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sheep dairy farmers

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In the future questions can be answered (but not today)

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The coaches have made their choices, the plane and hotels are booked, the oppositions scrutinized and the play sheets devised, learnt and eaten for breakfast.  The pundits are weighing the odds, the analysts are comparing numbers, the families have crossed their fingers Will we win,  everyone is asking? Sounds a bit like sheep dairying to me.

In the last couple of weeks I’ve  been taking  calls and  emails  from people keen to invest in sheep dairying. There was John from Auckland who had his eye on a sheep and beef   farm in Northland  as a potential  conversion. And a couple from the Wairarapa thinking of dropping the ‘b’ on their small Fonterra-supply bovine operation.  And we’re working  with three groups of final year Massey Agri-Science students on a sheep milk ‘scale up’ project. The students have to come up with a plan  that would  move a  part-time 100-ewe sheep milking operation in the Hawkes Bay to something  that  would produced a $100k a year income for the family involved. Easy right? Not so much.

John was ringing because ‘the boss’, aka his wife, wanted to know if  his proposed  $2m spend-up  would stop her buying a new coat for next winter or not. He was joking (kinda).  But the boss had a point. What kind of return was possible from milking sheep?   The Wairarapaians wanted us to send them a  spreadsheet with an answer to that same question:

‘Are you able to provide us with some information re milking sheep, stocking rates, production, feed             inputs, cost of stock, share price if applicable etc. We are just looking to see if the numbers stack up             at this stage.’

One of the student groups is going in this direction –  doing a (very worthy) farm budget. Another  is doing  a SWOT analysis, and the third, interestingly, is  doing an ownership analysis. This is  encouraging – different forms of analysis (there’s not enough of it and there’s certainly not enough of it in dairy – with or without a ‘b’) asking different questions driven by different assumptions  and different desires.

I’m not trying to pour cold water on people  asking the  good and proper numerical question about sheep dairying:  ‘what kind of returns can we expect if we  invest, convert or scale up’,  is an essential question. But I worry that the answer to this question, the magic number question   (is it 5, 10, 15 or 20 percent) is not the answer those asking are  looking for. Do they really want to know the answer to that question , because the short answer to the numerical question is  there is  no short  answer – which may be exactually what some, such as the ‘boss’,  wanted to hear.

Of course there are numbers and if we just look on-farm then they are pretty disappinting.  If we assume  $2 a litre and 20 percent solids then we are only looking at $10 kg/ms. At  a 200 day lactation and just on a litre a day per ewe, then, you might as well go back to meat and wool or  keep the money in the bank (see Lucy Griffith’s financials in her Nuffield Report ‘A Business Plan for the NZ Sheep Dairy Industry). And that’s about where we are at on average at least. And add to that  the rather fringe nature and uncertainty  of  local and international markets for sheep milk  products and even  investing in the Chinese share market start to look like a half way sensible idea. But in asking that question only, we are looking in the wrong direction.

What those in the industry are doing (and have been doing  – Kingsmeade particularly)  is building positions in markets beyond the farm gate ( and not waiting for that market to emerge already formed). And they are looking beyond income to assets and in most cases forward to the next  generations – even with Landcorp and SLC.  Now Landcorp’s partner SLC  will want to cash out some years down the track with a very good return on the cash they have committed. And Landcorp itself will be looking to show  the Minister of Finance  a commercial return from the  Wairekei pastoral site long before it  goes back to the owners. Sheep dairying may well be  the acclaimed  feature of that plan (an asset in other words). And if we look  into the Wairekei Pastoral site,  you see intergenerational family business at its core (an intergenerational nest egg). Go around  Spring Sheep Dairy and you get to the  Gunsons and the  Kings and the Clairmonts and perhaps even the Neylons and of course the Konuis of  Waituhi Kuratau Trust. You realize that they are not really in based on the numbers. They are  in for the  position, for the assets and  for their  ‘team’ .

They’ve  made their choices, done their sums, scrutinized their operations and their oppositions and  devising their ‘play sheets’. They don’t have the hopes of a nation on their shoulders,  but they do feel past and future generations looking over their shoulders.So when we ask questions about ‘the numbers’, let’s be clear why are we actually asking. There are some questions that can only really be answered in the future and  ‘will we win’ is one of them.

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National Fieldays 2015  was a fascinating first outing for Sheep Dairying.This year we were part of the Massey stand (PE50) and thus went with  Massey’s ‘More Productive Sheep’ and FoodHQ backdrop. A photo of the site (with out the crowds that thronged through) is below. With that said  I think Sheep Dairying was the star of this ‘show’ due to our  engagement tactic of  giving away about 35 kg of sheep milk yoghurt, 4 kgs of sheep milk toffee and 5kgs of sheep milk paneer cheese  (with a curry sauce). All three foods were  produced by  Riddet Institute and Massey’s School of Food and Nutrition students working with Abby Thompson (Riddet) and Alistair Carr (IFN). As a backdrop to this discussion we also with ran a short video. A copy of this is also below.

We  also gave away about 180  copies of the Countrywide magazine special section on sheep dairying,  spoke to dozens of people about setting up  sheep milking operations,  met many of our industry colleagues who stopped by to swap news and discuss current challenges  (including Peter Gatley, Jake Chardon, Steve Carden, Andrew Sherman  and John Ryrie, who on Friday stepped off a plane ready to start his new job). In a couple of cases we seem to have helped people find jobs in the industry and we also had some very interesting discussions with people who were in sheep dairying back in the 1990s.

If I were  to volunteer a couple of choice moments from four days of talking flat out about sheep dairying they would be meeting Ruby Mulinder (recently of Landcorp and a Massey Alumnus) and her husband who are planning to become sheep milk producers in the future but in the meantime are heading off to the UK for him to play rugby and for her to find work in the UK sheep dairy industry. These are two very engaging, passionate and smart young people whom I hope we can help get a start in the industry when they return. And the other  choice moment  is sitting with Sally Burnett and talking through some options for the  truly unique sheep milking business she and her daughter are looking to develop in the South Waikato.

Of course its very difficult to tell just how successful a few days of  talking with hundreds  of people about sheep dairying might have been. Our target was to put the option in front of as many farmers as possible, to help the public that stopped by to get a taste of sheep milk products and generally to carve out a space in what is a truly stunning event (thanks to National Fieldays for sponsoring out site this time around!) .   I hope  we’ve made an impact. The feedback from those we talked to was encouraging,  but the proof will come when these same people make a start in the industry or, come to regularly buy our sheep dairy goodies currently available or arriving soon.

Next year we’ll have our own stand,  outside probably,  and we will, I hope,   run some kind of milking demo as well as seminars, workshops and be able to offer space for people to meet, engage and  discuss things with a huge group of industry members. Of course it is a bit of an ask to have milking ewes onsite in June, and this explains the very small numbers of animals at Fieldays( a few highland cattle and few sheep on the Pratley stand, as far as I could tell), but such a demo would certainly allow us to stand out from the rest of the exhibitor flock.

Thanks to all the  team for helping out. We were:  Sam Peterson (Massey IVABS), Lucy Griffiths (Consultant and Nuffield Scholar), Linda Samuelsson (AgResearch, Sheep dairy  Project team leader), Grace Powell  (Food Technology student and creator of the sheep milk paneer), Bob Longhurst (AgResearch), Natalie Watkins (AgResearch),  Marita Broadhurst (AgResearch), Sandra and Dave Ray (Waikanae Sheep dairy Farmers),   James Clairmont (Waiheke Cheeses) and Craig Prichard (School of Management, Massey Business School).

 

masseystandat fieldays

A look inside big scale Ewe Dairying – Waituhi-Kuratau Trust (Taupo)

The Maori TV programme ‘Kai Time on the Road’ did a fantastic job recently of profiling the Waituhi Kuratau Trust’s 3000 head Sheep Dairy operation.  Particularly it introduces the trust’s ‘Hipi’ yoghurt and showed  their sheep milk freezing operation (they sell  to cheese makers around the country and off shore). Here’s the link (or click the picture below) and to see the milking and freezing operation scroll through the video to 12minutes 26 seconds:

sheep milk freezing

 

 

Here’s William talking about WKT’s sheep milking operation  with National Radio.

Is Lifestyle block Sprawl a Ewe Can Dairy Opportunity?

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Miles King of Kingsmeade Cheese, pressing his fine sheep cheese in his factory near Masterton.

I personally want to see Jiang Zhaobai’s application to the Overseas Investment Office to buy Lockinver Station tossed out,  and the property sold to a NZ domiciled and preferably farming-based investor. But what can we learn from this tussle over land between global and local capital? One thing might be a keener sense of how we are NOT  currently using productive NZ farmland  – and what we might do about it.

Lochinver is a big deal. But are we making the most productive use of land that New Zealanders already own? Recent land use research* shows that the threat to productivity is not just from absentee billionaires. Each year three Lochinver’s worth of land are turned into  lifestyle blocks (160 average dairy farms),  5,800 new ones in total,  are created across NZ adding to the 175,000 others that already exist. These cover about 10 percent of NZ’s non reserve land and currently about 17 percent of the country’s ‘high class’, this is highly  productive land. Around Auckland  the figure is twice the average this with  35 percent of  high class land now locked up in sprawling  lifestyle conversions. This form of semi-urban sprawl  long outstripped NZ’s urban sprawl.

Now the researchers appreciate the challenges of claiming that sub 40ha lifestyle conversions actually take that land out of productive use. Hopefully, Drs Andrew and Dymond are already working on the definitive answer to the question of just how unproductive are lifestyle conversions.  Chicken farms, piggeries, and some horticultural uses  can be highly productive but they are likely to be the exception. Just how many of piggeries have appeared on the lawns of the homes that have sprung up on the outskirts of NZ cities in the last 15 years? Not too many. The authors quote a Hawkes Bay survey that found that 66 percent of blocks of 4ha or less where not being used for any productive use at all. So what’s to be done?

One response would be to lock up all high value land. Some regional councils have moved in that direction. But what other intensive, productive farming options are worth trying?  Is there a living to be made in milking sheep that graze lush lifestyle block pastures and selling the milk to cheese makers, or ice cream makers or restaurants, cafes and the like? And with ewes is this a low capital route into dairying for those locked out of bovine dairying extraordinary amount of capital needed to get even the tiniest of footholds? We think there may well be. In the next postings we’ll outline some ideas we’ve had for developing commercially viable sheep milking operations that make more productive and sustainable use of NZ’s  semi-rural sprawl. We’ll also be discussing routes into ewe dairying for small sheep and beef operations. We’ll also be talking about finding buyers for sheep milk and sheep milk products and the character of the sheep dairy industry in other parts of the planet. Who are we? Just a bunch of Massey people keen to help sheep dairying along in New Zealand.

sheep of to the shed

Andrew R and Dymond JR (2013) Expansion of lifestyle blocks and urban areas onto high-class land: an update for planning and policy, Journal of the Royal Society of New Zealand . 43( 3): 128-140(http://www.tandfonline.com/doi/pdf/10.1080/03036758.2012.736392)

Ewe Can Dairy A Massey Site