the wider family situation added complexity. However, the strengths were clear: an experienced farmer, improving business performance, sensible diversification and strong land security.

At UK Agricultural Finance, we take a pragmatic, agricultural-led approach. We understand that farming rarely follows a straight line, and that temporary setbacks do not define the long-term viability of a business.

For me personally, having grown up on a family farm, I know how vital it is to have a lender who understands the pressures you face and works with you, not against you.

If you are looking for flexible finance to support recovery, investment or diversification, UK Agricultural Finance is here to help.