Back to Life, Back to Reality .....

Warning: The following post contains constant and detailed reference to sheep and should not be read by those with a low tolerance to sheep chat ....

Three days back and its all been a bit bonkers here. The reality is that I owe people money, which I didn’t when I left for my trip. Six weeks of not doing consultancy and cash flow has stopped - one of the rules of first generation farming club I learnt whilst away was that Cash is King..... Bugger - I’m breaking the rules already.

In a vain attempt to stop the men with baseball bats coming to make enquiries, I sent 40 lambs too market on Thursday. The results made me think:

To make a fair comparison, lets use the price per kg figure and then make both the first two groups 40 kg lambs instead. Per head, the Wiltshire crosses would have been £63.60; the Texel crosses would have been £68.40 - that’s almost £5 of a difference. On this basis, taking an example of a total of 650 lambs sold, that would be £3,120 more income if they were all texel lambs. To make this difference up I’d need 699 Wilt cross lambs to produce the same income as just 650 texel crosses.

On the evidence of the above, I probably should be happy to drop the Wiltshire and just use Texel rams ..... but I can’t. See, once upon a time, I had this plan to breed my own peculiar composite ewe. It would shed its wool (that’s why I needed the Wiltshire), be prolific, a great mum and have good conformation. One day I would have thousands of these perfect sheep. I believe in fairy tales - I’m a dreamer and a romantic - but it’s the hope this plan might actually work in reality that makes me happy.

The lambs in the first group were either 62.5% or 56.25% Wilt (its less complex than it sounds, honest!) but only 12.5% or 7.25% Texel (Ok not doing myself any favours re the complexity argument, am I?). The end aim for the composite sheep is for them to be Wilt 50%, Texel 25% and Lleyn 25% with most of them producing Texel sired lambs. I’ll get good prices with patience. I just need to endure some pain before I experience the pleasure. It will all end happily ever after - honest!

IF.....

Dear Lord, thank you for the blessing you have bestowed upon me on this Nuffield trip. For the people I have met and for the words they have spoken. For the lessons they have taught me and for the sights I have seen. Most of all thank you for not allowing me to make a fool of myself too much by ensuring there was no easy access to karaoke and reminding me to do my flies up at every turn.

Now is the important bit: the translation from Nuffield bubble to reality. Please don’t let my uselessness hamper my ability to apply things that I can translate for good; and please don’t let my uselessness make me think things that will never work are a good idea.

That’s the thing - some things I have learnt could help me immensely if I can translate them properly; other things may seem a good idea but will never work in my situation or at the very best distract me from what should be my true focus.

To paraphrase Kipling (NB Rudyard not Mr Cakeman): If I can trust myself, when all men doubt me, but make allowances for their doubting too... If I can dream - and not make dreams my master; If I can think - and not make thoughts my aim..... If I can watch the things I gave my life to, broken, and stoop and build them up with worn out tools; .....If I can force my heart and nerve and sinew to serve my turn long after they are gone and so hold on when there is nothing in me except the will which says to them: “Hold on”.... Mine is the earth and everything that’s in it and maybe I might be close to being half a man. I realise I’m breaching the melodramatic restrictions that I should strictly apply to this blog but lets just forget this last paragraph ever happened.

I think we all have a "useless" side to our characters, something that distracts us from getting close to our full potential. But we all have really good traits too. The trip has made me realise more than anything that I really need to get my act together. A leopard can’t change his spots but he can add definition, body, gloss and have less split ends by using a different type of hair product. I’ll see if my spots can be made better by the product of this trip. Is there an analogy doctor in the house .... it’s an emergency!

Without Struggle, There is No Progress ....

The title of this post is taken from a Ms Dynamite lyric (I am so down with the kids, its well bad, innit?). Taking the huge leap from her application of the line as representative of social and racial suppression and the communal struggle against this; Mr Blanche is using it for the progress of first generation farmers.

I have heard of many stories of struggle on the path of progress to a successful farm business. One man came from a difficult background, he had witnessed his mother trying to drown his father in the bath amongst other horrendous alcohol induced violence. He left school at 15 without being able to read or write. But he now sees these as the basis of his determination, and as such - an absolute positive. At one point he lasted 8 months on bread and cheese alone because he didn’t have enough money for anything else. He remembers at the end of this period he sat down for lunch with his work mate and started crying - his lunch didn’t consist of bread and cheese, he finally could afford something better.

Another guy would sleep for 10 months in a year in his swag as he mustered to save up enough cash to build his business. He too was challenged on the diet front due to lack of money on more than one occassion - eating nothing but fruit cake for a fortnight once. He started his first mustering business at the age of 17 and within 2 weeks he was bust due to non-payment for his first two jobs.

In the height of drought another would get up at 4 am, cut bush (so her stock could eat it) till 8.30, school her kids till 3pm then go out again to cut more bush to keep her animals alive.

A man now with equity of over 15 million had, on the way, had his equity halved twice. The key is he kept going. He didn’t give up. As the Brumbie runner says - giving up is easy, anyone can give up. Not giving up is the defining characteristic of the men and women I have met and who have made it.

To quote a less fashionable musician, Billy Ocean - “When the going gets tough, the tough get going”. All street credibility safely destroyed ... phew!

Memoirs of the Unworthy ....

And so the end is near .....

I’m in Auckland and tomorrow I start the journey from end point back to the beginning. From Auckland to Methven in Perthshire is likely to take almost 40 hours but I suspect my thoughts will be delayed for much longer.

If I cast my mind back over the last six weeks the main things I take from it are that firstly there are other ways of doing things. There is a wider world out there both physically and in attitude. Much of what I’ve seen has made me question the barriers I, and no one else, have put in front of myself. I appreciate this is a cliche but sometimes cliches are true albeit unoriginal.

Secondly, has been the personal stories of first generation farmers. Without exception they have been exceptional people - special not in needs but in wants. Their determination, their ambition, their resilience make the ones that have made it in farming - without help, capital or gift - the best stories in agriculture. Assessment should be made of farmers not simply on the basis of where they are but where they are minus where they started. Judgement of individuals should be made not on what they are but who they are and the depth of their character. Those that have made it had depth, they had depth because all of them have dug deeper than most.

It was an honour to meet them all. I was probably an unworthy ambassador .... there is plenty digging ahead of me.

The Yoda of the Ryegrass Plant ....

Mandi McLeod - a 2009 NZ Nuffield Scholar - was highly recommended to me as someone to visit. Her report on succession was excellent with some brilliant sound bites and she hasn’t failed to disappoint having met her. She lives just south of Hamilton with her partner Ant “Beetle” Beet, a 50:50 share milker.

Though Mandi came highly recommended, no one warned me about Beetle. He is a first generation farmer, who I suspect is in the top 5% of operators. Whereas some that I have met have been lucky with the timing of markets, Beetle has been hit twice by their vagaries and volatilities. 50:50 share milking is a three year deal, their capital is in the cows and cows have had a value of between $3,000 and $350 in the last 10 years. The share milker getting out after 3 years when cow price is flying is a wealthy man; Beetle got hit when no one wanted cows and almost had to start again. This is the very thing that makes his story better - he got hit then he started again, he got hit again but he still kept going and is now in a position to buy his own farm.

There are a lot of whistful words spoken in the UK on New Zealand farming methods, there is also some cynicism. What I would say is their breeding is good but so is ours in many ways, their scale is impressive but so is others, their low input for low loss at lambing is definitely something I am extremely envious of. But there is one thing they are head and shoulders above everyone else in - growing grass.

Going round his 2.5 hectare paddocks with Beetle opened a door to another room in farming. Things I had read about and heard about, I was eventually seeing ..... and finally believing. The ryegrass plant was talked about with deference and with a detailed understanding. Its physiology: once grazed it will grow again in 3 days, if immediately grazed again it has to drain itself of the strength to grow to its full potential; the senescence timing, moisture content and energy values it produces at different times of year; its response ratio to nitrogen at different soil temperatures; and most importantly of all the measurement of what’s there, the prediction of what will be there and how to fit this with the stock demand. It was a science and a logistical feat of management. It was serious. The same acre in North Island can grow 18 tonnes of grass dry matter or 9 tonnes - depending on how it is managed. The maintenance requirement for a dry dairy cow requires half its requirement as a newly calved animal. Twice and half - these are significant signposts on the grassy track to true efficiency.

If Beetle was the Yoda of Ryegrass, I’m hoping the Force is strong enough within me to use this amazing plant as a true Jedi Knight should use his light sabre - to defeat the dark side (my own desperate inefficiency). Yes, I know - too much TV as a child!

Its not what you do, its the way that you do it .....

What a difference an hour makes! Sometimes the shortest meetings are the best. I had from 11am to Midday to order a Hot Chocolate and the biggest Latte I’ve had in my life (it came it a bowl which meant my nose had a constant blob of white froth for a significant, embarrassing period!) plus interview my third NZ first generation sheep farmer as our paths briefly met on the shores of Lake Taupo in the North Island.

Alastair has a full time job but has entered sheep farming through leasing the land and stock on an 8,000 stock unit station hundreds of miles away from his home. He feels he has a business model that can yield 100% return on his capital and 7% from all farm assets (average sheep farmers may be struggling to get near 3% here). All he has to find is the working capital for inputs, wages and the rent for the land and stock (around $120,000)

In the absence of a clearly defined vehicle for progression - akin to share milking in dairying - Alastair has built his own in the sheep industry. He has accepted that most current farmers have increased their equity though their “land owning” - rather than their “farming” - business. In other words, most of the equity has been gained from the increase in land price rather than production profits. This is a really important point - I feel currently the only feasible option in the UK for those with minimum capital is to farm your way to a sustainable business. Buying land at current prices, well in excess of its productive value looks crazy ... and my bank manager would agree wholeheartedly.

He repeated Ben Allomes assertion - you have to be in the top 5% of operators to make a successful business from production alone. He called it “Operational Excellence”. You have to think outside the box and innovate. How does he achieve operational excellence? Simple systems was the top of the list - he only has two stock classes: sheep and cattle. With ewe hoggets, different breeds with different breeding strategies, all types of cattle youngstock; some equivalent farms might have 30 stock classes. The right genetics. Feed your sheep correctly - that meant rotational grazing of 1200 ewe mobs in 6-7Ha paddocks on the basis of detailed feed budgeting (a huge amount more dry matter can be grown this way). Forward planning. Excellent staff. In truth he felt it was 100 small things in addition to these but that was my hour up and I would have to wait to find out all the answers to Operational Excellence.

I waved goodbye with one hand whilst wiping the latte froth from my nose with the other.

Good things come to those who wait.....

At last ... I have touched a sheep! After a long five weeks without physical work I spent at least 10 minutes helping push sheep up a race for crutching ... phew, I need another 5 week rest now. They were Romneys and I have to say I liked them (Oh Lord, King of the Wool Shedding Sheep please forgive me).

I was there to meet Ben Allomes, former Share Milker of the Year and past President of Young Farmers. What a guy! His attitude was so positive, his clarity of thought exceptional. He and his wife Nikki started straight from University with no money. One of the first things they did was write down goals and a strategic plan. The main target was $1 million of equity in 10 years ... they did it in 7! He embraced debt and got excited by it. He was adamant that the only way to progress from a standing start was to be in the top 5% of operators. He drew me a graph of how equity grows and the process he went through. The shape of the graph was one I’d seen a number of times before from first generation farmers:

OK this just shows how crap I am with computers but its years are on the x axis; $ on the y!. They could be any values, I've just chosen 10 years and a million dollars - work with me here. Ben argues that this is typical of building a business from a low capital base. Some people give up in the middle of the graph thinking they are getting nowhere. He also had a view that the progression is made up of three crucial stages. The first third is gaining, perfecting and implementing skills. The second third is making contacts and proving to these contacts you were worthy of progression (hence opportunities arise). The final third was profiting financially from the previous 66.66 (recurring)%.

Second Rule of First Generation Farming Club - Be Persistent!

Wiltshires without the Horn ....

Obviously, this is just an excuse to put photos in of sheep but as mentioned previously I made a visit to a Wiltshire breeder near Christchurch. Wiltshires in New Zealand are the same as Wiltipolls in Australia. The Sheens are one of two flockmasters that record breeding values in the breed, but Steven has added a 10 point scoring system of shedding variation which he has been applying for 5 years. He reports it has made a huge difference. A group of Wiltshire Horn breeders in the UK have been recording the same for two years with a five point scale, so technically he is cleverer than us!

Wiltshire Horns seem non existent and a major reason for this is any lamb or hogget killed has to have less than 40mm of horn or the processors will not accept them.

What the Wiltshire Horn has over the Wiltshires I saw was shedding ability. Steven would quite acceptingly shear his sheep as long as he could do it with the sheep standing up. Otherwise the sheep were big, meaty and selected for easy care characteristics. I was impressed!

I say Composite, you say Synthetic ....

The sheep industry in New Zealand has seen many changes. In 1980 there were 60 million ewes now there is only 23 million. Sheep in a lot of the South Island have made way for Dairy cows, Deer and even Vineyards. Yet despite all this they export the same tonnage of lamb. Lambing percentage has increased from 102% in 1980 to an average of 123%. Carcass weights have gone from 13kg to 17.6kg per animal.

In terms of breeds, the Romney still dominates at 40% of all ewes; thereafter there is the group known as “Other” at 29% (more of which to follow); the Coopworth (a stabilised Romney x Border Leicester) represents 12.2%; with the Perindale at 9.6%.

The “Other” category represents what are known as Composites and include Kelso, Rissington, Greline, Textra, Romdale and Coopdale ewes. I was forcibly told that what I, and everyone else it seems, called a Composite (cross bred sheep that has been stabilised by a number of back crosses) was nothing of the sort and in fact these should be termed Synthetics. Composites are really cross bred sheep that are constantly added to with new genetics (I scare myself with how interesting I can be).

The New Zealand “Composites” have probably peaked and are on the decline. Overly aggressive marketing and their failure to prove themselves under difficult conditions have checked their rise. The Finn and East Friesian breeds, which have a part to play in many of these sheep, add fertility but produce lambs which are incredibly hard to fatten. Processors hate them. Fertility may be there but some lack significantly in mothering ability. As the fashion was raging some suppliers made the mistake of supplying not the top rams, just all the rams and quality dropped. Quality will prevail and some Synthetics will be here to stay but the cynicism learnt from alot of broken promises will remain.

Sheep are just sheep and its perhaps overly optimistic to pretend otherwise.

Take the rope down and return the wobbly chair to its rightful position .......

I am an emotional man. I cry easily and laugh at anything. The problem with this is that - as (the legend that is) Ronan Keating once said - “Life is a Rollercoaster”. Having been exposed to the wonders of the dairy industry and the phenomenon of share milking - I was down - not “valium / noose and wobbly chair” down but down nonetheless. Share milking is a young man’s game. I felt like I’d seen it 20 years too late. I’m 41 and only have a hobby.

Friday was free - no meetings - which, given my Calvinism induced guilt complex, was really worrying me. I happened to get a name of a Wiltshire breeder from a man that helps run the breeding value recording programme (SIL) and managed to visit the breeder and his wife near Darfield (40km from Christchurch) to subdue my self flagellation. My expectations weren’t high but I am obsessed with Wiltshires (its so wrong, yet feels so right) and I needed out.

The visit turned out to be a revelation. Not only were their Wilthires actually really good sheep, they were first generation farmers. Not only were they first generation but Steven had started when he was 37 - that’s later than I did. Now in semi-retirement they had made something really significant from not a lot. A 750 acre farm, 2,300 ewes, 1,000 hoggets and 70 finishing bulls. Literally every square metre was improved and used to its full potential. They grazed goats in the gullys to clear gorse. Over winter they would move a half hectare electic fenced paddock every day to maximise grass usage, fertility transfer and regrowth. Their costs were very low, but they never skimped on fertiliser. They were a team and had obviously enjoyed their journey together immensely. They had bought their farm and bred good sheep. They were happy with what they had achieved but humble too. They may not have had equity of $15 to 20 million but they were as successful as the dairy guys I’d met a couple of days earlier - they had achieved their goals together in a far less profitable sector.

Its still possible to skin the farm cat, you just have to adjust your method when you get older (these analogies still aren’t cutting it are they?).

PS. Obscure sheep photo is of Landmark ewes - a synthetic (NB not a composite! - there is a difference) bred from the government's own flock. I will tell you more soon .... don't get too excited!

The Milkmen of Human Kindness ....

Met two first generation dairy farmers yesterday. Both had Equity of between $15 and 20 million having started with minimal savings! Some, if not most, of the successful farmers in New Zealand are first generation and in the dairy industry. Surpluses can be immense one 50:50 share milker (roughly 50% of costs, 50% sharing capital inputs) earned $650,000 last year and this sort of money may see the end of such agreements, as its too much for the land owners to stomach. The flip side is that the previous year little money was made and much lost. Whereas the end price of milk solids (a kg of milk solid effectively means a twelfth of of a litre) used to vary by 50 cents it can now have as much as a $2 fluctuation from year to year. It stands currently at around $7 / kg which is seen as good.

The pathway in dairying seems simple but intrinsic yet only around 20% make it all the way. People start young - late teens, early twenties. Savings are made, this money invested and heifer calves raised. Once milking these heifers can be leased (@15% of value) into other herds and when numbers are large enough a Lower Order share milking job (less capital, less share of surplus than 50:50) can be had putting the cows up as capital. Thereafter a 50:50 share milking opportunity can be sought where rewards can be even greater. Some share milkers run more than one farm; perhaps using a lower order share milkers or employed labour to run the other farms day to day. Apparently there are some in the North Island share milking up to 7 properties. From here land ownership is very realistic given the potential profitability of dairying.

Debt is huge - it is not uncommon for there to be only 30% equity and there are plenty with less. Yet if the return on capital employed is 16% and the interest rate is 8%, yield is still being made on whatever debt is held. Debt is seen as a positive and - in current conditions - easily serviced. The banks might refuse a loan application for $200,000 for a wool shed but accept one from the same party for a $2 million dairy conversion. Yet all that is required is for the price to fall below $5 and there will be a shortage of new under pants in the department stores of New Zealand.

What amazed me was the culture in the dairy industry. Most have had help and kindness bestowed upon them when working their way up the ladder; now those further up, in turn, want to help those lower down. If you are young, driven and want to make a success in farming from a humble starting point - come to New Zealand and milk cows!

Let's have a heated debate .....

In a followers survey to the question “Am I mental?” with respect to keeping pigs (see ‘Generation Next’ post), the results were as follows: “Definitely”, 50%; “Not bothered, but definitely”, 50% (OK, OK there are still only two followers).

My Wiltshire Horn wingman Tim reckons pigs are the quick path to no life and bankruptcy and sheep rule OK. (To be fair he’s had experience of the pink things). Building lots of capital only to die is a flawed goal, he says. This reminds me of something else Lynton Arney (the nice man, with nice Border Leicesters) said to me: “If you die with more than a dollar in your pocket you’ve mismanaged your finances” - maybe you’ve mismanaged your life too.

Yet all the evidence suggests that for first generation farmers to make an adequate living and have a sustainable business structure you need to a) make good profits - so you can live this year; b) build equity - so you can live next year and c) generate cash so you can live today and are able to fulfill a) and b). New Entrants are challenged with low levels of capital, a business that is too small to be viable and difficulty in accessing land at sensible values. Logic would suggest that given this you need to increase capital to build the business to a viable level and make a more cash generating use of land (than maybe sheep can provide).

I read a statistic that 32% of the New Zealand dairy industry are from a non- farming background. Most of these will be share milkers - it is huge here. I am going to meet a first generation sheep farmer on Saturday - to my knowledge (admittedly poor) he is the only one in New Zealand, it certainly feels like it! The reason for this discrepancy: cash generation; profitability and thus an ability to build capital all on a relatively low acreage without having to rely on living to 135. Best story I heard was an Englishman who spent 10 years share milking until he owned 1000 cows - he then sold them at the top of the market for $3000 each (now worth $1200) = a cool $3 million. He might be able to finance a sheep farm with that!

Example figures of turnover and profitability (on the same theoretical hectare) were given to me by a very clever man, whose first love was sheep:

1. Dairy: Turnover - $9,000/ha; Profit - $4,000/ha
2. Crop: Turnover - $4,000/ha; Profit - $1,500/ha
3. Sheep: Turnover - $1,500/ha; Profit - $ 600/ha

Pigs that make a good profit is not a “mental” enterprise; pigs that aren’t done right or are victim of macro-economics .... well I would definitely have to see Dr Bonkers then. Maybe Tim is right - they will ruin my life. Maybe there is another way ... but in the mean time I would urge people to have more sausages and eat bacon every day ..... just in case.

Ain't no mountain high enough ...

With the logistical tenacity of my Uncle Tom Murdoch (and the unforgiving hospitality of my Aunt Janey) I was able to visit four high country farms in my first five days in New Zealand. Queenstown is on a similar latitude to Bordeaux yet the landscape is like the love child of Switzerland and Scotland with additional hybrid vigour, way above the mid parent mean. It is truly remarkable as the name of its closest mountain range - the Remarkables - suggests: they say it how it is in New Zealand!

My visits were constant in quality but what struck me was the variance in attitude of my hosts. My first visit scared me - the technical detail was fired at me at a constant velocity somewhere above the speed of sound itself. A stock unit - the principle measurement of livestock farming - wasn’t just a sheep or a cow it was a 55kg ewe, averaging 110% lambs per year, producing 4.5kg of wool and consuming 570kg of Dry Matter/year. The return on a kg of DM averaged 12 cents for sheep compared to 60 cents for dairy cows. Feed budgeting (how many kg DM to feed each day) was the most important management practice. I love this sort of thing but couldn’t write fast enough to take it all in.

My second visit was to another very successful farmer that relied much more on his gut and his innate stockmanship. I know many excellent farmers in Scotland that go on feel rather than figures and it was actually comforting to meet someone like this in New Zealand. I almost expected every farmer to know the number of blades of grass on his farm aswell as the energy and protein values per inch of leaf, such was my perception of this country. The two others were true gents and really interested in the conundrum of first generation farmers ... who weren’t in dairying. It was done in the past through shearing or mustering their way in but those days are gone. There was a stage between the late 60s and early 80s where there was ballot farming, which involved government land being balloted for new entrants. Now it seems to be a first generation sheep farmer you need to milk cows for 10 years as penance.

The other thing that struck me was the use of the hills. Fertiliser and clover seed were a major input onto hill land (usually by air) up to 3000 feet. Hill improvement through reseeding was common place. The hills were of true worth and vital in supporting a 5,000 to 10,000 stock units per labour unit ratio and making stations viable. Of course back home we can’t do anything to our hills, that said they’re not exactly near Bordeaux!

One more thing - there’s no money in sheep in New Zealand or at least it seems to be struggling. Deer pay best (venison to Germany plus velvet), then sheep, then beef cows. Don’t worry, I’m not going to start deer farming, at least not yet.

PS the photo is of Perindale ewes on the Remarkables Station. The stock were remarkable too - no pigs though which was disappointing.

Gate SIX ......

One of the many things Lynton Arney (the nice breeder of nice Border Leicesters in SA) passed on to me was a quote: “Never underestimate a farmer’s powers of observation; but be cautious of his powers of interpretation.” He was talking about sheep and EBVs but lets take this a bit wider....

Now I’m not sure if I can really call myself a farmer yet but the trip from Sydney to Queenstown saw two instances of the caution with which I should treat myself:

1. “This is your captain speaking, just to say we have on board the most modern navigation system on the market, state of the art and we will be using this to land at Queenstown.” OK, firstly why say this unless there is an issue - it would have been far better to say nothing. My interpretation of the statement was - ‘we need all the help we can get and it still might not be good enough’. I instantly remember an ex of my brother who was an air hostess admitting even she freaked out landing at Queenstown. We flew in between imposing (and close) mountains, over the huge (and deep) lake and the navigation system was working sufficiently hard on our behalf. It was never really going to be a problem ... though i did kiss the tarmac on landing!
2. The New Zealanders speak very differently to the Australians (I know I should know this already but I was finally observant on landing). They have an alternative usage of vowels. Especially unnerving is their pronunciation “i”s as “e”s and vice versa. The first tannoy annoncement I heard, for a few weird seconds, appeared to end as follows “...would all pissengers proceed to great sex”.

Observation and correct interpretation are two very different things!

Sydney State of Mind ......

Spent a long weekend with my brother (Hamish) in Sydney and his wife Susan, my neice and nephew. My brother is my oldest friend but we are both equally useless at keeping in regular contact.

I talked corporate finance with stockbrokers with 8 hours drinking under their belts (my chat was on fire as you can tell - see picture: left to right is Blanchie (Hamish); Blanchie (Bearded - looks good doesn’t it? (cough cough) - and obviously slightly sweaty); Walshie and Clarkie - stockbrokers just add “ie” to the end of a surname it appears. You can see I was using my own personal style to secure financial sector funds.

Saw the best example of meat marketing .. like .... ever .... at Victor Churchill’s butcher shop (yeah, I don’t get out much but see second picture). Hamish beat me at golf and also at the game we play - how long can you go without catching a fish before you give up.

The last night in Australia I sat in a glass fronted restaurant, with the part of my family I see far too seldom, over looking Bondi Beach with a cold beer in hand. Admist the screaming and vomit (Hamish, not neice and nephew... ho ho). I pondered on what had just been these last few weeks as I watched an archetypal symbol of Australia meet the wider world (beach meeting sea - still need to work on those analogies!). As the Tasman stroked Australia it was also stroking the land of the long white cloud and the next day - by the power of Quantas - I’d be meeting New Zealand too. Its the place of worship for many a sheep farmer lets see if I get born again. Thanks Australia and all those I met - you have taught me well!

Generation Next ......

I was priviledged to meet two genuine first generation farmers in South Australia. Both were almost twice my age (I like to think); both had started with a big block of scrub and not a lot else but now I was meeting their sons who had built upon the land their fathers had cleared and apon the hardship their fathers had endured. These land clearers didn’t just start at square one it was almost off the board, in the margins, square zero. Both sons had built hugely upon their fathers work - one in sheep, the other mainly with pigs.

The second generation have built the on the efforts of the first. The sheep man managed his debt so that it never increased, servicing it through excellent production practices and also using these proceeds to invest in drainage and clay spreading (on his running sand soils) that transformed the productivity of the land. These practices combined with the natural increase in land values has seen his equity increase dramatically.

The pig man was a revelation. He was one of the very few I’ve met who has increased a significant proportion of his equity through production. He borrowed big and seemed to have balls of brass but he was able to service and reduce this debt through the cashflow a 1000 finished pigs a week provided. He was an innovator and an early adopter. He concentrated on systems rather than procedures and was the first in Australia to farrow, wean and finish in strict batches, his inexpensive growing sheds reduced capital input (see picture) and his farrowing shed was state of the art. He had expanded when others thought it was crazy but he trusted his gut then referred to his head for an objective opinion and has thus far ridden the market fluctuations incredibly well through his expansions to 1800 sows. He may have taken risks but he made sure big risks were of low risk by doing things exceptionally well.

It has been apparent since Washington that Cash is King and given the problems getting hold of land, an intensive enterprise needs to be considered seriously in order to build a farm business of true worth. I have been talking to a company that would want up to 70 finished pigs a week but are quite happy for me to start at as little as 18 gilts. A gilt is just over £200 and promises to give me 20 odd pigs per year; compare this to a gimmer at over £120 to provide 1.5 lambs a year. Obviously what life I have will be taken away from me and cash outflow would induce long periods of buttock clenching; but maybe this is a true opportunity. It would be a vertical learning curve but I have a market and should just work backwards. I am seriously considering this - am I mental? Must go - the yellow van is here to pick me up.

Here comes the science part - concentrate.....

There are only two ways to build an agricultural business - 1) production - profit and cash generation and 2) real estate - growing values of property. That’s it, simple as, QED.

This is the constant theme I am finding. Some of you may point out that this theory belongs in the file marked “The Bleedin’ Obvious” right next to the one marked “No poo poo, Sherlock”, but it is really interesting to see these methods employed in an individual’s story and how they inter-relate given different economic conditions.

One of my visits in South Australia was to a man who started out with what would have been barely a five figure sum in pounds sterling and now must have a business worth tens of millions. Through a small family loan, the home farm acting as guarantor and vendor finance (the common practice of the seller of the farm being paid off over a number of years); he managed to purchase his first 900 acres. In the first seven years his business grew 25 times and has continued to expand. He now has over 10,000 acres, most of which is good quality arable ground.

How did he do this? There will be some reasons that would be only obvious if you were there with him along the way - he is obviously an exceptional operator and focused on the essential detail that is crucial to high efficiency. But also what was important was:

1. he bought land at, or below, productive value - in the past, as a rule of thumb, this would mean grossing the land’s value in three to five years from production; but this has reduced to an 8- 10% return on capital target. Did some quick figures on this and an acre of land that might support 4 ewes should really be worth £1,000 to £1,800 in the UK (conveniently ignoring SFP and wintering issues)!!!!
2. he was bold (procrastination is very dangerous) in his risk taking but crucially managed that risk incredibly well. He transformed alot of land with flood irrigation capability and managed flooding and salination issues through drainage. These works on their own increased the value of the land considerably but also ensured production and hence cash generation. He questioned the theory that you can’t manage the weather - he has by ensuring a minimum of 60% of potential production when there would have been nothing following extreme weather events.
3. the two biggest effects on his business, cost him nothing except courage. He implemented a totally different way of managing his staff that ensured they had status, satisfaction and security. The responsibility to achieve tasks was all theirs and also judged by their peers. He plotted a graph of his net worth and at the point he implemented this, the line increased sharply. Later he set up a board to run his business, all decisions were made by the board that didn’t include him or his sons! The board was made up of trusted people and the family could make a case for an action but it had to be researched to death and very persuasive - again at the point this was implemented the line of Net Worth increased.

From being a bit over-obsessed with “heart” as an essential to first generation farming, this visit really emphasised to me the need for “head” usage in decision making. Maybe the heart could be the engine but the head the steering wheel, accelerator and even handbrake .... mmm - need to work on my analogies.

Sheep ..... probably the best animal in the world...

A huge proportion of my followers (50% of all two of them) have requested more detail on the sheep that I’ve come across here. Always keen to respond quickly to feedback, I have waited a week and finally got round to this - this ones for you Timothy....

Damarra and Dorper - wool shedders. The Damarra is a fat tailed sheep that isn’t too popular with processors as a pure bred. It is smaller than the dorper, hardy and has the ability for polyoestrus (Sp?) lambing (ie twice a year) I hope I’ve attached a photo of some cross Damarras; the Dorper - I saw mostly white faced - is a big sheep with a good carcass. A cross of the two is common with Garry Hannigan really pleased with a Dorper (50%); Damarra (25%) and Wiltshire Horn (25%) cross. Amazingly for all you Wilt breeders out there (Ok lets be honest that just means Tim...) the Wiltshire was added to increase prolificacy!!!! He was also using Meatmasters which from a hazy memory were cross Dorper/Damarras.

Though the Merino still rules in the pastoral country of the Outback there is a big shift toward the wool shedders. A Merino can add $15-20 of wool and $7-14 for its skin but its labour demands, huge risk of flies and poorer meat product make shedders a more attractive option in rangeland Australia due to the logistics and costs of mustering. This step change in production was symbolised by the Browns at Reola station home to one of the biggest and efficient wool sheds in Australia. It has the capability to allow shearing of 2,800 ewes a day. The Browns have since gone 90% toward wool shedders and the wool shed lies quiet for most of the year.

The Australian sheep flock has reduced from 180 million ewes to under 80 million and as a result their lamb price is probably better than ours ($120 for decent 50kg lambs). But down in South Australia pure Merino and first cross Merino ewes (with Border Leicester, White Suffolk or Poll Dorset) are almost the only way to go. Easier managed country and the financial importance of wool and Merino type skins make it the logical choice.

Graham Clothier at Lucindale taught me alot in terms of focusing on the essentials and keeping systems simple. Feed according to need, ensure good shelter to limit post lambing mortality and get as many lambs out of them as possible. This seems obvious but Graham was doing things beyond what I had actually considered. He also took me to Naracoorte market which was a bit different to UA Stirling! (see left)

I did go and see the the Breed president of the Wiltipolls near Strathalbyn. Wiltipolls are Wiltshire Horns crossed with a polled breed followed by four back crosses, with only the hornless selected (see below left). If you thought it was impossible to improve on a Wiltshire Horn, this is it and the yellow van will be coming to get you very soon using the Mental Health Act as an enforcement tool.

On my last visit in South Australia, I met an interesting man (Lynton Arney) who bred Border Leicesters - like our Border Leicesters but they looked far less like rabbits exposed to unhealthy levels of radiation. His branding was really impressive (sweatshirts, caps and even cooking aprons) and his method of client care - genuine but not intrusive; factual rather than hype - seemed really effective.

I am sorry for my poor photo placement and quality but I cannot accept liability for any dissatisfaction on anyones part especially those that play the banjo and are from Wiltshire.

Broken Hill killed a radio star ....

If we all get 15 minutes of fame in this life I have now officially only got 9 minutes left. Garry Hannigan at Churinga contacted ABC Broken Hill to say a Nuffield Scholar was in town. The next day the Western Division of New South Wales was exposed to a live six minute radio interview with Michael Blanche talking, what can only be described as, “mince”. Ami the interviewer (see picture) was very nice - I hate to think what would have happened if I had had the Australian version of Paxman.

I mentioned “heart” as a key to progression for first generation farmers - I thought this sounded good so I then continued to repeat this over and over again, proving that really I should have engaged another organ (between my ears) to be fully comprehensible. Anyway I have employed the maxim learnt from the Brumbie Runner “Always look forward, if you look back you’ll just trip up”. Still can't help cringing a bit though!

Maybe size does matter.....

Theory 1

It pains me to say it but size is important afterall! In the Outback its generally seen that 10,000 ewes per man is the rule of thumb. Dirk Stevens near Broken Hill managed 12,000 on 3 properties over at least a 400km radius (and he was still sane and very amusing). With 10,000 a couple of bikes, a “ute”, maybe an old tractor and a grader (for the tracks) might be the sum of the plant and machinery. Admittedly lambing is seen as the one time you need to stay away from stock (thanks to the tradition of natural selection - there was an incredulous reaction to UK sheep farmers being so interventionist and making lambing a self-perpetuating problem)! No drenching or vaccines are usually required and mustering of each mob only takes place three to four times a year. All this said there has to be a lesson learnt here!

Theory 2

“What’s to be, is within me”. My first visit was to Tony and Meredith Thomson near Bourke. Tony had amazing vision and was working on really radical stuff on his sheep. He was absolutely brilliant but the one time I thought he might lose patience with me was when I mentioned that the system needed to change in the UK. I got the impression throughout this first week, that whinging about the system is probably the biggest social faux pas you can fall into - first rule of first generation farming club: its up to you and no one else!

Theory 3

Adapt and Innovate. The rise of the wool shedding meat sheep and the fall of the Merino was a real trend I saw. Poly-oestrus lambing (twice per year - heaven forbid) made 100% lambings into 180%. The harvesting of feral goats at tiny cost kept families. All these were intuitive farmers making the most of what their available resources and climate could offer.

Theory 4

Never take things seriously. Joe Baty the Brumbie Runner would sack musterers if they weren’t funny. It was not only good to have a laugh - it was compulsory.

Theory 5

“How do you eat an elephant - one forkful at a time”. Set your goal, work out the tiny steps needed and start “eating”. Apologies to my many animal welfare activist followers for this analogy.

Theory 6

“Always look forward, if you look back you’ll trip up”. When you take a hit don’t dwell on it, dust yourself down, probably mutter something related to XXXX it and go again.

Theory 7

Its all about heart. I thought that was a given for me, but it hasn’t been tested as much as those that live in this corner of the world.

How, why and wherefore....

Of the five first generation farmers and one third generation (saddled with significant debt at the start) I’ve met so far the over-riding principles are the same - heart (where there’s a will there’s a way); endurance of hardship & resilience (anyone can give up, giving up is easy) and embracing risk (debt is a driver). What differentiated some was how their success was provided in varying economic ways.

Some made it through production. Back in the 1970s, margins were greater. Turnover as a percentage of land value was huge - above 30%. Even now in certain areas of the Western Division of New South Wales a farm can be paid off with its profit from production in perhaps 10 years, given suitable enterprises. Compare this with the UK at current land values and average margins, it might take up to 100 years!

Sheep stations endure very low costs (Vet & Medcine and Feed are quite often zero to a few cents) and have developed systems that require a fraction of the plant and machinery we feel we need in the UK. Freight and fuel are the significant items of expenditure and these can be massive.

Some made it through real estate value increases. By taking on run down properties and improving them significantly a station can double its value with the help of land price increases during that time.

In certain sectors such as cotton the willingness of financial institutions to lend considerable sums (up to 100%) provided one operator the opportunity to build a significant business whilst his property increased in value to help his balance sheet.

Another, Joe Baty, generated cash through Brumbie running and goat mustering and now deals heavily in goats to keep cash flow healthy.

Net Worth - the amount of money they would be left with if everything was sold and debt paid off tomorrow - was almost an obsession with some. This was seen as the bottom line and calculations were made regularly to keep within target or as a measurement of success. Debt was seen as compulsory to be healthy, Equity targets varying in levels from 50% to 80%.

In the Outback I saw the two ways to grow a business - farm production unhampered by distorted markets and asset growth helped by efficient market forces. There is a lot of translation to be done to apply this effectively back in Scotland!