With the aim of helping farmers navigate an increasingly complex operating environment, Beef + Lamb New Zealand’s inaugural Future Farm opened its gates recently for a second public open day.
Lanercost, a 1310ha hill country sheep and beef farm in North Canterbury, is in its second year of operation as B+LNZ’s Future Farm. While the focus has been on getting infrastructure, staff and livestock in place, lessons learnt by the management team through the lease agreement process and pasture renewal programme were shared at the open day (these can also be found on the website).
Because of the complexity of the lease agreement between the land owner Julia Whelan and lessees Simon Lee, Carl Forrester and B+LNZ, the set-up costs were more than expected and this impacted on the business’s bottom line. This was alongside expenditure on a new tractor and repairs and maintenance.
Rod Hanson, an accountant who is part of the Future Farm Advisory Panel, told attendees that lease agreements and equity partnerships were likely to become more common and people should never underestimate the time involved in carrying out due diligence.
Going into an equity partnership with an industry body certainly added another level of complexity.
Carl Forrester admitted pulling together everyone’s interests was a challenge and Simon Lee says it was important to be clear about what each party wants out of the partnership.
“Communication is critical.”
The process highlighted the importance of determining what everyone involved is trying to achieve, (particularly the landowner), before money is spent on professionals.
Speaking at the open day B+LNZ CEO Sam McIvor, said as a partner, B+LNZ was probably more pedantic and conservative when it came to the lease agreement, but this attention to detail was necessary to protect the interests of B+LNZ’s levy payers.
“We didn’t make it easy.”
The lease is a 15-year lease – made up of three five-year terms.
Each of the Future Farm business partners put $630,000 into the kitty and made an agreement not to borrow any money- a decision that was challenged throughout the day by farmers at the open day, particularly with very low interest rates and high product prices.
These high product prices have also inflated the price of capital stock and while the partners spent $97,000 buying hoggets, they haven’t been able to stretch to buying any more ewes. They are now focused on breeding and retaining as many replacements as possible- and this includes lambs from the hoggets.
The farm is now carrying 2832 mixed-age ewes and ultimately the management team would like to be running 4000 ewes.
In five years, the farm aims to be in the top 20% in Earnings for Interest, Tax and Rate /Total Farm Capital by land class.
To help them achieve this they have employed farm consultant Jansen Travis to see where they could generate the best return within their capital constraints. The farm also wants to maintain a beef cow herd which was also viewed as a constraint. They are now running 220 mixed-age cows for pasture control as well as being productive units.
Jansen recommended a focus on maximizing ewe production and this meant a shift from finishing lambs to selling all non-replacement lambs at weaning. All prime lambs are sent to the processors at weaning and the balance are sold store.
Dan Brier, who heads B+LNZ’s Farming Excellence team, says they’ve gone from an income driven by lamb finishing to an income driven by the productive performance of the ewes.
This also means they have gone from relying on summer and autumn feed (to finish lambs) to utilising spring feed to underpin the reproductive performance of the capital stock.
However, with the aim of operating with a minimal environmental footprint ultimately, they don’t want to be relying on winter feed crops to supply this feed.
An intensive pasture renewal programme over 100ha has meant they are growing around 40ha more feed crops than they would in an expected “standard year” and to eat this feed they have been wintering 148 dairy grazers and 169 Friesian bulls.
The dairy grazers provide valuable cash-flow and the Friesian bull are viewed as a quick turn-around stock class that will be phased out once the bulk of the pasture renewal programme is complete.
Farm manager Digby Heard admits having so many stock classes adds another level of complexity to the management and wintering cattle on winter feed crops does have environmental implications, potentially pushing up N losses.
The Future Farm team follows best practice management when it comes to establishing and grazing winter feed crops, identifying and isolating critical source areas and grazing from the top of the paddock down.
Environmental management will be a significant focus of the Future Farm programme, reflecting the consumer and regulatory imperatives all farmers are now facing.
Future Farm Insights Manager Kirsti Lovie outlined the environmental opportunities and challenges on Lanercost, particularly the challenge of balancing the requirements of stock and land with cashflows and the need to generate a profit.
The Future farm is making full use of mapping and modelling tools to identify the land use capability of different areas of the farm, Overseer to carry out nutrient budgets, Farmax to model stocking option and FarmIQ for management data.
When the management team took over Lanercost the nutrient losses were given as 17kgN/ha, but Kirsti explains that in reality, they don’t really know how accurate this number is, as there was no access to the farm’s historical stock or cropping policies. An initial Overseer calculation under the current regime generated a number of 24kgN/ha, but by going back through specific management, such as changing crop paddocks and ensuring the fallowed areas had a grass covering rather than bare dirt, they were able to adjust this figure back to the baseline.
Kirsti says they want reduce N losses from a starting point of 17kgN/ha and this should be achievable with less winter cropping and dairy grazing.
While the tools to measure on-farm carbon sequestration are not yet available, Kirsti told the audience this was possibly another opportunity for the farm and one that will be explored through the Future Farm programme.
Find out more
For more information about the B+LNZ Future Farm go to https://beeflambnz.com/future-farm