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2013

Farming in the family with positive succession planning and governance

Executive summary

The fundamental drive behind completing this research is to identify various key procedures and initiatives that successful New Zealand family businesses instrument to ensure their achievements and wealth are passed down through the generations successfully. I was also concerned in clearly recognizing some of the common issues which arise in family succession strategies and methods in which these matters may be avoided.

This project will benefit the rural community to hopefully provide an insight into farming families to think about the big picture and long-term viability of their business. I want the project to benefit farming families and professional advisors by also providing some context around governance and effective structures which have been planned. I hope the rural industry will relate to this report and understand that all families are different and not one plan will work for everyone. I want this report to provide guidance around communication and when and how to remove the elephant in the room, leading to successful conversations and positive outcome for all parties involved.

Succession planning is the progress of a strategy that ensures transition of the family farm, from one generation to another with minimal disruption. Succession planning can often be a living document to safeguard all family relationships and future ownership of assets, aspirations and involvement in the farm. Rushed or poorly planned and implemented succession strategies can have major impacts on family relationships along with extreme financial implications on the business.

What I relished most about putting this research paper together and gathering the required data was the chance to spend time with farming families who had extremely successful industry knowledge; and sit around the kitchen table with them and speak openly about their own businesses and experiences. They each happily shared with me the issues and barriers they had challenged along the way, and what they had learnt along the way from any mistakes. These people have been there and done it and could share their real stories with passion; their experiences and knowledge in my opinion, is considerably more valued than any other material source obtainable. I enjoyed this part of my research to be extremely exciting, and it reiterated to me how much I enjoy the Agriculture industry and what a joy it is to be involved in.
From gathering my data for this literature report I have made three recommendations for effective and successful farm succession of the family farm.

  1. Start early with conversations to avoid any assumptions or expectations which members of the family may have. These discussions should start at an early age, as young people’s interests do change, along with abilities and skill set. A poorly executed plan and approach can often be put together at short notice with damaging effects to family relationships.
  2. Open communication to stimulate a range of sophisticated thinking throughout the farm succession process will help to get an enhanced understanding of all family members’ idea and vision for the family farm. In my opinion both farming and non-farming family and spouses should be involved in this communication. It is also essential to seek independent advice from a succession facilitator, and have other trusted advisors involved including Bank Manager, Accountant, Lawyer, and Farm consultant.
  3. Document everything with a completed business plan which is handed to all family members. Consider including minutes from meetings, farm succession strategy including time frames, roles and responsibilities, goals, and updated wills.

Can generating gas and electricity be the solution to New Zealand dairy effluent management.

Executive Summary

This paper explores the options available to manage effluent within the New Zealand Dairy Industry.

It also clearly investigates why Anaerobic Digestion is not suitable at its current levels of technology to be an option for commercial dairy farms in New Zealand.

  • Only 20 percent of the available effluent is collected in the Cowshed
  • High costs of substrate such as Maize silage
  • Lack of time and skills to manage the running of an AD plant
  • Nutrient levels are still maintained using this system

Then it provides some practical, innovative solutions to manage the effluent.

Using 3 key options for integrated management

  • Bio Crude manufactured using Algae
  • Dung Beetles
  • Precision Farming technology

It also challenges those within the industry to support change, and take action to implement the above solutions for the benefit of all those within the industry.

Can Generating Gas and Electricity be the Solution to New Zealand Dairy Effluent Management. – Natasha King

The 50/50 Sharemilking: Where are we in 2013.

Executive summary

The purpose of this report is to have a better understanding of the 50/50 sharemilking industry in 2013.

The perception within the dairy industry is that the 50/50 sharemilking business structure is on the decline and not enabling sharemilkers to progress to purchasing their own properties or enter other business investments.

Having been a 50/50 sharemilker for seven years, from the late 1980’s to mid 1990’s and having gained significant benefit from the system, I identified the need to ensure this unique pathway endures. Due to this interest in the succession of our industry, I investigated where the 50/50 sharemilking system stands today and provided some solutions for how it may develop in the future.

The body of the report looks at the actual numbers today and the trends over the last decade. I also decided very early on in my research that there appeared to be, as I have termed it, a “natural progression bottleneck”. This in itself was having a significant effect on how the 50/50 sharemilking system was functioning. To illustrate this more clearly; I chose to survey 10 long term 50/50 sharemilkers from around the country.

My findings were conclusive in that the industry needs to look seriously at its 50/50 sharemilking contract to more closely align itself with the current economic landscape, market changes and farm demographics.

Phil Butler

Defining the cost of within orchard production variability on the overall profitability of a NZ apple orchard.

Growing conditions in New Zealand have historically been recognised as being some of the best in the world for producing exceptional volumes of excellent quality apples. To remain financially sustainable New Zealand apple growers need to specifically focus on their natural strengths, ensuring that the production they achieve maximises the advantage of their location.

NZ apple growers have spent significant time and focus on cost reduction in orchards this may have been detrimental to overall profitability. The NZ apple industry does not have the same access to cheap finance as many of its international competitors such as the USA. New production techniques generally come with significant costs, areas of new production have a relatively long lag time from initial investment to final repayment. New growing systems also have financial risk, with the potential cost of mistakes made during the learning and development process.

Increases in the overall production of market acceptable apples can be achieved by ensuring all trees are working individually at an optimum level with minimal variation between them. This has potential for gains in cost reduction, resource use efficiency, minimisation of fruit quality variability and improvement in overall profitability.

To ensure tree to tree variability is minimised systems need to be created to efficiently measure key differences between trees. Similar populations of trees are grouped and then analysed to quantify each groups impact on overall block performance, in an easily understood format.

Beyond the scope of this project, tree to tree variability information can be used to assist with investigations into potential solutions and financially justifying the cost of variation mitigation.

This study was undertaken in a commercial Royal Gala apple or chard with 6159 – 10 year old trees planted on M9 rootstock. The assessment focuses on 1887 trees within this block. The use of trunk diameter measuring was decided as the basis for ranking variability. Fruit size and total fruit number per tree was assessed in a small trial. 5 different trunk size groups were eventually formed and the profitability of these assessed using a computer based profitability benchmarking model.

  • The missing new trees returned a negative profit of – $19,755 per ha.
  • Weak/small trees returned a profit of $ 8,516 per ha.
  • The average size trees returned a profit of $14,435 per ha (approximately the same as the overall block profitability).
  • The largest of the average trees returned a profit of $21,344 per ha.
  • The excessively large / scion rooted trees returned a profit of $5,435 per ha.

Jonathan Brookes, Brooks

Connecting with the Conscientious Consumers.

The following report has been completed as part of my participation in the 2013 Kellogg Rural Leaders Programme. The scope of this individual research project was to select a topic of interest to the participant and spend ‘Phase Two’ of the Kellogg Rural Leaders Programme completing the individual research project. Findings are then presented on return to Lincoln University during November 2013.

After a great deal of deliberation, the topic of research I developed was to investigate the different ways that producers were connecting with consumers, and vice versa. Of particular interest to me was the concept that producers were taking control of the messages that were being portrayed with regard to production. Thus I came up with the title “Connecting with the conscientious consumer.”

Those involved in the food production industry are keenly aware that consumers are becoming increasingly discerning about the origins of their food. Of particular concern to consumers is the way ‘meat is made’. This concept is reflected in a number of different signals and includes the consumers desire to understand the way their product was raised, what chemical and additives were used during the production process and the animal handling techniques employed during the lifespan. The purpose of my report was to investigate some of the different techniques being employed to connect our increasingly metropolitan and city-­‐based population with the origins of their food. I was able to segregate the different themes of these techniques into three categories: education, food service and practical. As such this report is split into these three themes.

The major finding of this research and exploration is was that there are a huge number of innovative and energetic producers who are going above and beyond to connect with their consumers. These concepts will be explored through the report. Another major finding was that those buying from these producers are content with buying in this manner. The shoppers appreciate the integrity that can be attributed to this kind of purchase, particularly with regard to those producers who engage in direct marketing. Due to the immense scale of people engaging in ‘connecting with the conscientious consumer’ this report is not all conclusive. Instead of simply listing all of those producers who are connecting with their consumers I decided to complete an investigative case study into some of the unique elements of their businesses. However, I can come to the conclusion that Australian consumers are becoming more discerning and cautious to know about the origins of their food. I see there is a great opportunity for people, particularly those from smaller, family based businesses, to employ tactics of direct marketing, selling the story of their exemplary land management and animal welfare techniques, along with the traditional protein (or fibre) product.

With this in mind, my main recommendations are that there is a great deal of appetite in the marketplace for a product that has both a story and integrity. There are great opportunities for producers to engage in employing techniques, as detailed in the following discussion, to enhance their business model.

Mary Johnson

Farming under nitrate leaching limits.

Executive summary

This report investigates the impact that altering the farm system of Singletree Dairies in mid Canterbury to achieve a predicted nitrogen leaching loss in Overseer of 24kgN/ha/year will have on both the operation management of the farm and the financial effects of this.

Singletree Dairies currently has a predicted leaching loss of 32kgN/ha/year and through the implementation of more pivot irrigation, increasing the area that effluent is applied along with altering nitrogen fertiliser management in April and May the level of leaching loss can be reduced to 24kgN/ha/year. The management and financial implications of these alterations are minor and are viewed as quite achievable.

When modelled on a ‘light’ soil with and available water holding capacity of 60mm, the leaching estimate for Singletree Dairies increased to 62kgN/ha/year. Significant management alterations are required to reduce leaching to the desired 24kgN/ha/year – notably a decrease in stocking rate from 3.76cows/ha to 2.90 cows/ ha. The financial implications at a farm level of these alterations were not as great as initially thought with a reduction in return on asset from 6.91% to 6.75%.

Singletree Dairies is able to continue to operate profitably under the level of nitrogen leaching suggested in this document, however there is likely to be a decrease in production levels in dairy farming areas of light soils which may affect the local communities the greatest.

William Grayling, Greyling

Funding the flow of milk

Executive summary

Overall there is no clear picture that explains how the industry should fund future growth. However, if some simple rules that have been defined as part of this research are followed, then access to capital to grow the industry shouldn’t be a limiting factor.

The key factor is the relationship between the asset values and profitability. Therefore, capital invested in the industry needs to be allocated to growth in productivity and if asset inflation occurs it needs to be at a rate slower than the growth in profitability. Being able to focus on the factors within farmer’s control, namely management, will improve the overall access to capital for the industry.

To answer one of the key questions of this research, is the amount of debt in the industry an issue or a limitation to future growth then the answer is, it depends. Simply put, what is important is the relationship between, asset value, debt and profitability.

Hamish Fraser, Frazer

Good to great extension: Influencing on farm change at pace and scale.

Tafadzwa Manjala, 2013 Nuffield Scholar

Executive Summary

Knowledge and skill alone does not result in practice change. Verbal persuasion, even well-articulated has low impact. Great extension is about a consistent focus on delivering to farmer needs that are self identified as well as those from gap analysis and doing it in a way that results in practice change.

Seventy percent of change programs fail because we assume people are ready to change. Understanding the stage a person is at on the change cycle helps target effective extension intervention which improves the probability of being successful.

To influence change, at pace and scale, requires a focus on changing behaviour, and to change behaviour we need to change the way people think. Most human behaviour is learnt from observing others. Through observation, one forms an idea of how new behaviours can be performed, and this coded information serves as a guide for future action. Practice change will occur when an individual believes they can be successful (self-efficacy).

Farmers learn best from other farmers and keeping farmers in the driving seat will increase participation and relevance of any extension activity, leading to more change on farm.

Identify barriers and then remove them before trying to change behaviour. Involving the farmers who need to change in the planning of the change initiative and the decision-making makes it easier to identify barriers and enables trust. Making general principles local through role modelling and or good story telling reduces barriers to change.

Breaking recommendations into small change steps helps to make success easy. Following up, and involving gatekeepers (decision makers) of the system are key triggers for change as restraining forces are reduced.

To support self-efficacy any change program requires some one on one and or group peer support as change is often stressful and confidence may be lacking.

Successful practice change begins and ends with a successful partnership. Therefore extension professionals will be more effective by building an ecosystem of partners.

The extension professionals’ toolkit needs a change model that guides extension to work systematically through the change process with farmers. It also needs an evaluation framework to measure effectiveness. One model is the See (belief’s), Do (behaviours), Get (results) Model. If a farmer is not happy about their results, extension can work with the farmer to review their beliefs which can then be challenged to change their behaviour to improve the results.

Recruiting extension professionals for head (intelligence), heart (passion) and tenure, helps to build trust and credibility with farmers which is important to influence change. Building capability is important in both hard skills (technical) and soft skills (understanding people and relationship management). Persistence is also needed as change happens over time (at least 3 years).

The recommendations outlined in this report operate as interdependent determinants in practice change. These recommendations will not only help extension professionals do their job effectively but also enable them to enjoy their work more while being effective at influencing change on farm.

Good to Great Extension: Influencing on farm change at pace and scale – Tafadzwa Manjala

2013 Nuffield New Zealand Scholars announced

They are spread from Northland to Southland.

Dairy NZ regional leader Tafadzwa Manjala from Whangarei, ANZ rural banker Sophie Stanley from Hamilton, rural entrepreneur Lisa Harper from Picton, Meridian Energy national agribusiness manager Natasha King from Christchurch and Northern Southland farmer and retailer Stephen Wilkins from Athol.

The research topics they are likely to cover are faster uptake and application of current and new management practices on farm, the use of social media to boost the New Zealand brand, encouraging innovation in rural businesses, using gas and electricity generation to solve effluent and water management issues and looking into synergies between arable and dairy from a nutrient and effluent perspective.

The Nuffield NZ Scholarship offers the opportunity for overseas travel, study of the latest developments in a number of leading agricultural countries, and provides an entrée to leaders and decision makers not accessible to the ordinary traveller.

Successful applicants have the opportunity to develop a better understanding of New Zealand and international relationships through at least four months travel. Scholars participate in a Contemporary Scholars conference with 60 Nuffield Scholars from around the world and a six-week Global Focus Programme with an organised itinerary through several countries with other scholars. Finally they have their own individual study programme with a research report due at the end of their travels.

Historically only two to three annual scholarships have been awarded, but Nuffield New Zealand Director Richard Green says it has been the organisation’s vision to grow the programme.

“We wanted to be able to award five scholarships without dropping our high quality standards and expectations on scholars. An increase in scholarship numbers has only been possible with the extra financial commitment from the partner sponsors, Dairy NZ, B+LNZ, FMG and AGMARDT as well as other supporting sponsors being FAR, Mackenzie Charitable Foundation and Landcorp,” he says.

“Nuffield and our sponsors have identified the opportunity and the need for more emerging leaders with the global vision and international connections that can be gained through a Nuffield Scholarship.”

The five 2013 Nuffield New Zealand Scholars are:

Hamilton’s Sophie Stanley, 26, has agricultural science and economics degrees from Massey University (2005-2008). She currently works for the ANZ Bank in Morrinsville managing a portfolio of 60 customers, mostly dairy. She completed the Kellogg’s Rural Leadership programme this year with the research project centred around the value of “Brand New Zealand” in our value added primary products in Asian markets.

She plans to take this a step further in her Nuffield studies to investigate how New Zealand’s agriculture industry can use social media and technology more effectively to both promote the NZ brand and promote innovation and knowledge transfer between farmers and industry, while at the same time attempting to reduce the rural/urban divide.

Christchurch’s Natasha King, 39, is national agribusiness manager for Meridian Energy and recently finished as chair of Canterbury Netball. She took the journey of share milking through to farm ownership and then stepped out of the gumboots and into the corporate world in the late 1990s.

One of her goals is to move into an equity farm partnership on a large irrigated dairy unit. Natasha is passionate about mentoring and progression within the dairy industry and has a close association with Dairy Industry Awards and AgITO.

Her likely research topic is whether generating gas and electricity can solve the effluent and water management issues for New Zealand agriculture. Natasha has two daughters, Victoria and Laura Shaw, who are 18 and 17 respectively, and partner Brett Hare.

Stephen Wilkins, 47, has been farming in a family farming business since 1982 and is based in Athol in Northern Southland.

The business includes sheep and beef breeding operations, a deer unit, dairy and dairy support. Stephen’s role focuses on an intensive arable system and the agronomy for the whole business. He has also been setting up a farm shop, run from an historic woolshed on the farm, selling farm grown and local produce and their own meat brand Athol Valley Meats.

Stephen’s potential research topic is to look at synergies between arable and dairy from a nutrient and effluent perspective. Stephen and his wife Heather have three daughters – Hannah, Ella and Molly.


Tafadzwa Manjala, 38, from Whangarei, is two thirds of the way through a Masters degree in Agriculture at Massey University, studying extramurally while working as a regional leader for Dairy NZ.

He has worked for Dairy NZ since 2004, organises the Green to Gold Group (business-focused discussion group) and until a few months ago was a councillor on the New Zealand Institute of Primary Industry Management. Tafadzwa also has a number of qualifications from his native Zimbabwe.

He would like to research how New Zealand can facilitate faster uptake and application of current and new management practices on farm. Tafadzwa and his wife Whitney have two children 10-year-old Rufaro and six-year-old Rosa.


Picton’s Lisa Harper, 37, was the 2011 winner of the Rural Women Enterprising Woman Award and a finalist in the 2009 Cuisine Artisan Food Awards.

She has a Masters in Business Management from Massey University (awaiting final results), a PhD in plant pathology from Lincoln University and a science degree from Victoria University. She was diverted from her academic career in 2003 when a family illness saw her return from working in Europe to take over the family farm in Marlborough where she grew up. The family started a business involved in cheese manufacturing and educational tourism – Lisa’s responsibilities include operations management, marketing, sales/customer service and quality control/hazard management.

Lisa already has a love of research and through her Nuffield scholarship might look at how to encourage greater levels of innovation in rural businesses and identify some of the road blocks that might be preventing businesses from taking their ideas further.

 

Nuffield Director appointed following review

The Trustees have over the last few months been working through a process to appoint a permanent Director of the New Zealand Nuffield Farming Scholarship Trust. Many of you may ask why this is necessary.

We have identified that to ensure the long term viability of the scholarship within New Zealand we needed to improve our performance with our existing sponsors and create an environment that actively encourages new investment by potential sponsors. To be able to enhance and develop new and existing funding relationships was the key skill set we were looking for in the appointment process for the position of Director.>

We were delighted with the response and quality of the applicants who applied. From this strong field we would like to announce that we have engaged Richard Green of Ashburton to fill this role. Richard is in his early 40’s, married to Vicky with three children. He has a strong background and experience in agriculture and business and a passion for rural leadership.  A brief outline of his working career is as follows:

  • BAg  Com Lincoln
  • Agricultural Business Consultant for Agriculture NZ
  • Director of Sales and Marketing of Agricom NZ Ltd (now part of PGG Wrightson)
  • International Seed Business Manager for PGG Wrightson
  • Director of a number of companies involved in agribusiness and other sectors

We are sure all scholars will join with us in welcoming Richard to the Nuffield fold. He attended the Wellington section of the Contemporary Scholars Conference to meet his international colleagues and contemporaries.

He is due to start in this part time contract position officially in early April. Please, if you should happen to meet him make yourself known.

This appointment is a major development for the NZ Nuffield Scholarship program and we are confident that Richard will bring his range of skills to enhance the way we operate. Barbie Barton will continue in her role with the secretariat work for New Zealand Nuffield allowing Richard to fully concentrate on the relationships needed to add real value to our sponsors.

For more information

Richard Green, New Zealand Nuffield Farming Scholarship Trust Director, 03 307 8159,0274 973 692

Stuart Wright, New Zealand Nuffield Farming Scholarship Trust Chairman, 021 329 763