Learning lessons down under

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WIGTOWNSHIRE farmer Rory Christie recently returned from a trip to New Zealand to study farming methods in the southern hemisphere.

Rory runs the Dourie Farming Company near Port William with brother Gregor. The firm has a dairy herd of 900 cows at Dourie and 150 cows at south Barsalloch.

Here is his report on the different attitude to dairy farming found in the land of the long white cloud.

“Looking back on my trip, I can say that I learned, re-learned and confirmed many practical and technical farming lessons. However, it is the similarities and disparities between the New Zealand and UK dairy industry that really spurred my interest.

“In 1964, when all subsides were removed it was tough for New Zealand farmers but it stimulated entrepreneurialism, ambition and success – something that the UK currently lacks. While UK farmers may want these things; it seems they are just not accessible.

“The key driver in New Zealand is that the Government need a successful agriculture industry and it actively ensures it has one. The NZ Government removed subsidy but it allowed the market to respond. Can you imagine the UK Government easing regulation so that farmers could form a co-op with 90 per cent market share? That is what Fronterra currently enjoys in New Zealand.

“That positive farming environment, a desire to survive, a very suitable climate and high level of technical skill secured a very low cost production system, which in turn created profits. Understanding the long term goal and sticking to it via unity has allowed huge investment in farmer-owned production.

The system of share milking is a contractual system unique to New Zealand, which shares the costs and benefits of running a dairy farm.

Approximately 40 per cent of dairy farms operate sharemilking contracts and it is the means by which new entrant are able to enter the industry.

All of this means that counterparts are now receiving a price per litre that is equal to, or sometimes exceeding, some of the farm gate prices being paid in the UK, but believe it or not this could be their undoing!”

Dairy profits ploughed into expansion

“As with all farmers when they make money, they rarely spend it on flash cars and women; they buy more land and cows. Dairying has expanded away from the heartland of Waikato and the North Island and most of the investment over the last 10 years has been in the South Island.

“In Canterbury, they are spending large sums of irrigation and in Invercargill I met several who were feeding grain, building sheds and buying Keenan feeder wagons. Why? Because like us they are falling into the trap of increased production and belief that more milk means more profit. Bankers are now not lending so easily and no wonder – some farmers have huge debts and bank loans of $50M are not uncommon. This, means that for the first time ever some NZ producers need a high milk price .

“The NZ dairy industry may be becoming more like the UK’s and for the very first time we are competing, at least on the price front, on a level playing field but the disparity is still huge and one we need to learn from. They still have a Government which values their input, they have a growing demand for their products in Asia and an ability to tap into that demand. Most importantly, the farmers value co-operation and although there are dissenters I doubt that such co-operation will be broken.”

Learning lessons on dairy

“So what can we learn from NZ? If the UK dairy farmers are to survive, we need to force the processors get their margin from farther up the chain not – as has been the habit for the last 15 years – from the farmer. As we all know there is plenty of margin in the retailers share. Processors need to look elsewhere for opportunity and farmers need to make that happen. The UK has virtually no export market yet we are continually told that the world needs to be fed. The UK needs to have the ambition to tap into the export market and be part of feeding the world.

“The current UK Government wants us to recover from rescession via growth and expansion. Defra Ministers say that support is going and that we need to be ready but it appears that they want to have their cake and eat it! They must sort out the market first. If they put in place an environment that is congenial to entrepreneurial growth of UK agriculture, then the domino effect will work. Farmers will invest, processors will invest and the UK dairy industry will expand into new markets, and no doubt, the retailers will still make plenty of money. The end beneficiary will be HMRC who will recover much more tax.

Essential to all this is the farmer his ability to unite, we must stop being picked off for a penny here and a penny there. We need to stop believing that we have no voice and stop using apathy and fear as an excuse for doing nothing. Let’s look forward rather than looking back, let’s be dairy farmers together rather than the individuals selling into some high and mighty processor.

“The next time you are asked to act together don’t just say yes and don’t turn up. Instead take responsibility and just do it!”