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Productive year in new zealand

The cyclone that New Zealand experienced in February caused widespread damage as well as loss of life. Monaghan native, Olin Greenan, is a milk producer based in the Waikato region on New Zealand’s North Island. In the aftermath of the freak weather event, Matt O’Keeffe spoke to Olin about the impact of the cyclone on farmers there

“We were very lucky in that we missed the main impact of the cyclone. At moments like this, it’s a time to reflect on our good fortune," says Olin. "Unlike many others, we were able to function normally but along the east coast and north of Auckland, there were gruesome scenes and, as a farmer, I fully appreciate that it must have been a nightmare for farmers in those areas.
“There were widespread power outages and entire farms under water. The hilly terrain added to the impact of the heavy rain, because the water ran off the hills and swept all before it. Livestock losses were high including flocks of sheep. We even witnessed cows swimming to reach higher ground. 

"People showed their generosity and there has been fundraising and other help including manpower to get the people most affected through this. Still, it is going to take a long time for them to recover and rebuild their livelihoods. Most of all, we are thinking of the families and friends of those who lost their lives. February was also the twelfth anniversary of the earthquake that knocked much of Christchurch.”

Good grass season

While the localised impact of the cyclone has been serious, it will have marginal effect on milk production, as Olin explains: “From a grass-growth perspective, it has been the best production season so far in more than five years. Initially, we had a tough spring, running up to six per cent behind in expected production and that meant buying in a lot of buffer feed early in the season. With good subsequent grass growth, we turned that deficit around and produced a lot of extra milk completely off grass. Normally, there would have been concentrates fed but that hasn’t been necessary for much of the season. The reason the cyclone hasn’t hit overall milk production is because the main areas most badly hit are not the major milk producing regions.

The weather has been a change from previous seasons. Normally, we would be hit with a drought in February-March with grass burnt off and loads of supplementary feed needed to keep cows milking. We would be milking once a day (OAD), whereas this year we only moved to OAD in early March and were feeding two kilos of a maize silage buffer. The cows are doing 40 per cent more production than the average for this time of year. It has been a great summer on our farm and the only downside has been the huge increases in production costs.”

Another share-milking move

The Greenans are share-milking in the Waikato and that can bring uncertainty: “The two farms we are operating on have been put up for sale, so we had to secure a new contract. Luckily, we have a deal done on a larger unit here in the Waikato. There is capacity for 800 cows and that will allow us to further grow the business. It’s a case of never wasting a crisis. The initial upheaval has worked out well for us. As well as enlarging the herd we can consolidate by milking the herd through one rotary parlour. "On our current farm we were milking two herds in two parlours. That should deliver some efficiencies in labour and other production costs. The move will happen at the end of the season, on what is known in New Zealand as ‘Gypsy Day’, when share-milkers move to new farms.”

Building equity

That traditional means of building up equity by share farming to eventually own a farm is coming under increasing pressure in New Zealand, as Olin confirms: “Historically, if it was 30 years ago, Anna and myself would have secured our own farm by now. We are long enough share-milking to have built up enough capital to buy a farm. What has happened is that there has been year-on-year capital gain on land and the gap between the value of a cow and a hectare of land has widened.  "Another dimension is that with high land prices and the cost of compliance, the return on capital from buying a farm is marginal. If looked at in cold business terms, why would you choose to do that over the share-milker model? However, as I’ve learnt in the last eight months, you pay a price for the relative insecurity of the share-milking model. It is high risk, high return. We were left, potentially, in limbo as to where we were going to live, but it has worked out well and, from a business viewpoint, we are satisfied to be increasing our wealth and that will give us options when we reach the next decision-making phase of our careers.”

Global outlook

The Greenans were home in Monaghan for Christmas and that allowed Olin to keep abreast of Irish dairy developments: “Our New Zealand prices were mid-eight New Zealand dollars for the current season. Irish prices have moved back, and prices may fall further. The biggest influence on New Zealand prices for the next period may be the return of China to the market. Part of me thinks that with inflationary cost increases, there must be some element of inflation built into the milk price as well or the economics don’t add up. There is increased global milk production, so the environmental restrictions don’t seem to be impacting on the ability for milk production to grow across the world.”

Everyone together

There has been an effort to build a consensual approach to emissions reductions in New Zealand farming. Termed ‘Everyone together’ the strategy has hit a few challenges: “There was widespread consultation but there has been disagreement from some parties involved in the sector and we are seeing division in how to move forward. The mechanics of the strategy are a bit confusing and that doesn’t help. Accusations that representative groups have sold out to the government have left people wary. My view is that we got the best option out of several unpalatable options, with some control over how the emissions pricing is set and how there would be funding coming back to the sector to support the necessary changes on farms. I’m not sure where we will end up now.”

Positive thinking

Olin takes a positive outlook on developments: “The top-10 per cent of milk producers will always outperform their peers. That puts them in a relatively positive position whatever happens. 

Average is a dangerous word and if everyone is piled in together, the financial figures will not look positive. I think there will be opportunities if you run an efficient milk production system. Through all the years of challenges, farmers have found solutions to problems through the application of science and technology. I have no doubt the same will happen in the future.”