Consultant advice key to saving farm
With a forecast milksolids payout of $4.55 per kilogram three years ago and a business $ 220,000 in the red, Walton dairy farmers Brendan and Tania Fernyhough were on the verge of declaring bankruptcy.
But before calling the Insolvency and Trustee Service, the Fonterra suppliers – the third generation of Fernyhoughs to farm the 120-hectare property at Rohe Rd – weighed options.
They could have freed up about $1 million in capital by cashing in their Fonterra shares and supplying Open Country Dairy instead.
‘‘ We were very close to it,’’ Mr Fernyhough said. ‘‘The banks encouraged us to and we looked at it.’’
They ruled that out, being strong supporters of the co-operative ethos.
They also ruled out selling part of the farm to pay debts because they didn’t want to be the ones not to live up to the family legacy. Then they called in Vaughan Jones, the Hamilton agricultural consultant behind the grazininfo.co.nz website, who they credit with saving their business for their children.
Mr Jones, who has 50 years’ experience in the industry, advised the Fernyhoughs to reduce their herd from 380 to 340, reducing palm kernel extract feed, supplementing with the Feedtech mineral mix instead.
‘‘On a $4.55 payout we were not going to break even. The thing we really struggled with was the banks,’’ Mr Fernyhough said. ‘‘It was not economic for us to keep feeding and the banks would have pulled the pin. We were just going to go bankrupt and Vaughan Jones came along and taught us how to grow more grass by using lime.’’
The Fernyhoughs were using 200kgs of nitrogen fertiliser a hectare – 24,000kg a year. By last season they had reduced that, under Mr Jones’ advice, to 90kg/ha or 10,800kg.
‘‘We were using a lot of nitrogen, now we use very little and the farm’s looking a lot better.’’
The Fernyhoughs have also abandoned tractordriven ploughs in favour of the older chisel ploughs.
‘‘We do quite a lot of re-grassing. Ten per cent of the farm is re-grassed every year. We need something that works for our soil type, light ash, which dries very quickly in the summer. We have gone to traditional tillage, away from power-run machines.
‘‘In the last 30 or 40 years we have been farming the top six inches. Changing to the chisel plough brings some sub-soil back up.’’
Another Jones’ suggestion to reduce herd numbers has also benefited the farm’s bottom line.
‘‘Because we are running fewer cows we are not losing out as far as grass production goes in the summer time,’’ Mr Fernyhough said. ‘‘ We were really struggling to get away from the model of high inputs. Now we are more focused than we used to be.’’
Taking stock: Walton dairy farmer Brendan Fernyhough called in an agricultural consultant to help beat financial problems.