How the MacTaggarts future proof the family business

For the MacTaggart family, who run J and E Hendry at Rascarrel Farm in Castle Douglas, strengthening the business’ financial and environmental resilience has included major investment in their dairy enterprise, renewable energy production and diversification into agri-tourism.

Matthew MacTaggart, who jointly manages the business alongside his mother, Fiona, and three siblings – Ewan, Tom, and Rebecca – says these developments have enabled them to keep improving the efficiency of dairy production, reduce their energy costs and generate a valuable extra income stream.

Over the past 12 years they have been supported by their farm consultant, Paul Henderson, and by Bank of Scotland, part of Lloyds Banking Group, which has provided financial advice and funding, including green-based financing to support long-term sustainability.

The MacTaggarts have put in a number of coastal lodges to future proof the family farm at Rascarrel

“Farming today is about being strategic,” Matthew says. “You can’t just keep doing things the old way; you have to adapt and be proactive to survive.”

In January 2022, the business invested in a new state-of-the-art cubicle shed for 300 cows and five milking robots, which has proved hugely successful.

Their 275 milking cows are contented in the new system, health has improved and milk yields have increased from around 8500 litres per year to just shy of 12,500 litres per year.

The increase in production efficiency means they have also reduced the carbon emissions per litre of milk produced, despite electricity usage increasing since installing the robots.

The new set up also includes heat recovery and plate cooling systems, taking advantage of new technology to improve energy efficiency.

The herd’s success is still based on stockmanship, knowledge of their cows and performance figures, but decision making is now supported by additional data, including live information on fertility provided by the robotic milking technology and Genus Ingenuity. They currently have a mix of Holstein Friesians and Norwegian Red cattle, bred to suit the previous system, but they are steadily returning to a primarily Holstein herd.

Cows are grazed outdoors and buffer-fed from early spring through to late autumn. Allowing them to roam free before returning to the robots for milking has led to slightly fewer milkings per day on average, but the MacTaggarts have noticed a 30% reduction in bought-in feed costs and more efficient grass utilisation.

Robotic milking has also created a better work-life balance for the family and helped to address the challenge of finding labour. Their previous herdsman had been with them for 12 years and it was difficult to find a suitable replacement.

“Switching to robotic milking was about more than just efficiency,” Matthew explains.

“It was about improving our quality of life and ensuring we could manage the farm sustainably in the long run.”

The bank provided a loan to help cover the cost of the new cubicle shed and robotic milkers, plus investments in two silage pits and a slurry lagoon – with more than 50% of the dairy enterprise developments funded by the business itself.

Rascarrel dairy herd is a mix of Holstein Friesian and Norwegian Red but they are focussing more on Holstein genetics now

The MacTaggarts worked on the financial planning with Lewis Carruthers, relationship manager at Bank of Scotland. He has been working with J and E Hendry since April 2021 and is of a similar age to Matthew and his siblings, which helps to build a strong working relationship, along with his specialist agricultural knowledge.

The farm’s coastal location presented an opportunity for diversification into agri-tourism, which the MacTaggarts began in 2012, again supported by a bank loan. They initially built four holiday lodges on the site overlooking the sea – marketed under ‘Rascarrel Bay Lodges’ – and, over time, have expanded to their current nine lodges.

Matthew’s sister, Rebecca, who has a hospitality background, helps manage the enterprise with their mother, Fiona.

“The holiday lodges have been a game-changer for us, especially during difficult financial periods, when milk prices are low. They’ve provided a vital supplementary income that has stabilised the business,” says Matthew.

During the pandemic, it was the other way round, with the dairy operation providing continuity of income until tourism recovered. The two enterprises work well alongside each other, making the most of the land and resources at Rascarrel.

In the first year, the lodges achieved an 87% booking rate and the percentage rate has risen to the high 90s recently.

The economic climate has however seen booking trends change this year, with people leaving it until much closer to their stay dates to book – just a few weeks prior, rather than months ahead.

The farm’s most recent investment was in solar panels, which are providing a reliable source of energy for the dairy unit and will help mitigate future electricity price hikes. The panels, installed on the cubicle shed roof this summer, are currently generating around 25% of their total electricity usage and are therefore expected to save a quarter of the farm’s electricity costs.

Installation has been funded via a hire purchase loan through Bank of Scotland’s Clean Growth Financing Initiative (CGFI) – which supports ‘green’ investments by offering either a 0% set-up fee for term lending or a discounted interest rate for asset finance.

Coming towards the end of a fixed price electricity contract prompted the family to look at investing in renewables.

“With our energy costs doubling due to the robots, installing solar panels was a no-brainer. It’s reduced our costs and made us less dependent on external energy sources,” Matthew explains.

Currently Scottish Power does not offer the opportunity to export energy back to the grid but Matthew is still interested in the potential to install more solar panels in the future, particularly on the holiday lodges.

However, they are limited by the power company’s restrictions on the size of the installation. Its current production capacity is 32KW per hour and they have calculated a six-year return on investment based on it running at 90% efficiency.

“Lewis has been fantastic and the support from Bank of Scotland, especially through their Clean Growth Financing Initiative, has been crucial,” Matthew continues. “It’s allowed us to make sustainable investments.”

Lewis takes a holistic approach to supporting farm businesses, aiming to guide them along a journey, based on risk mitigation and long-term business resilience, identifying their existing strengths and where the potential risks are.

He has also introduced Matthew to Soil Association Exchange (SAX), with which the bank works in partnership, as an additional opportunity to uncover any insights that could help fine-tune farm efficiency and environmental sustainability.

The family plans to keep progressing herd genetics, improving milk quality and calving efficiency and the future may see them building more holiday lodges. For farmers considering new ventures, Matthew highlights the importance of thorough research and planning. “Sit down, make a plan, and if it’s feasible, go for it,” he summarised.

“Find people that have done similar things,” Lewis added.

“Cost it out and look at your return on investment to make sure it’s worthwhile. It’s also got to be right for your business – you’ve got to have an interest in what you’re doing.”

Matthew’s business advice

1. Have a well-thought-out plan before making major investments or changes

2. Consider diversification options, but ensure they make business sense

3. Seek out supportive banking relationships

4. Maintain a close eye on financial projections and keep the bank informed

5. Don’t be afraid to be proactive and take calculated risks.