Diversity reduces risks of profit loss
The South Island farmers of the year prefer hard data, not hunches, to make their farming decisions and believe that’s allowed them to build a resilient business. They talked to Tony Benny.
Neil and Lyn Campbell farm 760ha near Fairlie, South Canterbury, with the property rising from 300m on the valley floor up to nearly 600m, giving what Neil says is a ‘‘really good’’ balance of summer and winter country.
When they bought the farm in 1993, they ran sheep and beef, much like most of their neighbours, but nearly 10 years ago the Campbells started to make changes and now also run deer, graze dairy stock and grow arable crops.
‘‘The diversity means we’re not exposed in any one sector and it’s all for a reason and all complementary,’’ says Neil.
’’For example, the breeding hinds run on the highest part of the farm where it’s a late spring. They’re fawning now (mid November) so their feed demand for grass is late and that’s a perfect fit in the spring for that higher altitude country.
‘‘So it’s horses for courses really.’’
The turning point for Neil was when he did a Kellogg farm leadership course in 2007, part of which was writing a report on the allocation of sheep meet quota into the EU. ’’I looked right back, since we started exporting really, and looked at the formation of the New Zealand Meat Producers Board in 1922 and the reasons it was formed and I thought, ‘nothing’s changed’.
‘‘Those reasons the Meat Board was formed, they’re still creating havoc to the industry nearly 100 years later.’’
Back then the issue was the power of the butchers at Smithfield in UK and though they’ve now been replaced by supermarket chains, Neil reckons little has really changed.
‘‘So I thought, the meat industry’s not going to change, so our business had to. Our profitability was average, we were making ends meet, putting a few groceries on the table, but we were very vulnerable to any weather extremities.’’
They did a SWOT (strengths, weaknesses, opportunities and threats) analysis of their business which among other things identified that their worst financial years were always drought years so they looked for ways to mitigate that.
They cut back on sheep and beef numbers and increased deer, took on dairy grazing, carried more tradeable stock like bull beef and now grow 80ha of arable crop every year.
‘‘We’ve got some very good soils in the valley floor and they’re quite suited to cropping. By establishing it in the autumn we’ve got good reserves and we can still grow relatively good crops in dry years,’’ Neil says.
‘‘It’s about taking the risk away from your business. To grow grass and feed livestock on pasture you need regular rainfall and that was another one of the risks that was identified, periods of extremities in the weather, so how can you structure your business so those extremities have the least impact?’’
Another important crop they grow is fodder beet, producing 20t/ha DM on 60ha.
‘‘On our class of country I believe fodder beet will do what lucerne’s done for Doug Avery in Blenheim. It gives us the ability to fatten stock on the shoulders of the season so we can sell stock at times when you obtain a premium for them.’’
Making changes to the way the farm has not only made the Campbells’ business more resilient, it’s also much more profitable than it used to be.
‘‘In 2007 our gross income per ha was $600 and now it’s between $1500 and $1600. Costs have obviously gone up as well but if you work on 50 per cent farm working expenses, do you want 50 per cent of $600 or 50 per cent of the $1500?’’
The drought of the past two years has had an effect, but nothing like it might have before the operation was diversified.
‘‘I wouldn’t say we’ve sailed through it, it’s had an impact, but the way we’ve structured our business now, it’s certainly better than it used to be.
‘‘We’ve had the straw off the crop for the cattle, we’ve had some grazing off those paddocks at strategic times post-harvest, we’ve got the grain on hand to feed if we need it, it’s not having to be bought in – there’s a whole lot of synergies there that suddenly all come together.
‘‘Instead of getting on the phone and saying, ‘I want to send 800 twotooths to Southland for three or four months’, we look at what our structure is within our business.’’
When Alliance Meat started paying farmers more for higher yielding carcases, Neil gathered data to decide what ram breed would deliver the best result and trialled seven different breeds in one season, using single sire mating and then tracking the progeny’s progress.
‘‘The lambs all looked same and it was only when you got the Viascan data back from Alliance that we knew which were best. We didn’t pick the winner and it’s what I said about hard data rather than gut feeling.’’
Today they use a texel terminal sire over their coopdale ewes and their lambs yield an average four to five per cent higher than the average among their lamb drafter’s clients, which translates to an extra $5.53 per lamb.
On 50ha of gorse-prone faces, the Campbells have planted pines and oregons, partly because they believed that was the best option for the land but also with farm succession in mind for their three grown-up children.
‘‘It gave you an asset that could be separated for non-farming siblings.
‘‘One sibling could be farming here and the others have the benefit of the trees and more recently we’ve generated carbon credits from them,’’ says Neil.
When they started planting exotic trees, the Campbells got rid of feral goats on the property, left over from a failed attempt to farm them by previous owners.
That helped start native bush regeneration in some gullies.
‘‘I think a balance is what we need.
‘‘I’ve got nothing against pine trees and oregons especially if you’re looking at gorse as the alternative but it’s nice to have the others as well and I guess in time we’ll put it into QE2 covenant to make sure it stays that way.’’
In an effort to diversify even more, the Campbells also own an 8ha vineyard near Blenheim, last year supplying 140 tonnes of sauvignon blanc grapes to a wine co-op that exports to Australia and US.
‘‘It’s affordable wine for a middle class wine drinker and the consumers can’t get enough of it at the moment.
‘‘We feel as if that gives us a strong base now for succession.’’