Going over old ground

 

The Pasture Renewal Charitable Trust (PRCT) has launched a new campaign aimed at encouraging farmers to renew 10% of pasture annually. PRCT project manager Tim Wood says the 10% target is a national average across sheep and beef and dairy farms.

“The 2009 BERL report came up with sheep and beef farmers renewing only 2-3% and dairy farmers 6-7% annually. 

“That report contained some analysis based on getting sheep and beef farmers up to 8% and dairy farmers to 12%. So the trust has pitched our national aspiration at 10%,” Wood says.

“The underlying message is that any increase in pasture renewal rates is good for your business.”

Because all farms are different there is no one-size-fits-all solution. 

 “We don’t want farmers to get too hung up on the 10% figure but we believe that 10% or greater is where it needs to be to significantly lift productivity on farms.”

Whatever way farmers look at it pasture renewal pays, Wood says.

“If the best paddock on your farm is likely to be producing double what your worst paddock is then renewing pasture has got to pay. Research says that new pastures that are established properly will yield 20-100% more compared to previous pastures,” Wood says.

A consultant’s view

Total Ag agribusiness consultant Rob Macnab says providing people get pasture renewal right it generally pays off and gives a good return on investment.

“In one of my cases this morning there’s a 52% increase in production and potential profit from changing a low-performing producing grass. It was doing 6.5 tonnes per hectare, now it’s doing 9.5t/ha and that’s a 52% return on investment,” Macnab says.

The investment might not always be solely in grass – it could be in fertility, subdivision and sometimes water as well. But the key driver was changing the grass.

 You need to ask: is the amount of grass I grow the limiting aspect of my production system? It could be fertility, subdivision, management practices or stock policies. It [pasture renewal] is one of the tools in the toolbox.”

Macnab was involved with a Beef + Lamb New Zealand plantain demonstration farm in 2012-13 that assessed a different pasture system and evaluated if it added value to the whole farm performance and profitability.

The results showed animal production was 44% higher than the control, which performed in the top 25% for the district – see accompanying tables.

“That control – the grass – was some of the best grass on the farm and he still got that percentage shift. We took a high-performing farmer and what we thought was the best stuff on his farm we changed it and he still got a benefit. So even top farmers can still see great returns from changing forage.”

Macnab encourages all sheep and beef farmers to make a change onfarm even if it’s a small one. 

“When farmers change one part of their system it actually flows through to other parts of their system. Changing something small can be the most beneficial thing. 

“Do something – it’s better than doing nothing at all. As farmers we need to progress.”

 

 

Bank support

As part of its contribution to the Red Meat Profit Partnership, ANZ’s Red Meat Sector Key Insights 2014 also highlighted pasture renewal as a common practice of high-performing farmers.

ANZ general manager agri Ross Verry says in talking to the top 5-10% of farmers they discovered pasture renewal was one of their key strategies for improving profitability and productivity.

“The reason they do it is because it’s something they can see they will make a return on investment,” he says.

“It is one of the common threads among high performers that they focus on pasture production and pasture management.”

Verry says those top performers are also more open-minded when it comes to experimenting with new types of crops or grasses that could improve productivity. 

“But it’s not just a slam dunk. The renovation or new crops they might put in do require careful management and there is a little bit of trial and error but over time it is a very good investment.”

Verry says another key finding was farmers undertaking higher levels of renovation or renewal were what he calls “investment minded”.

“Top performers feel it’s an investment that they can’t afford not to make. They don’t see it as a cost but as an investment that will deliver a return. 

“They recognise the opportunity and see the value in spending the money. 

“They are prepared to borrow, if necessary, because they see they will get a better return on investment than the cost of capital.”

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According to a 2009 BERL New Zealand sheep and beef farmers only renew 2-3% of pasture annually.

Lending a hand

ANZ developed its Pasture Productivity Loan when it realised top performing farmers viewed pasture renewal as a key place to invest in their businesses to grow productivity and profitability.

“It’s something that we can make available at a low interest rate, around the cost of funds, over five years. It’s around 4.75% at the moment,” ANZ’s Ross Verry says.

Launched in about July last year Verry says the uptake has been strong – in the hundreds – which is positive.

“What we really want to see from our customers is a forecast of what type of return the investment will produce. We need to see that people have done the analysis and presented a forecast of what they expect to achieve over the five years. If that stacks up we will make the loan available.

“People have seen it as an offering to the red meat sector and have moved their banking relationships across because they have recognised the value in the facility and the need for ongoing investment in their farming business,” Verry says.

ANZ recently expanded the loan scope and it is now called the Pasture and Performance Loan.

“It now covers growing the pasture and converting it, if people want to couple it with genetics or conversion-type investments.

“We’re really keen to work with the sector behind the farmgate. It’s not just the dollars per lamb that distinguish the top performers, it’s the kilograms of meat and fibre they produce per hectare. There’s a lot that farmers can do that’s absolutely within their control to improve profitability and we’re really keen to support that sort of stuff,” Verry says.