Day four was all about young farmers and the pathways they take to getting to their desired goals. We met with a couple of young farmers who are working in different situations relating to family and back ground and finally we met with the Rabo Bank who answered a few of our questions relating to the ability of the these farmers to make a return on asset. Keeping in mind that over the past few days we have heard a lot of enormous land prices and current poor milk payout.
It’s important to note that the path to farm ownership in Australia is vastly different to New Zealand. NZ is far more structured in a young farmers progression from worker, manager, contract milker to 50/50 share milker, share milker is the fastest way to make a return on asset, but can be very risky as you don’t have long term farm security and own a very volatile asset in cows. But from this position you give yourself the best opportunity to launch into farm ownership. Existing NZ farm owners have a culture of helping young farmers purchase land. Australia is far less structured in comparison, farm ownership is the end goal as it gets you security for your future.
Firstly we met with Simon and Hilary Valley, a young family with two kids and what appears a bright future. Hilary coming from a sheep and beef background and Simon’s parents milking cows in a different region. They have decided to work away from there families, and have built up a 50/50 share milker position on a 500 cow farm.
Simon has a very clear idea on his farming outlook that of the low Input system. He realises his money is in his cows and ever trying to increase there value you through breeding and culling. They are currently working hard to save and increase the value of their stock so when the opportunity presents to purchase their own land the bank will come to the party. It was refreshing to see a young guy with a lot of passion and optimism.
The second farm we visited, Blackmores, was 100 hundred years family owned and recently converted from sheep to dairy. There’s three sons in the family each looking to own and operate their own business. The family took the approach to move away from the traditional sheep into dairy to generate greater wealth more quickly to achieve the families goals.
Currently they’ve acquired a second milking platform and an area which they can winter their cows on. Hamish Blackmore was very reliant on foreign employment, in particular Phillipino. It’s of great advantage to the business to try and get these guys permanent residency as they are good workers and once trained very valuable. This pathway to dairying is some what similar to home where families work together to grow.
Then finally we rolled into Rabo Bank. This was a great experience as we could really nut out an understanding of how young farmers could purchase a milking platform. There’s no silver bullet, every circumstance is very different. The main factor is timing, buying and selling stock and getting in during good times to build your equity quickly. Probably the main point is not a lot of farmers pay back principle and rely on capital growth within land and cattle. By growing their equity they buy more land, milk more cows in an aim to eventually have enough to consolidate and pay off debt.
From the day we gained a greater insight into becoming an owner of a dairy farm in NZ. Both of the farms we visited had different mechanisms working with and against them, speaking with these guys we increased our knowledge and it gave us all a bit to think about. NZ is a very different set up to Australia, it’s a process that takes time, good management, risk and a lot of hard work.
We met with the Wyndham Young Farmers for dinner and further discussions around different pathways into the industry in NZ. It was a fantastic way to meet with a group of young, passionate, like-minded people who were reaching their goals within industry.