Al & Juddy are joined by local farmer Chris Chamberlain for the second episode of their two part series.
Chris shares his personal leasing experience, offering valuable lessons and expertise that will benefit young farmers looking to get their foot in the door.
“We need young people and their enthusiastic brains. And I think leasing is a way that they can get their foot in the door and old hardheads can help assist. You can ask, you can listen and you can learn” – Chris Chamberlain
Juddy All right Allister, good to see you again. I love that stylish cardi. Very good. I think you going to be pumped with today's topic. So what are we talking about?
Allister Well, we have a visitor in today. Chris Chamberlain from the Banks Peninsula on the eastern edge of the Canterbury Plains. And we're going to be talking about his experience and discussion points around leasing land and expanding the boundaries of your property in the most creative ways possible for his property. So welcome, Chris. Looking forward to getting into this. So that's the aim. So, Chris, now we've known each other for about 25 years now. We met in the late nineties and that was all on the basis that you're one of these farmers that reach out to find people, to ask questions of what's going on in the property, what's working and how can you leverage off things. So first things first, we really should define what your farming business is and for the listeners who might be listening for the first time, Chris comes from one of the most beautiful farming environments. The Banks Peninsula is two extinct volcanoes on the edge of a large plain in the South Island of New Zealand. And these two volcanoes have created this landscape, which is just spectacular. And I think that's a good lead in for you to describe Putiki for us and how your business is structured.
Chris Thank you. 1100 hectares in Port Levy, the first bay out from Lyttleton Harbour, about 13 km's of coastline. Northerly aspect, sort of summer dry, winter mild, very healthy clean stock country. So that's the core business there. And we have got a linked business which I think we're discussing today out on the Canterbury Plains, which is 80 hectares of irrigated heavy flat country and we've got a 70 hectare lease opposite, which is a dryland block. And then we've also got access to 200 plus hectares of an adjoining cropping farmers and others in the area. So there's a bit of an elastic boundary out there. So we try and balance our breeding property, which is our core business with the block out at Leeston and hence I use these guys expert advice about how I make money out of their expensive seeds.
Allister Yeah, pretty much sums it up nicely. Well, very good. So look, I think the idea here today is to discuss a topic associated which might relate to a lot of young people in New Zealand looking at starting in the farming world by leasing land. And, what I really appreciate about the questions you've always brought to us is the thinking about as I start to invest, as I start to try to push the boundaries of what I'm doing, how best am I to leverage off this in my spending? You know how do I interpret what I'm actually achieving. Those types of questions are quite considerable from yourself. So I suppose I'd like to start asking you, you know, the Leeston block of 80 hectares is technically your leverage point for your capital stock farm at Putiki, which is pretty heavily defined by rainfall of about 800-850 metres, 350 metres above sea level down to coastal north facing points and by north facing we are hot and dry. So anywhere under 600 mils rainfall and drought use can be some of the hardest and driest places in New Zealand. So it's got quite a range. But at the heart of it, it is, as you described, a capital stock farm which is judged by live lambs at weaning.
Allister And again, your cows and calves, you know, how many cows have you got on the Peninsula?
Chris 250 beef cows. Angus Hereford and they will go to Charolais Bull where we've got an inline farming policy with our Charolais breeder for the calves. So he takes the top end calves. We juggle we winter the balance or in a year when the calf prices go down, the demand is high which looks like this year could be we will sometimes just cash them up and go.
Allister Yep, so they don't hold a space on your farm.
Chris No they don't hold a space on our farm and again so we're back to wintering breeding cows that produce progeny to sell live weight out the gate. And also on the ewe policy split lambing a lot of turmoil sire early and then we have the Romneys, which are our replacement A flock and those ewe lambs, everything goes off the farm and the 20th of November, which is early, but we target an early premium market coming out of the winter, early spring, we try and then get the weight back on those ewes while we've got it the year before it dries out.
Allister Just to clarify you lamb the last month of winter?
Chris We lamb the early ewes sort of if they take the ram on D-Day, they will start on the 20th of July, and that's all the point country.
Allister End of the middle of winter basically.
Chris End of winter and then the balance lamb sort of mid August which is sort of mid-winter well late winter.
Juddy Its very interesting just listening you know, we're talking about leasing land and the ability to bring stock around. But you've mentioned something else which doesn't involve actually leasing land, but also it gives a similar outcome. And that's a reform in these relationships in terms of, you know, inline farming. And that's another strategy here that you don't have to at lease land to add value if you're able to share that with, you know, a long standing relationship. So that comes back to that, that relationship. And if you can have those set in stone and you've got each of you winning out of that. It's another potential way of running that system without having to lease land. So maybe it's something else we've got to think about. But when we go into thinking about land leasing, what are the other ways that we can actually stretch the boundaries of our farm by not either leasing or owning, but using other people in an in-line system?
Chris Yeah, totally agree.
Allister And that actually what has developed with the Banks Peninsula farming too, is attempting to in-line farm with others.
Juddy And staying on that point again, it's not all or nothing that you can actually do both. And actually if you have got these relationships and you are leasing and you've got a number of different options in an environment where you farm. Where you don't know what next years going to be and that can be anything from quite outstanding from a growth point of view. Through to having very little having these as lots of different options in front of you to be able to exit stock off that I think's you know, good strategy of having lots of options and not just one. So I think that's very useful in terms of if people are thinking about leasing land whether they have actually thought about some of the other ways that they can achieve a similar thing.
Chris Yeah. And the beef one's an interesting one with Brent. He, you know, he targets them to be 250 kilos and up he knows full well if he gets them early and backgrounds and he takes some through his fodder beet process through the winter and he hits the spring. He can have those animals being killed in December, early January - February. And that's excellent, that's a very short time.
Allister He knows his terminal genetics, because he's supplying you. Your calving date and what you're able to do with calves on cows are quite reliable at the top end of your genetic base. And so he's also guaranteeing he's getting the right class of stock back into his system to make his finishing component as efficient as you can possibly get. And he runs a pretty exceptional example of that.
Chris He does. And he's specific in his target, so I understand why he's doing that. So if he goes under that 250's and to 220, 230 they're up winter cattle and the arithmetic and the carbon footprint, the whole thing goes out. So it's good for me, I know what he wants. So then we can go back and try and strategize how we prevent, how we present those animals at that weight range. And it's consistent he has it, he's on an irrigated block. It happens every year, we're not lining up in the sale yard which is a boom bust.
Allister It takes some stress out of life too, just by forming a reliable relationship.
Juddy I think the one from what I've seen of these systems, the one key aspect of that is communication. And so being able to indicate that, you know, that this year is going to be a bit tough and that there might be not as many reaching those targets or that, you know, you've got a lot of feed and there's going to be a few more or they're going to be earlier or later. I think that the key thing to make those relationships work really, really well is that communication. And when that falls down, then those systems don't work particularly well.
Chris Yeah, agree and I get to, you know, because he's on the way to the Leeston block and I get to see those animals growing out. We're in contact, we see, you know, he'll let me see the kill sheets, you know, where they're falling. They weigh them continually. So I get feedback. He's the stud stock breeder. So he also gets to see the progeny. So it's in-line farming especially Banks Peninsula because we do one thing well, we breed animals. And we need someone to finish them well and taking the risk factor out of having a mark at one year and not others because of climate or trends is our Achilles heel and that's why we're where we are in Leeston. And that was a foil for us to take a risk profile out, it is an increased workload. It is a different set of skills. We're only on a smaller scale, some of the bigger operators in New Zealand operate on big finishing blocks and on the Canterbury Plain and they grow them on an area.
Allister Absolutely. Now speaking of workload and scale the Leeston blocks is 80 hectares in the heart of a significant arable environment, a lot of small seed crops of all sorts of shapes and sizes. You originally had an irrigation system based on a side roller solid roll system.
Chris Yeah, poor man's pivot.
Allister Yeah, poor man's pivot and because of that and you’re living closing in on 50 minutes.
Chris Yeah, it's about an hour.
Allister About an hour down from Leeston which became a limitation to reliability. So you've invested in a pivot irrigator on the small block. Take us through when you're thinking about the financials of doing that, you know, what needed to change? Because this is the point, you can't carry on doing the same thing when you create an efficient system or whatever. You must change things. So what were the thought processes you went through when you started to look at investing at putting a pivot on your land?
Chris Well, our old one, the poor man's pivot it wasn't too bad as labour intensity when it was sitting in the paddock, but when you were moving it to paddock to paddock it was like a good workout at the gym. And my father was getting older because he was my main man out there at that stage. And then we've inherited another guy. He's equally my father's age now, but it didn't turn him on that much. So working backwards, we're in the process and can agree about water consents and we've got to, you know, we were pumping sort of wells on artesian diesel surface pumps that sort of at 8,9,10 metres and the water process for consenting was tricky. So it was obvious we had to change, we were still consentable but we needed, you know, we needed to put the well down deeper, which we did. So then we said we needed to capitalise it and then we went into what's best and we looked at various strategies with Briggs guns runs and all sorts and fell on the pivot that runs a big arc. So then we got the costings in front of us and then you go, okay, how do you make that work?
Allister And then you've got ten foot ditches running through your property.
Chris We've got ditches and we've got stock. And so we were very early adaptors of fencing creeks and ditches off because of animals going into creeks and ditches. You've generally got a very grumpy person trying to pull them out or they drown. So we had done all that before, all regulations were hit because we had animals on there. The pivot story, running a straight profit margin on an animal born in Putiki, Port Levy in late November early December. And taking it to Leeston to finish it as a traditional summer schedule falls when supply comes on, the market goes down. When there's plenty around, they don't pay a lot. So the margins on doing that could some years be as low as sort of $10. And that included a cartage there, cartage out, crutching, feeding, let alone the crops you put on. So it doesn't pay, and it was the worst part about it. It was just so damned unpredictable and you couldn't bank on it. So some years when it was short, you'd make good margins and everyone wants to do it. The rest of time you're doing is saying, why didn't all that animal go store and go and float around in the ocean and have a bit of downtime? So just by having animals on Leeston I couldn't see how we would make that work. It was nice to have an easier operational. So that's when we sat down with yourself, Allister, and Juddy's been involved over the time and sit down and said, look, if I'm going to spend this, show me how I'm going to make this platform of land 80 hectares, how I'm going to make it pay, because it's got to be more than just a value add on a lamb. And you know, we had some good advice from Tim Ridgen who showed me around the district of guys that we're doing vegetables, cut and carry, you know, wheat crops. I didn't want to go into that. I don't own a tractor, now begrudgingly, but I don't want to own gear. And we're surrounded by very good contractors. We're lucky we don't have to, so we can just make a phone call and manage. So we did that and we fell on quite a few things of which lamb finishing is still a priority. It's in there, but it's sort of eight months of the year, but we need to shoulder and make more money. So we sort of threw $2000 a hectare down. So we've got to be making that at least.
Allister And it's $2,000 a hectare. At that time of that discussion, your typical breeding operation would be lucky to be at a thousand very much at that stage.
Chris Yeah. And if you just did it on a margin trade we valued it on, but if you only getting a $10-15 margin, it just wasn't paying for that. And then you had to then keep stocking it because you are buying and selling to a certain risk. So that's when we bought in Watties peas which suits our rotation out there with what we're doing as a change crop. We spray that out in early December and it gets drilled we just have to put water on it. They manage the spray, they harvest it, and we're back in there with, you know, a grass or a follow up crop at the 1st of February. So it's only out for that length of time and it sets that crop up. We've actually got their crop designed so it goes in on a clean pasture and you know, hopefully we've got a weed free pasture when we start again. We did that. Beans fell out. Watties beans, green beans. But the timing of it's not great because they're coming off now or a bit later, which now we're in the autumn and we can get wet when we get wet we are slowed down. So when we redrill we've got a paddock forming a big leg. And we tried maize, which seemed like a hell of a good idea and hit the wettest winter and we had to have a track machine to get it off. So and that was too late coming off.
Allister And really when I look at your class of country and, and it's hard for, you know, when we talk about different landscapes, obviously the soil types create a lot of the leverage to what your businesses are capable of doing. And this property's got quite a heavy clay base and it's got a high water table so the whole property can get heavy quite quickly. And for example, the damage done by that maize harvesting operation was really significant because the clay also dries out and gets extremely hard and can take a long time to create a structure again. And that's caused us a few problems.
Juddy Yeah, what strikes me when we're talking about these lease blocks, the first thing probably is that you've got a really good understanding of your home block and the relative strengths and weaknesses there. And so when you're looking at a lease block, you've actually got a job in mind. So I think that's the first thing and some of the other things that you might need to do on that to make the lease block. And any infrastructure, you've got to put on that pay. I think the other really important part about this is actually understanding potentially what the lease block was like, because if you think about, you know, it could be useful because it's next door, but its natural characteristics may not be in line with what you were thinking. So I think that's the to backs actually and you mentioned that you've walked around that property and understood its natural capital and what potentially it could bring. But I think the other two really important things. Understanding your own business and where that's going to add value, but also whether you are actually using or the lease block you're looking at that might be next door. But has it got the natural capital that you require for the plans that you've got?
Chris Great. You know that was very much the case. Luckily, we had been grazing it. It was a block that you wouldn't say is being farmed.
Allister So what we've been talking about, with the pivot is your property, but this is this elastic boundary of a farmer with a quite an entrepreneurial look to the surrounding areas. So the everywhere around this property is arable without livestock. So they've all got its primary infrastructure mostly is there stock proof fences.
Chris To a point.
Allister To a point.
Chris The good thing about an arable farmer is if the fences aren't good and my animals get in, you get a call really quickly.
Allister Yeah, they tell you what's not going right. But also because it's also on the edge of a small agricultural township, there's also a bit of land around the edge of the township. That is actually what you describe as I wouldn't say land banked, but you would say.
Chris Real estate value.
Allister It's real estate value, which basically means that sometimes it can be sitting moderately idle and just being present gives you those opportunities. And also that you haven't got a high competition specifically around you necessarily for your stock class.
Chris But I would think we've leased a few properties in our time and generally speaking on the peninsula, the one you get to lease, I'd say 80% of the time is the most rundown property in a valley and you're dealing with someone that thinks it's the best property in the valley and they've never put any fert on. But you have to and you have to fence and fix it. And it's just generally the way it's been. And this particular property was like that. It was a white post property and the infrastructure, it was a little bit rundown, but it's a good farm and it's been a good farm and it had a good history in the past. And so we were lucky to get an opportunity. We knew that the neighbours were good people and they're elderly so they don't want the hassle. We'd been grazing it and we'd said, shall we lease? Because we didn't have any control about changing pastures swards. And it was pretty native what we inherited. And so that relationship was totally important. And it is a relationship handshake. We've got a legal lease agreement, but you know, the nature of these people was your words your bond. So being dryland, it was actually an advantage to us because our winter heavy block, I think that's what your leading to, our home block we knew what it's capable of. This block, I sat there in my head and worked out what could I do, what would it run on a per annum basis as a breeding ewe. It's 70 odd hectares and you know, you just can't make it stack moneywise. So I said, right, well how do we make it grow a lot of grass or a lot of forage, but how do we also make it grow like all our home block percentage out, some forages that actually will run us through the shoulders on a dryland. And so I want my cake and eat it. So I want December, January, and February to operate as well. And I sat down some figures so I knew in my own mind what I was going to do. And then I rang you to likely characters and said, here we go, I'm coming to come to Kimihia so get your whiteboard out. And all I really did was just prompt one or two sentences, and then Allister and Juddy would go, well, I don't agree with that Juddy. I don't agree with that, Allister, but we had a really, really strong session on what that property would grow as a blank sheet if you did it right. Put the fert on. I had already come to my mind the conclusion that I couldn't afford just to walk in there and drip feed two paddocks a year to get it to go. I said, well, tell me if I'm wrong, but really my guts telling me I've got to go in here guns blazing and change the swing round. So it's get the fertiliser on, get the crops and forages in so come spring I've actually got something I can deal with that puts weight on animals and that's where we got to.
Allister And I think the first challenge for me too though, was to ask the question, is the property paying for itself on its footprint or is it actually helping you change something somewhere else to actually make your money somewhere else? So does it have to be completely self-funding on its actual footprint or can it free up and help you actually change your economic basis of another part of your farming system. And I think those are the first challenges of working out how you gearing it, are you gearing it to be self-sufficient. It's got to pay for itself full stop, or maybe it doesn't have to pay for itself and the stock float on the property, but it frees up for you to physically change a stock policy somewhere else that is changing your economics. And that's the only way I could see it, is that if you didn't change anything, how are you going to get more? And so you had to change something. And so what really did it allow you to do? Bringing in the block like that?
Chris It allowed us to use our main property, the 80 hectares with the good grasses. It allowed us to say, okay, we don't need to be wintering on it, we can walk that through. I had been utilising the cropping farm down the road for that to a point, but you didn't have control of it, whereas this one did. And so I could actually have that spring burst, we could actually lamb ewes on the dryland block.
Allister So just to give a context, the key to the original 80 hectares that you own is that it is quite heavy as we described winter. The beauty of the irrigation is that we've always found that the property with its wet soil, interestingly enough, is always, it's only about 620-630 mil rainfall. So interestingly enough, it's actually a really difficult spring establishment environment that can be spring established because of the soil. But you go from wet to dry and hard soil conditions really fast. And so water helped us become more reliable and getting crops up and going. But again, I think the biggest description of this wet winter management, the soil destocking, this land and winter and what it gives you in the spring was the year that you made a call to find grazing off your primary 80 hectares and destock it because it was so wet, but because you freed up the land, you didn't put pressure on it. You didn't have stock through it all winter under wet conditions, you made the most momentous amount of silage in the following spring of which you sold at a rate that, unless I'm mistaken, covered your grazing, covered your replacement fertiliser, and you actually walked away ahead. And that was by taking all your animals off your own land and putting them somewhere else.
Chris Correct. And that was an extreme like the driveway was running water and it was quite late. It was sort of mid to late August and we had the opportunity to get off because even with lambs on that country it can turn it quickly. And yeah, that did work and then we managed to get the fert truck on and then we managed to be first in the queue for, you know, like good Italian silage with some clovers in it. So it was top end stuff and went onto the milking platform and it did two jobs. We got that surplus off, it paid for the grazing plus and it paid for the fertiliser. So it had done its job plus it had something in the pocket, but it set us up to fly.
Allister For the rest of spring, the rest of the early summer.
Chris So that sort of dawned on me as a policy. And then we've locked in that deal with the milking platform, which for the area we farm when the cows, you guys will have to help me out here, when they start to milk, you know, it's imperative they get them up to peak milk and they will quite often feed the stuff was cut and carried and feed directly on that first shift.
Allister So not in silage, its literally cut green onto the dairy platform next door. Mostly in late August and September as soon as you can get vehicles driving around?
Chris Normally that first week of October.
Chris It is shut up on the 1st of August and it comes off.
Allister So that's early to middle of spring.
Chris This year, we got rid of 37 hectares out of the 80. And you know, it was a good cash flow for the business. So it had done it. Then we fertilised it and we set it up for what's coming over from the Peninsula.
Allister So that's what I love is that you're a stock farm, but you've got your eyes wide open to the fact that sometimes it's actually if you can make it work, it's actually better to take some stock off your land. And free it up and allow it to thrive, and then actually it can go. You can get silage offered as an example, which is not live weight or meat, which is as a stock farmer that's what you're up to. But the state that the silaging process allows that pasture to be presented in when the animals come back is right on the mark for what you're trying to achieve and again coming back off that property into your lease, your description is you focus on getting a lot done early, investing quite a few dollars early because you're trying to get as much of that and that's a 45, 40, 50 hectare block, wasn't it?
Allister 70 hectare block so you've only got three years in there at least in the first phase, you've got to get as much done early as possible. And you've got to get it in a system that doesn't just commit you to future cost the whole way through that process.
Juddy Yeah. One of the things that really interests me here and that's around, you know, there are a number of different options it appears that you've got in front of you when you're making some of these decisions and a lot to unpack. You know, how do you decide, how do you get all of those options in front of you? You know, you could be forgiven for going I'm a lamb trader and I could put some other stock in here. But here you've talked about, you know, creating silage for a dairy platform. You've got you know gone to see next door neighbour cropping farm and so it looks like you have endless opportunities. How do you come to those? is it people that you're talking to, do you lie awake at night thinking about these things? And I think because what I can see is actually sets you up to be able to make a great decision because you've got so many options, so how do you get those options?
Chris It is about being there and being aware and listening and with people and for the neighbouring farmer, the cropping farmer, like he knows full well that his work load when he was lambing ewes down that we graze off when he's lambing ewes with a key times he needed to be establishing as arable crops. So the whole block went arable. He doesn't want to leave it in fellow from the autumn so he wanted animals we're there we pay him per head per week. He puts the grass in and he walks away. We manage it for him. If he wants stuff we are there, drop of a hat, we will take stuff, we'll chew. So it works for him, his synergy is he doesn't cut any of his straw. Nothing comes off that farm because he's saying it's fertility off the farm. He loves it, sheep go round and eat his weeds in his hedge rows and then the dung and the pee go back in so yeah, he's got a really good view of that. It works for him, but as you say Juddy, it's about talking every year. What's going forward. What have we got? Time frames, then I have to juggle that to be at the point of not being overstocked. But sometimes we are because that's just around the corner and then that fills in for our lease block or our home block. Okay, I know I'm going to have to plug some holes. So I have to be able to dial up to grow something and one decision we've just made on the home block is a Asset paddock that's coming to the end or gone to Watties peas this year. It's got barley grass through it and it was just looking perfect to spray and we took a call to spray it because we knew even taking a balage crop, which is where it's destined, won't be great. So we've just stuck an annual in this year and we did the maths on it through Robert, and again you're asking the right people and we said well for the expense of direct drilling this in growing a true Italian and then taking it out in the spring as we're going to get that crop. But I'm also going to fill that hole for trying to have those animal when I need the pressure.
Allister You've created a weed control option too becuase barley grass in the system.
Chris Weed aswell, we have a problem when we hit. It's not a bad problem because I'm farming on a dry land hill block and the problem is always finding feed, a problem sort of coming into September, October, when we start to move is the cropping guys going, I need these here and I'm going, I need these home. And it's the space of three or four weeks can juggle and the phone going 'hey, Chris, you're the only fool around the district that's got some ewes you wouldn't want to whip down and feed the grass seed paddocks off'. We're sitting in an arable area, where management for them is there crop.
Chris And animals. Look, there is massive synergies. Juddy, you've mentioned it before that they are there and God, we've just got to get ourselves organised so that we can help one another out. So, a lease block being if you talked about that lease block just being one block off. If I went and leased it and didn't have the offshoots. I would have gone looking for those and saying, Hey, you know, if I want to have enough ewes parked up here at the end of July to lamb I can't carry these through the winter. You know, I need them to be around, hopefully in driving distance where they're on the road.
Juddy It seems to me and if I'm kind of distilling this down to some really simple messages, the first message is you seem to be very good at spotting opportunities, right? So being able to understand what the arable guy wants or what the dairy farmer wants and what his issues are and how you could be part of the solution. So I think that's the one thing that's being very good at understanding what other people are after and opportunities for you. I think the other really critical bit then is the critical evaluation of that. You can be part of, you know, a cropping farmers set up for his ryegrass crop and that's the opportunity. But you're also very good at making sure that it's a dollar for you. And so I think the other two, if you bring those two together, spotting opportunity and then making sure those opportunity are actually financially viable, I think the other two things that I think are probably the key to the success and I don't know. Do you do a lot of spreadsheet work. Do you engage other people to run those numbers? But it seems that in the back of your head, right, the simple maths that you've got is that there's got to be a dollar in this or there's got to be maybe a purpose. And you've talked about, you know, weed control and looking at the whole picture. So take us through, is it obviously that's you don't do that by this doesn't happen by chance, how do you do that, what's your process.
Chris Yeah I do, Jackie would say I am a strategic thinker about I'm not big on a spreadsheet I do a lot of gross margins on paper and kick it and biff it and throw it. And I do make sure, like my cropping guy, we talk like he's telling me what he's putting in the ground. He's saying, what have you got coming forward? I say, you tell me what you need and then try and structure it that way so we can pull anything at any time from Putiki. Like, ewes at scanning twinning like ewes. I mean, can come there for two months and then they can go back. So I do look at that and I work towards that spring period, which is the money months for a breeding system, as you guys know. And if I've got my red clovers going, you know, I've got to eat them. So a lambing ewe lactating a lamb that's a sale ewe is an outstanding stock class unit it betters the late winter lamb finishing lamb which is going to cut teeth and they're going to say they've got to go, they've got to go now. They've reached the limit. And then all of a sudden you've got the feed exploding. So I work backwards on that. I work backwards on what I need to be, the two blocks. The balage goes off, so it right through there in August and the balage goes off a fair chunk of that we sit off the red clover, so we've got it sitting quite strong before we put the ewe on. And when it goes, my God, you need it to go. Yeah, but we're not scared, I'm not so scared now and, actually taking a light animal from Putiki that's struggling for whatever reason. If she had twins or triplets last year to get her on a truck, to have them itemised at Port Levy. So they're lambing around the yard paddocks they're close to me getting them out so a ewe and lamb at foot can go out. So I think it's a real benefit to have that breeding block over there to feed into that.
Chris But the dollars and cents, you know, the silage is one that ewe lamb trade is another. We hit that in mid-November and thank you very much for coming, mum. She's a lovely big fat ewe and I look at them and go, my God, you should be back home.
Allister Yeah, why aren't you doing her again? Absolutely
Chris But, it does it, and then it starts to open and the lambs coming, the ewe lambs come through.
Allister And just to define that, make sure everyone understands what we're talking about. There is a last lambing ewe. And often we tend to find that they're culled for age a cull for teeth and so the reality is they tend to be low body condition animals after that have often raised let's just say two lambs and there's nearly always been a margin in the heavy ewe versus a light ewe. And so what you're doing is growing two lambs out magnificently on a proven ewe and then you're actually feeding her in a way in these locations where there's always a live weight advantage on that ewe at weaning and that's a very much a leverage point for getting more out of the system than just popping two lambs. She's an asset, she's actually another half of lamb.
Chris She's a ewe that I'm taking on that I wouldn't be. On the hill we can get another year out of it but I need to be kinder to her through the winter. And secondly we are targeting a November market when the season starts, you know, stock are short supply so you can get ewes killed, go through this year, go through another three or four weeks. And it was very hard.
Juddy And so again, coming back to, I think distilling down some of these key messages, you know, we've said earlier, the key thing is to understand your business and where you know, the dollars and cents are coming from. What gives you, you know, good margin and what not so good. And then the other one that I was hearing was particularly around the lease block and your neighbourhoods is communication again, you know, being able to forward plan, you know, what have you got coming and then reflect that, you know, on your home block that things might be a little slow and they might be coming forward a bit faster. So having that real conversation with probably a lot of people, contractors, I mean you must spend a lot of time on the phone Chris.
Chris Yeah I do, like one of the guys that is working with me. We came back one spring, Allister meet him and Allister had been in the car for the afternoon. We had all sorts going on and Morris driving home he says 'man have I got a headache' I said 'you're not feeling very well?' 'no' he said 'my head is just spinning'. I thought about it, I talked to him afterwards and he said, 'why don't you just get rid of all that and just let's go mustering and get the sheep and just sell everything and have an easy life.' There is merit in that and as you got to pull back on all these things, if you're doing all that extra work for out making any money, yeah, that's all you are doing.
Allister I got to emphasise that's your key point on most occasions now is that everything's for a purpose. Everything has to be part of a plan, whether it's the plan directly in front of you or leveraging something else. So I think, you know, when I look at it too, that is exactly it. Now come back to your lease block and looking at how much you invest in your first year on a lease block. I look at that and I think, well, you know what you've identified straight away is what is the purpose of having this land to make a difference if you don't change it fast? Where we are actually at is that how does your attitude to spending, attitude to investment change through the life of that lease? So we're now coming to the end of that example and we've had these discussions just inside the last three or four months about how are we finishing, how is your investment phase finishing because really this is a time that you could exit a lease in some really cheap fast feed options. Not leaving anything significant in the ground with any high value because actually that could be wasted value for you. It's an interesting process though, the way we looked at that.
Chris To go back before we come to that. So when we inherited this property, took the lease on, when I had the whiteboard session with you guys and because of what we'd been doing over the road on our own, I knew the advantage of those high growth rte grasses and the legumes, which I've had for years from you guys. And I'm going, can I replicate them on this dry land block and you guys said yes you can. So that's a lot of expense, and there's no irrigation to back up if you have a disaster. So the first thing again is ring your people. I got Ravensdown our rep for fertiliser, so I said I want to soil test every paddock on this farm. It's a lease block when were they last tested and I said I don't know, it's a lease block, run down, but I want you to help me here. I'm not paying for a soil test on every damn paddock on this farm. I said, you guys are going to get it back. So we had to address paddocks for capital to get it in and to get the crop in to get it to grow, because otherwise we couldn't tick that box. That was tick box one, tick box two was how good the land was, you know, a contractor saying, it's not good enough to put this in. And I said, well, we have first year and we want to try. So we tried one, we had one that said, you can't do this. And I said, well we're going to because we need to see if the red clover was going to work on this really rough paddock. It did work. So it gave us confidence to then in the spring hit some more. So we got on sort of a mini system, dryland system and when it rained last year, the year before. Our lamb growth rates was good coming off that block as they were off the irrigated block, so we knew it could adjust. This year it's been really dry and it hasn't been to that extent. But going out now, like there's two years to run on the lease and I'm looking and I'll get Allister out and had a look and said look two years to run what do I do here. And if we have it all grassed up which just sounds really simple, which I think would be you go to just biff your grass and come the spring massive amount of grass, dry land drying off. I'm sitting there, I said Allister, I want it to grow, I want my winter capacity, I want more spring capacity. So we know it's autumn, winter, spring. But I don't want to give up the summer. I want some summer. And we had three legume paddocks that we're run out, we've got one there and he came, Allister came back and said go for legumes, I said ok how do I make that. So we are investing in that but potentially looking forward in the spring we will have sort of four paddocks and a legume and we can run that legume for two years, which will give me that. I've got my finger in that pie. And really we're trying to say this is the last time the tractor will be coming into these paddocks with exit looming. If we get another renewal, we can change. But, the guys that we're leasing off are elderly and you know, they don't want to be tied down to something long term. I can fully see their position. So I have to be flexible and I think we are. And so that's why I went to you and said, how do we get out of this.
Allister Well, we made the discussion also is that you want you to put yourself in the chance to win and chance to be close to 100% of what you want to do off the block right through to the very end. And so that becomes this issue that, you know for a fact you're just not going to be able to leverage anything off grass only on 80 hectares if it was all just grass only for the last 18 months and that's big windows of time where you're not leveraging anything like you were in the first two or three years. So we've put ourselves in a position where you can actually still leverage at 100% for the whole length of the lease with actually some still some pretty cost effective exit strategies at the end. So that has been the primary process we've gone through there. So, look, what can go wrong with that.
Chris Yeah, what can go wrong with that Juddy?
Juddy Yeah, I guess. I think what I was starting to think about is in your exit strategy, have you thought about if you do have to exit that the flow on effect that's got to other parts of your business and maybe starting to think about you know that you've now not got this block and what all of the things that you've taken for granted that this block gives you now you've now not got. So have you started thinking about that ahead of time?
Chris That's what I do with my downtime. I think about that stuff. No, you're correct. I do. And yeah, if it disappears, well, the stock classes and stock numbers pull back, I would be more reliant on the cropping guy next door that's mainly growing hoggets out, in lamb hoggets in the winter. Yeah, it will. And it'll be a juggle and more probably lambs sold on farm. It's like shrinking your business to make it work. Getting back to those adjustments, I mean, it's worked really well having this block totally adjacent it has worked well for us and when we like, as Alliser said like the 80 hectares in the home block, there's 30 hectares of that in red clover. We try and sit around that 25 to 30 hectares. This block will have out of the 70 hectares, we're probably going to have 20, 25 hectares.
Allister So we're talking about a business running about 40% legume based finishing stands?
Chris Yeah, and the rest of the grass is a sort of 2 to 3 year Italian. So when they grow with and give them a bit of fertiliser, I mean this block was so dry this year was the driest summer I think we've had. It's absolutely bounced back that wonderful grass Mohaka. I don't know who grows that.
Juddy Probably the last comment from me and then I'll get Allister to sum up. But the other thing I was thinking about here is you know your system is something that you're starting to get towards an optimisation of. It's actually quite complex when you think about the number of different aspects to it, the number of different blocks, a number of different things you're doing with it. And I guess for those people starting out, you probably recognise here that there's a huge amount of management skill here, that if for some people it will be taking the very basic options, the straightforward options, the ones that give you, outcomes most of the time. But as you step through something that becomes more reliable, gives you more options. You actually need to add more management time to that. And so I think that's a really good take home message that the more sophisticated these systems get you're probably getting far more consistent results out of this. You know, the productivity is very high, but increasingly more and more you've got management time. You've got to be very good at looking at those opportunities, taking the right opportunities. And so the management game has to lift so much more. And so I'm taking some of these things on. You've got to be prepared for that increase in terms of management. And I would say you're probably one of the few people that could successfully, over a long period of time, manage the complexities of this. And, you know, it doesn't help to fellows coming in with harebrained ideas about what could be next. So I think that's really key when we were talking about this in terms of, you know, offering advice to others, I've got to say that level of management around that and picking the right winners comes a whole lot harder as the systems get more and more complex.
Chris Agreed as you said you know you must make a lot of phone calls and go home. Yeah I've got a good contractor. Ring him. We've been working long time together, so he's really good. Robert Trott, PGG Wrightson for the seed through you guys, he's excellent. He understands our system, so he's looking at the crop. I can't be looking at it. I'm over in Port Levy, but when I come out, I'll ring him and say hey and he'll have a look around. He'll tell me. So you have to use those people and that expertise. Tom, who's living at Putiki. Tom and Noami, they've got a lease block which, you know, I introduced them to Allister. I said, you don't have to know everything, Tom, but you can ask and you can listen and you can learn. So he's around the corner, phone went, opportunity for a lease block round here in Tai Tapu and would Tom be interested? And I said, yes, he would. He's 30 and he's trying to get his feet on the ground and he's doing a hell of a good job around there. And that property's pretty rundown. It's a challenging property, but he's getting his head around it and he's doing everything for the first time. And I see it doesn't always work. So be prepared. Just do your homework. He's relying on Robert. He's had input from Allister. So what I'd say to that young person leasing it is your chance to get your foot on the board and take the most rundown property you can at a price point and then work out before you sign it. Work out how you are going to make some money and you don't have to own stock. You can graze stock, you can graze cattle, you can own some stock, walk your way in. All your bank wants to know is that you pay back some money and they will lend to you again. So he's really and our industry's old sheep and beef, 58, I think is the average age and we need young people. There's got to be a transition stage coming up, I feel, with where does it go? The capital base is held up here with expensive land and how the young people enthusiasm brains get in and there's got to be some way. And I think leasing is probably a way that they can get their foot in the door and old hardheads can sort of help assist.
Allister And I think that's a really great place to actually try to conclude, because when I look at it, I think that's where mentorship comes in and people with experience of thinking in the space to just actually navigate the questions of just not doing something for the sake of doing it, you have to still have a thought process around what you're trying to package up. And I feel if I was to summarise what I perceive some of the strengths you've done over time, as you have always recognised that the importance of relationship opportunity, you're not so proud that everything has to be done by you or in your system. You don't have to be completely enclosed. You can actually leverage. You might be a stock farmer, but you can actually take your stock off your land and make money off something else for a period of time and for a win in both situations. So I feel the concept with lease blocks is to identify the full opportunity that comes with them. Identify the fact that you have to make changes in quite strategically aggressive at the start of a leasing process. You've got to work out how that leverages off all your existing assets and what you can achieve through your existing relationships. And the key really still is that if you don't change enough, you won't actually get an economic return off these things. And so the moment you change your land footprint, you bring in outside land, you must change enough to make it all pay. And it doesn't have to pay for itself, but it can make other things work better at a much higher level if you can change them enough. So I feel all those are the sort of questions you need to be asking. Also, the process of investing in fertiliser and the cropping systems or pastoral systems that are going to fit your stock expectations and flow. Not everyone's finishing lambs in summer, so others might not have a problem with grass base summering, but the reality is not always can grass based summering finish lambs and you need to really invest at the start of that process. And I think the big message would be to focus on the way you start to finish a lease block because it's your performance over the whole every single year of the lease. And if you whittle away your initial investments for the last period of time, you’re actually giving up some of the profit over the whole period of that lease. So you're looking at the profitability of the three years of the lease, not just the first two. And so how you finish is quite a big deal in a lease based system as well.
Chris And reputation wise, you're not going to walk off a lease and leave it a mess. I mean, that's what gives leasing a bad name. You know, you're looking after a family asset for the owners of that property.
Allister That sort of attitude is exactly the mental approach. You should be trying to run it at 100%. You should be efficient with the way you finish, but also, like I say, you want to put yourself in a chance for at lease to be extended or actually someone who's going to see that you've been a really good operator and is prepared to lease there land to you at a later date. So I think that pretty much sums up some of the strengths of Chris's system and in some of the thinking that he's put into it, which we both appreciate, have been part of.
Juddy That's excellent well I see that I've missed a call from the spray contractor and that's never good. So we might call it a close and will see you next time.
Allister See you next time, Juddy.
Chris Thank you.
Juddy Well, I'm excited, Allister about this next segment. We've got Lara from marketing.
Allister Hey, Lara.
Lara Hey guys.
Juddy So Lara is going to ask us some questions that have been sent in off our Facebook page. So let's see if we can answer those.
Lara Right, in your opinion, what works better? Plantain, chicory or brassicas?
Juddy Well how about Allister.
Allister Who asked that question?
Lara Justin flicked that through.
Allister Okay. Justin Right.
Juddy Allister how about you talk to Justin about that from an agronomic point of view and I'll make some comments from an animal point of view.
Allister Right, because we don't know the animals. That's the one weakness of the question, Justin, is that I don't quite know exactly what stock classes we're discussing, but I assuming you're looking at summer cropping and I personally always see summer brassica as one of the most consistent upfront volumes of feed you can get from a dry environment. So the drier your location, the more summer brassica, particularly a rape crop is your feed in the bank feed that you can use spring based moisture and carry it into summer as a large volume of guaranteed feed, even if it's drying down. Both the plantain is a summer crop. But technically I wouldn't use it as a summer crop unless you're in a summer moist environment where I'd use plantain and clover and then it's actually the clover that's driving that summer growth. Not just the plantain but the chicory is without doubt my other major cropping favourite in summertime. And the reason is that you never get as much as a brassica upfront, but it finishes so much stronger. So the longer your dry phase lasts, the more chicory is a suitable species because every regrowth cycle in a brassica is slowly declining, whereas chicory is just getting better and better on regrowth cycles. And typically you're actually dealing with a lot of dry matter quite late and late summer and even autumn with chicory before it declines. So that's the species for it.
Juddy Yeah, from an animal perspective, again, we don't know what animals, we're assuming it's not chooks. So if you're thinking about finishing, I agree with Allister that probably the go to is the summer brassica just watch in terms of getting animals onto that and I think their feed budget in terms of getting the right amount in is quite critical because you can't do much else with that. You've got to graze it. I think in those dryland areas I do like the chicory in terms of being able to punch further into that dry. I'm not convinced about it, as a lactation feed, there's need to be some more work on that.
Allister What sort of lactation feed, Glenn?
Allister What sort of lactation feed.
Juddy I'm talking about in that early phase.
Allister In the spring.
Juddy In the spring.
Allister Okay. We're talking about summer crop here though, that's the thing. Answer the question.
Juddy Okay. But but in terms of holding up through those dry periods. Absolutely. Having said that, chicory in its second year throwing up seedhead can be problematic from a quality point of view. Plantain let's call it Ecotain. I think it's a very useful early season. And the other thing, particularly with Ecotain is, it can help you meet some of those environmental regulations if we were reducing nitrate from the urine patch. So actually all of them have there place it just depends on what your if you're after and actually chooks will eat them. All three of them.
Allister Yeah. If not the plants, the slugs that may come on them.
Juddy Excellent. So thanks for the question Justin.
Lara Great. Shelly has asked, will Juddy ever send my book back?
Allister I got to answer that for you. Shelly, this is Allister speaking, Al. I can say for a fact, no.
Juddy Yeah, what he said.
Lara So, Shelly, it looks like you won't be getting your book back. Yeah, thanks for listening. If you guys want to send in your questions, hit us up on email firstname.lastname@example.org or on our Facebook page, Agricom NZ, anything serious and everything in between really just flick them through.
Allister Thanks Lara, from marketing.