City-country farm partnership success

Press, 31 December 1982, Page 12

City-country farm partnership success

A very successful citycountry farm partnership, the conversion of one of Culverden's stately homes and historic properties into a mixed deer and sheep unit and a look at one of the larger properties in the Waiau irrigation scheme were the highlights of a recent field day organised by the' North Canterbury farm consultants Ross Macmillan and Stuart Macintosh.

With the energy characteristic of Mr Macmillan, some 60 or 70 of his clients, their wives and some invited guests from agricultural-re-lated businesses, bustled around three big properties in the Scargill and Culverden areas in which he is involved on a very warm day last week. The choice of the three properties was an admirable one for illustrating the shape of Canterbury agriculture at the end of the twentieth century. At Sulphur Springs, Scargill farming partner Chris Giller recounted his own good fortune in getting involved in what Mr Macmillan described as a classic North Canterbury hill country development job. The two initial objectives were ease of access and control over stock. Extensive track formation and over 60 km of permanent electric fencing done by Mr Giller and some hired labour has transformed Sulphur Springs into a manageable 60 paddocks in its 525 ha. Mr Giller. a shearer for 11 years, brought no farming traditions or preconceptions to Sulphur Springs and has thrown himself into implementing the plans of the partnership and Mr Macmillan.

He is an equal partner with two Christchurch professional men and after making contact through Lincoln College Farm Management Service, the three took over Sulphur Springs in May 1980.

Stock units at the takeover were 2834 (at 5.39 per ha) and are at present 4582 (9.23 per ha). Other developments include direct drilling of the Scargill-Waikari Valley Road flats into new pasture, the building of a very impressive set of sheep yards, renovation of the house, planting of woodlots and implementation of a silage operation. ,

Mr Giller said he had accumulated some capital

before entering into the partnership. but the Rural Bank was not interested in him because he had not had five years continuous farm experience.

He had registered with the Lincoln College service and had turned down some sharefarming opportunities because he wanted to use his capital. The present partnership had worked extremely well, said Mr Giller. and this was confirmed .by one of his citypartners who attended the field-dav.

This ' partner explained that there were ' three reasons why investment in farming was attractive three years ago. It was investment in an asset which was not going to be eroded by inflation, taxable income could be transferred into non-taxable gain and his work required his presence, so that he needed some sort of superannuation scheme. “But the rules have been changed in Wellington halfway through the game,” he said.

With the $lO,OOO tax writedown provision introduced by the 1982 Budget the contributions of the non-farm partners in the enterprise would go in debt servicing, with nothing extra for development. Therefore the unit had to produce enough income to continue development.

Thus he believed the development of properties such as Sulphur Springs was going to be slowed down by the Government's measure.

The city-based partner said that the 10-year ownership provision also contained in the Budget wouldn't affect his partnership.

“We are not in the business of trading farms,” he said. He did not expect that he would have been able to make an investment in Sulphur Springs under the new rules. Many city investors had received a real fright when they became aware that the rules could be changed, even retrospectively.

The putting away of considerable quantities' of silage instead of hay was one feature of the management of Sulphur Springs highlighted by Mr Macmillan during the field-day. Some 600 to 700 tonnes had been put down in one large pit.

Mr Macmillan estimated the cost of silage at $6 to $7

a tonne, plus capital cost of pit and covers and the cost of feeding out. One tonne of silage was the equivalent of 10 bales of hay. which cost around $1.40 a bale to cut and cart. Therefore silage was about half the cost of hay and provided a better quality feed, said Mr Macmillan. At the western foot of the Lowry Peaks Range near Culverden. Mr Michael Davison explained that he had bought Kaiwara from the MacFarlane family in 1976 in a rundown state. The first two years of ownership of the 800 ha property were devoted to pasture renovation and fencing of 300 ha on the flat and on the more gentle hills. Some'46s ha of the steeper hill country was fenced, oversown and topdressed. More recently the homestead had received attention. In 1976 it contained about 34 rooms.

“Half of them leaked,” said Mr Davison. Some two to three years later renovation is still going on, but even now the overall effect is breathtaking.

The Oamaru stone and weatherboard mansion contains two bedroom wings including an upstairs master bedroom with balcony, enclosed courtyard with fish pond, and massive entertaining rooms opening onto about half an acre of gently sloping front .lawn with giant fir, a. lake at the bottom and views of the mountains around Hanmer. Some three to four years ago a 40 ha deer unit had been included on the flat. It now carries 50 mixed age hinds, 25 two-year stags, 40 yearling stags, 15 yearling hinds and two adult stags. Mr Davison was involved in a deer capture venture, using helicopters, but now he carried 50 hinds for an offfarm investor in return for half the fawns, and did not go capturing.

Mr Stuart Macintosh explained that there were basically three types of deer farming enterprise — meat and velvet production over short raising periods, specialist velvet or breeding hinds. At present the gross margins for these enterprises (total income less direct expenses) were $7l, $66 and $123 per stock unit respectively.

However when the cost at 18 per cent of total addi-

tional capital ($42,840; $67,960 and $154,000) was taken into account the surplus per stock unit shrank to $32.87; $5.57 and minus $15.93 respectivelv.

This compared with the current gross margin for sheep of $23 per ewe with 110 per cent lambing and clipping 4.5 kg of wool annuallv.

But $6 of this $23 came from the supplementary minimum price scheme, said Mr Macintosh. He believed the future of deer farming was bright. The industry was structured, lean meat was produced, there were company investments and market developments taking place, it was a suitable form of farm diversification for a livestock farmer and the industry was not covered by S.M.P.s.

Mr Dick Davison, vicechairman of the meat and wool section of North Canterbury Federated Farmers, who farms a property called Blakiston, near Culverden, with his father Mr Peter Davison, explained the farming policy of the 330 ha property to the field-day. Recently some 80 ha' had been border-dyked before the first water was received in October 1981, and this was now being used to fatten lambs. The Davisons also have 17 ha of wheat. (“It should be more,” said Mr Macmillan); 20 ha of rape. 5 ha of lucerne, 9 ha of prairie grass and the balance unirrigated hill pasture.

The basic Corriedale flock is being injected with English Leicester, to improve the wool lustre, and with Coopworths. Mr Davison said that the very good irrigation scheme had resulted in 500 extra lambs and 2000 kg more wool, which at a total of $16,000 extra would go a long way towards recovering the $54,000 cost of irrigation on Blakiston.

High lamb weights were obtained last year, at an average of 15.3 kg and $24.77 net return. Mr Davison summed up his lamb rearing policy as attempting to get as many as possible into the 12 kg plus, better priced carcase grades. Lambs were drenched rigorously every 21 days and some $l.BO per head was spent annually on animal health.

But the gross return per head was $5 to $7 better than average.