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kellogg 2016

Analysis of production systems in the New Zealand dairy industry.

Executive summary

The objective of this study was to investigate the aspects of production systems in the New Zealand dairy industry with profitability as the key driver, along with resilience to volatile price swings, international competiveness and an environmental enquiry. Existing data was used for this analysis . Over the past 10 years there has been a substantial increase in supplementary feeding on New Zealand dairy farms, resulting in an increase of more than 100% in feed costs, while cost of debt increased over 40%. 

Many decisions to increase farm intensity and supplement feeding are based on a perception that additional feeding will lead to further milksolid production, and therefore, further profitability and return on assets. Caution needs to be taken here, as the key driver of operating profit per hectare on New Zealand dairy farms is the cost of production, as this can be managed within the farmgate, while other variables lie beyond farmer control.

Analysis from this study suggests that although individual farmers operating intensive systems have done well, and can remain profitable in average farmgate milk price seasons, the New Zealand dairy industry as a whole has be come less resilient to external factors, international competiveness has been eroded, and profitability has become difficult in low to average milk price seasons with higher breakeven milk prices required. Intensive farm systems with off-paddock facilities such as cow housing barns, when incorporated in the New Zealand pastoral mode l, have also shown that it is difficult to achieve positive environmental outcomes whilst being profitable, with breakeven milk prices required in excess of $6.50 per kilogram of milksolid.

International datasets show that the overall costs associated with supplementary feeding can be more than 50% of the purchase price when accounting for wastage, utilisation, capital infrastructure, fuel/energy, and repairs and maintenance.

Combining supplements into a pasture based system can have the possibility to enhance total feed intake, production and profitability. However, the real milk solid response is regularly inconsistent and less than anticipated. Results under ideal research conditions showed a response of 70-80g of milksolids per kilogram of supplement dry matter introduced into the diet, while commercial dairy farms only had a 55g response.

However, not all farm system decisions are necessarily based on profitability. Many decisions concerning farm systems, intensity and infrastructure can be based on non-economic factors. This does not mean they are poor decisions, so long as the long term viability of the farming operation is sustained, but farmers must be aware of the implications of doing so.

Farmers need to be cautious of making reflex decisions in altering their systems due to a short term shift in milk price. What needs to be understood is the key drivers and values of the operation, and make decisions based on the core objectives and strategy, current performance, and recognise opportunities to make strategic changes to increase business profitability and resilience.

Zach Mounsey

The future of fodder beet.

Executive summary

This report aims to identify the advantages and disadvantages of fodder beet (FB) as a feed option for lactating cows in the dairy industry. In this report I analyze the cost to grow, harvest and transport fodder beet. In addition, I compare similar stock feed that includes: palm kernel expeller (PKE), and grain. I pay particular attention to the nutritional and environmental factors involved with each type of feed. 

To begin, I give a brief overview of PKE, grain and FB. Next, I examine the key physical attributes and history of the different supplements. The next section outlines the different dairy farm systems in relation to the level of supplements used on farms.

In this report, I review the factors that influence the cost of supplements. From these factors, I then assess the actual cost of the different supplements. Once I convert these dollar figures and apply the amounts to an energy unit, I then pair this information against the average dairy payout figures from past years. From here, I then calculate the profit margin of each feed. This figure is then extended beyond an individual farm by applying industry statistics to the calculation. I use the calculation to then highlight the potential benefits a change in feed could provide for the entire dairy industry.

Another major issue associated with supplements is the environmental concerns. In my report I provide the opposing viewpoints with regard to the usage of PKE. This section is designed to highlight the difficulty associated with achieving collaboration when the opposing views are so strong.

I conclude by addressing the difficulties with feeding FB, one example is acidosis. However, I also provide the potential nutritional benefits associated with lower levels of excreted nitrogen, and therefore more protein is utilized and absorbed by the cow.

This report strives to be both informative and provocative. I want to inform the reader on the current issues surrounding supplements, but also, and perhaps more importantly, challenge the reader to think outside the box and reach for solutions. We live in a world of constant change as this report continually highlights. For us to move forward as a collective, we must embrace this constant change in order to prosper.

Sam Riley

Developing light sand pasture dunes into irrigated land.

Executive summary

The New Zealand government has set a goal of doubling the value of exports by 2025. In order to achieve this, the Irrigation Acceleration Fund (IAF) was allocated $35 million over five years to support the development of irrigation infrastructure. 

Rangitikei local government had employed Catalyst Group an environmental management consulting company to conduct case studies on irrigated and non-irrigated properties to the determine potential of expanding irrigation. It would appear that central and regional governments are keen to develop more land under irrigation.

The aim of this project is to understand the formation of sand dunes in the lower west coast of the North Island and their stability. Secondly the project aimed to find out what support from Government has been provided for farmers to develop their land to irrigation? Lastly the project provides a case study on re-contouring land.

A range of interviews were conducted to explore the aims stated above. Dr Alastair Clement from Massey University w as contacted to understand how local dune fields were formed and stable they are, and how they were unique. Hew Dalrymple a farmer near Bulls was interviewed to see how their current irrigation project was proceeding.

The lower North Island sand dune area has undergone massive transformation over the past 10,000 years and parts are still forming. Early Maori and European settlers have influenced this dune area more recently ( past 1,000 years).

Developing these dunes would always be restricted by cost to develop. But it had been proven to be feasible to irrigate and produce increased returns from the land. Current regulation provides a reasonable framework for farmers to adhere to. More information from regional councils could improve the process to help estimate costs and barriers.

Hamish Easton

Did the concept of Te Aute College shape our leaders.

Executive summary

I will be exploring the topic of Maori leadership that has come from a Maori boarding school since the 19th Century. Te Aute College holds a proud heritage of Maori leadership and this is viewed through stories and generation of students who have attended Te Aute a Maori boarding school for males in Hawkes Bay, New Zealand. 

Leadership for Maori communities is an important pathway for our youth to become leaders, including a need for developing effective leadership and governance and also look at traditional and contemporary Maori leadership. My question is: has the concept of Te Aute College helped shape our leaders.

Leadership has been recognised as an important issue for Maori communities this includes a need to develop effective leadership and governance and explore the different styles of leadership.

I have created a survey to pull information from past pupils to help towards the conclusion of my findings and to hopefully assist Te Aute College in future years to once again establish themselves as one of the greatest Colleges in Aotearoa, New Zealand.

“I cherish the deepest regard for Te Aute for my three years in the College. Laid the foundation for my academic career. It was the teachings at Te Aute and the formation of the Te Aute old boys association that ingrained into myself and others our responsibility to the Maori people”.

This quote is taken from a letter written by Sir Peter Te Rangihiroa Buck in 1951 to the principal of Te Aute College Richard Webb. Buck had an outstanding list of accomplishments while attending he college which shaped his passion for excellence and his contribution to the Maori people.

Farrell Chrystal

International agriculture investment: Foreign ownership of New Zealand farmland.

Executive summary

Foreign Ownership of New Zealand farm land is an ever evolving topic that is of interest to a large number of us and a discussion that many people are uneasy to have or have a strong feeling either way.

People fear for loss of ownership of our great land and consider the implications it will have on future generations. 

Before land can be sold to foreign investors it has to go through the Overseas Investment Office (OIO) which assesses applications from overseas investors seeking to invest in sensitive New Zealand farm land. Farm land that exceeds 5 hectares is deemed to be sensitive.

It also is required to get Ministerial approval if granted approval from the OIO. New Zealand has a robust OIO process and we should not fear that it will let us down, but look for greater opportunity when foreign interest is expressed in our land.

Before reading into this report consider this – If you were a land owner looking at selling your farm land that you have firstly worked hard to get and secondly to keep and run as a viable operation, should you be deprived of t he opportunity of obtaining maximum value from your asset?

I hope this report will stimulate further discussion and debate on Foreign Ownership of our New Zealand farmland.

Jamie Cunninghame

Exploring the design of a Nitrogen-Attenuating stand-off pad for dairy cattle.

Executive summary

The focus of this project is to explore the potential design of a nitrogen attenuating feed pad for dairy cattle that are wintered on fodder crops in the lower South Island.

I hope to explain some of the reasoning behind how important cost effective environmental sustainability is to the New Zealand dairy industry, and attempt to open up some avenues of further discussion and research.

Aaron Wilson

Why are females underrepresented in the position of rural manager at ASB Bank Limited.

Executive summary

Why are females underrepresented in the role of Rural Manager at ASB Bank Limited? In what has traditionally been a male dominated industry, more and more females are occupying Rural Manager roles with ASB competitors. The other divisions within ASB also have a high number of females and there is a large number of female branch and commercial managers at ASB. This report aimed to gain more of an understanding of why there is a very small number of female Rural Managers at ASB.

In September 2015 personal interviews were carried out with Six ex ASB female Rural Managers. The interviews where either carried out face to face or over the phone. The interviewees were very forth coming with information about their time with ASB. There were consistent themes from the majority of the interviews, the main ones being; 1. They didn’t enjoy the contestant sales focus and drive to bring on new to bank clients; 2. They felt like the minority, with a limited number of other female Rural Mangers to cross pollinate ideas with; 3. They were disappointed at the lack of a specific female Rural Manager uniform; 4. They felt that there was a lack of support from the Regional Manager level of the business.

In September 2015 personal interviews were carried out with 10 farmers from a range of industries and age demographics. All interviews were carried out face to face. There were consistent themes from each of the farmer interview;

  1. The farmers didn’t have an issue with the gender of their Rural Manager.
  2. The Rural Managers need to be confident in what they are doing.
  3. The Rural Managers need to have a good under standing of production systems.
  4. The Rural Managers need to have a good understanding of the relevant topical issues facing the industry and to also have a personal opinion on the issues.

A large array of data was sourced from the Human Resources Department of ASB, in-order to gain an understanding of the gender breakdown of the current Rural Division, and also around the gender breakdown of the candidates who applied for roles of Rural Manager at ASB. With the ASB Rural graduate program, on average over the last three years ( 2014 , 2015, 2016 ), 40% of candidates who reach the assessment centre part of the application process are female, only 18% of the successfully hired candidates are female. All of the graduates that have been spoken to felt that the assessment centre process was a fair process for selection of graduates.

The new hire data was also assessed for a gender breakdown. The data shows that for the period from 10/01/2010 until 30/9/15, there have been 37 new hires into the Rural Manager role. Females made up 21% of the applicant’s and 11% of the new hires. At the time of writing, all but 1 of the females employed into the Rural Manager role have now have now left the bank.

Discussion was applied to the above topics and some conclusions were reached.

Four recommendations have been made as a result of this project. They are;

  1. Continue to employ the best person for the role, regardless of gender.
  2. Invest more time in coaching females in the sales side of t he Rural Manager role. The bank has a great opportunity to work with the females existing strengths (organised, attention to detail) that females offer to the business, and nurture their sales abilities.
  3. Have an ASB Rural Uniform specifically for the female Rural Managers. Don’t just modify a male’s uniform to kind of fit a female. They have earned the right to be in the role of Rural Manager. Recognise that by making available a female Rural Manager specific uniform. Involve women in designing the new uniform.
  4. Put in place a mentoring program for female Rural Managers. There are a number of experienced females in the Rural business. Put a formal mentoring program in place to support them, as they are a minority.

Brad Saxton

Nutrient management regulation and New Zealand deer farming.

Executive summary

Farming practices in New Zealand will need to change in order to comply with nutrient management regulation. This regulation is broadly described in the National Policy Statement for Freshwater Management (2014). It is then addressed more specifically at the community level through Regional Council and stakeholder engagement. There are almost two thousand farms throughout the country that produce deer (deer farms), either exclusively or as part of a mixed farming system. They will be exposed to nutrient regulation but the exact timing and extent of regulation are unknown. What is also unknown is the impact on productivity that this regulation will have. If significant, levels of production achieved by the Deer Industry may be reduced. Deer Industry New Zealand (DINZ) is the industry body responsible for promoting and assisting the development of the New Zealand deer industry. They support environmentally sustainable farming systems and seek to understand ways in which deer farmers can achieve them efficiently and effectively. They recognise that Land Environment Plans (LEP) that describe the sustainability initiatives on the property will be essential for all deer farms in the future. This project has several aims; one is to understand the water quality issue in its broadest context, a second is to examine the location of deer farmers across New Zealand and prioritise them by their deadline for having an LEP in place. A third aim is to interview deer farmers who have been through the LEP process and communicate to other deer farmers the lessons they learned in that process. The final aim is to comment on the broad issue from the perspective of deer farming.

Solis Norton

Developing New Zealand’s primary industries social capital.

Executive summary

This report and associated research asks the question:

‘How could NZ Inc use Social Media to support the Primary Industries?’

Social Media can no longer be ignored as a tool for your brand strategy. In a recent Dominion Post article, (Ranekleiv 2015) said ‘Online retailers are seeing rapid increases in the number of competitors. To remain competitive, they’re being forced to expand their offerings of products and services. Marketers need to engage with online customers and integrate the brand’s social media platforms into the overall experience. Consumers shopping online will also be referencing the brand in either positive or negative ways on social media. Brand owners can use social media to be part of those conversations to build their brands, and important tools are evolving to support this process’ (Winter C, 2015.)

The three areas of research completed for this paper support Ranekleiv’s statement. These research methods are:

  1. A literature review, used to establish the uptake and value of social media nationally and globally;
  2. An online survey promoted across Facebook, Twitter and LinkedIn targeted at rural social media users to understand their use of different platforms
  3. Case Study interviews, which were held face-to-face, via phone and email to understand how they use Social Media as part of their strategy.

A key finding highlighted that the sector lacked resource; capability and knowledge of social media so generally hadn’t invested time or money into developing a Social Media strategy. This has meant a slow uptake in the use of the tool, so organisations are missing the opportunity to engage online influencers with their brand.

By having our industry’s brands on Social Media, we can collectively tell our NZ Inc story. We do a poor job of promoting ‘our brand’ currently and my recommendations look to influence change:

– Develop a national social media seminar series to educate Primary Industry organisations on Social Media

– Form a ‘collective’ to tell our NZ Inc story through industry collaboration

– Build on existing campaigns such as #AgChatNZ and #NZFarmerday

When used well, Social Media can drive business, build brand awareness and allows communication to be had at a deeper level with customers. By ignoring the opportunities this tool presents, businesses are missing the chance to influence a growing online audience. Online consumers demand transparency and it’s important for long-term growth that businesses build a social media strategy into their broader brand strategy to position them for this growth.

Chelsea Millar, Miller

Level 3 graduate outcomes vs employer expectations.

Executive summary

With almost one in six jobs in New Zealand and over 70% of product exports dependent on the Primary Industries, there is an unequivocal need for skilled employees to make this happen.

Some indications from the farming sector are that concerns over skills and recruitment of skilled employees is decreasing although remaining in the top 10 concerns. Anecdotally this is still a big concern.

The number of farmers who took part in the survey is not sufficient to provide reliable quantitative data. It is aimed at providing insight into whether the graduates of the Level 3 programme achieved the aptitude and attitude as expected by employers and work experienced farmers.

There were some mixed views of what should be expected of a graduate. This was generally understood that basic skills were required. Some mentioning the additional learning that would take place in their first year of employment or level 4 study.

Even in areas where employers were asking about specific skills they would often mentioned attitude, trust, initiative. Additionally, many listed skills such as ability to listen, have to be able to trust them and adjust when things don’t do to plan. One stated that “trust, respect and work ethic are more important than knowledge”.

The results from this survey highlights the need to undertake further research with increased farmer engagement. This will enable a better understanding of farmer expectations for the quantitative (skills) versus qualitative (attitude) graduate outcomes. This in turn can provide better linkage between training providers and farmers ensuring future graduate outcomes are relevant and fit for purpose.

Paul Crick