Goldn Hills 28 th Sept Goldn Hills, Securing our Future ? Colin Brown Wrightson Solutions Dunedin.

Gold’n Hills 28th Sept

Gold’n Hills, Securing our Future ?

Colin BrownWrightson Solutions

Dunedin


You are here


• Create Solutions in Agriculture


Audience Type?

• A. Grew up in farming, love agriculture• B. Agriculture/Horticulture is a major

component of your teaching

• C. Chance to get away for a few days and get on the booze with a few old mates


Topics

• Importance of Agriculture to NZ

• Some historical trends

• Issues facing farmers

• What Wrightson is doing


Some historical analysis


Importance of AgricultureTotal area (including minor islands) 26.8 million hectares

Farming land 16.5 million hectares - 13.3 million grasslands

Farm numbers (1996) 66,045 holdings

Farm types (1996)

25% dairy

36% sheep & beef

5 % mixed livestock

17% horticulture

2% crops

15% other


Agricultures Contribution

• 8% of the workforce

• 12% of GDP

• 53% of exports


March year 1992 1993 1994 1995 1996% of % of % of % of % of

GDP GDP GDP GDP GDP

Agriculture 4,511 6.2 4,344 5.8 4,956 6.1 4,852 5.6 5,008 5.5Sheep, Beef and Mixed Livestock 1,575 2.2 1,458 2.0 2,119 2.6 1,867 2.2 1,656 1.8Dairy 1,515 2.1 1,443 1.9 1,416 1.8 1,418 1.6 1,742 1.9Horticulture 759 1.1 716 1.0 638 0.8 753 0.9 739 0.8Other Farming 371 0.5 360 0.5 367 0.5 401 0.5 413 0.5Services to Agriculture 292 0.4 367 0.5 417 0.5 414 0.5 458 0.5

Food, Beverages and Tobacco Manufacturing 4,441 6.1 4,389 5.9 4,607 5.7 4,853 5.6 5,060 5.5

Subtotal 8,952 12.3 8,733 11.7 9,563 11.8 9,705 11.2 10,068 11.0

Gross Domestic Product 72,277 100.0 74,578 100.0 80,824 100.0 86,556 100.0 91,461 100.0

Source: Statistics NZ.

Table 8: Contribution to Gross Domestic Product by Selected Industry and Production Group1

IndustryNZ$

(million)NZ$

(million)NZ$

(million)NZ$

(million)NZ$

(million)


Table 3: Exports of Agricultural Products from New ZealandJune Year 1998 1999 2000 2001 2002

(NZD000)1 (NZD000)1 (NZD000)1 (NZD000)1 (NZD000)1

Live animals 139,508 143,253 176,477 153,736 158,378 Beef and Veal 1,174,610 1,087,225 1,403,833 1,677,714 1,820,258 Lamb 1,291,727 1,343,188 1,530,163 1,893,225 1,989,467 Mutton and hogget 194,671 160,542 168,602 232,605 269,130 Venison 136,936 138,036 157,498 230,164 124,390 Other meat products 137,461 144,845 173,758 226,014 311,198 Total meat and meat products 2,935,405 2,873,836 3,433,855 4,259,721 4,514,443 Butter 1,028,820 990,006 923,153 1,102,593 1,083,836 Cheese 897,745 983,288 990,235 1,271,951 1,417,215 Wholemilk powder 1,123,748 1,199,766 1,269,558 2,198,107 2,062,071 Skimmilk and buttermilk powder 571,791 569,069 588,582 1,071,694 1,177,708 Other dairy products 100,868 119,262 123,161 144,367 149,953 Total dairy products 3,722,972 3,861,392 3,894,690 5,788,713 5,890,783 Greasy wool 227,467 195,574 225,623 293,661 277,907 Slipe wool 83,267 47,566 50,793 67,039 39,494 Scoured wool 600,444 497,829 522,350 521,971 504,911 Tops and yarns 101,034 104,915 114,516 110,351 109,858 Other wool products 7,088 7,506 13,029 10,693 8,204 Total wool 1,019,300 853,390 926,311 1,003,715 940,374 Casein and caseinates 651,659 762,892 805,630 1,213,324 1,172,547 Deer velvet 22,919 20,365 27,730 28,074 31,788 Crude animal materials 256,237 248,569 231,885 253,213 266,959 Animal oils and fats 157,511 156,641 135,633 148,323 149,487 Carpets 75,739 87,109 99,336 102,273 101,054 Hides and skins 331,413 271,718 291,542 444,628 376,429 Leather 199,269 198,437 202,017 322,795 260,995 Dressed skins 118,040 109,879 99,520 127,721 145,991 Other pastoral products n.e.s. 21,944 21,304 32,258 68,015 46,293 Total other pastoral exports 1,834,731 1,876,913 1,925,550 2,708,366 2,551,542 Total pastoral based exports 9,651,917 9,608,784 10,356,881 13,914,250 14,055,520 Fresh kiwifruit 428,964 473,658 458,964 594,920 618,446 Fresh apples 381,400 488,028 404,346 341,321 420,868 Onions 97,866 100,465 78,507 96,790 100,798 Squash 56,649 59,886 60,354 71,249 81,660 Wine 100,977 126,345 177,195 197,614 251,705 Other horticultural products 460,989 505,862 530,019 669,648 636,547 Total horticultural products 1,526,845 1,754,245 1,709,386 1,971,542 2,110,023 Cereals and cereal products 32,259 16,297 11,773 15,361 8,311 Eggs and honey 12,712 12,019 14,657 20,681 26,239 Meal and pet food 42,313 36,285 100,165 144,396 169,730 Other agricultural products n.e.s. 171,703 204,964 235,722 244,207 252,331 Total other agricultural based exports 258,987 269,566 362,317 424,644 456,611 Total agricultural based exports 11,437,749 11,632,596 12,428,584 16,310,437 16,622,155 Total New Zealand exports 21,489,502 21,777,427 24,876,376 30,985,717 31,111,746

53% 53% 50% 53% 53%


Table 3: Exports of Agricultural Products from New ZealandJune Year 1998 1999 2000 2001 2002

(NZD000)1 (NZD000)1 (NZD000)1 (NZD000)1 (NZD000)1

Live animals 139,508 143,253 176,477 153,736 158,378

Total meat and meat products 2,935,405 2,873,836 3,433,855 4,259,721 4,514,443

Total dairy products 3,722,972 3,861,392 3,894,690 5,788,713 5,890,783

Total wool 1,019,300 853,390 926,311 1,003,715 940,374

Total other pastoral exports 1,834,731 1,876,913 1,925,550 2,708,366 2,551,542

Total pastoral based exports 9,651,917 9,608,784 10,356,881 13,914,250 14,055,520

Total horticultural products 1,526,845 1,754,245 1,709,386 1,971,542 2,110,023

Total other agricultural based exports 258,987 269,566 362,317 424,644 456,611

Total agricultural based exports 11,437,749 11,632,596 12,428,584 16,310,437 16,622,155

Total New Zealand exports 21,489,502 21,777,427 24,876,376 30,985,717 31,111,746

53% 53% 50% 53% 53%


Some Economic & Production Trends


Relative CPI & Nominal TWIQuarterly Averages, March 1970 Base

0

20

40

60

80

100

120

70 73 76 79 82 85 88 91 94

Nominal TWI Relative CPI (World/NZ)


Wheat - Average Yield1905 - 1995

0

1

2

3

4

5

6

1895 1905 1915 1925 1935 1945 1955 1965 1975 1985 1995

tonn

es /

Ha


Wheat - NZ Average $

0

50

100

150

200

250

300

350

1970 1975 1980 1985 1990 1995 2000

NZ

$ Nominal

Real


Dairy - Herd Size & Production

0

20

40

60

80

100

120

140

160

180

200

1915 1925 1935 1945 1955 1965 1975 1985 1995

Herd Size

Kg MF / Cow


Dairy - NZ Milk Solids

0

0.5

1

1.5

2

2.5

3

3.5

4

1915 1925 1935 1945 1955 1965 1975 1985 1995

NZ

$ /

kg

Nominal


Dairy - NZ Milk Solids

0

0.5

1

1.5

2

2.5

3

3.5

4

1915 1925 1935 1945 1955 1965 1975 1985 1995

NZ

$ / k

g

Nominal Real


Sheep - Production Trends

-1.0

4.0

9.0

14.0

19.0

24.0

1915 1925 1935 1945 1955 1965 1975 1985 1995

Wei

ghts

( K

g )

0.00

20.00

40.00

60.00

80.00

100.00

120.00

Wool Wt Lamb Carcase Lambing %


Lamb - NZ Average

0

5

10

15

20

25

30

35

40

45

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

NZ

$

Nominal Real


Cotton

0

10

20

30

40

50

60

70

80

90

100

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US

cen

ts /

lb


Butter

0

20

40

60

80

100

120

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US c

ents

/ lb

Beef

0

20

40

60

80

100

120

140

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US c

ents

/ lb

Banana

0

5

10

15

20

25

30

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

Cotton

0

10

20

30

40

50

60

70

80

90

100

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US c

ents

/ lb

Jute

0

100

200

300

400

500

600

700

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US c

ents

/ lb

Lamb

0

20

40

60

80

100

120

140

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

Rubber

0

20

40

60

80

100

120

140

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US c

ents

/ lb

Tea

0

20

40

60

80

100

120

140

160

180

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US c

ents

/ lb

Banana

0

5

10

15

20

25

30

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US

cent

s / l

b

Coffee

0

50

100

150

200

250

300

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US

cent

s / l

b

Lamb

0

20

40

60

80

100

120

140

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US

cent

s / l

b

Rice

0

100

200

300

400

500

600

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US

cent

s / l

b

Tea

0

20

40

60

80

100

120

140

160

180

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US

cent

s / l

b

Tobbacco

0

500

1000

1500

2000

2500

3000

3500

4000

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US

cent

s / l

b

Crossbred Wool

0

100

200

300

400

500

600

700

800

900

1000

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

US

cent

s / l

b

World Commodity Price Trends 1950 - 1995


Historical Analysis

• Profitability of farming has steadily declined for all of this century

• Disguised by inflation and commodity price cycles


And it gets worse


Chicken Production IndicesSource: Poultry Industry Assocociation of NZ

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1965 1970 1975 1980 1985 1990 1995

Wt g

ain

on 1

kg

feed

0.0

0.5

1.0

1.5

2.0

2.5

Wt g

ain

in 4

2 da

ys (k

g)

Broiler weight gain on 1kg feed Weight gain in 42 day period


Messages/ Consequences

• Use technology to keep increasing scale• Use technology to keep increasing output• Find better paying markets• Change to a higher value output• Or -

– Find other sources of household income– Or change careers


Issues facing farmers

• Increasingly technical


Go from this


To this


Comparative Feed Consumption with Rate of Growth

Lamb Weights

0

8

16

24

32

0 20 40 60 80 100Days

Live

wei

ght

(kg)

Feed Consumption

0

4

8

12

16

20

0 20 40 60 80 10Days

Fe

ed

Le

vel (

MJM

E)


RYEGRASS CONTINUUM Courtesy of Richard Green Agricom (NZ) Ltd

Ashburton

ITALIAN HYBRID PERENNIAL RYEGRASS Annual Ryegrass

Short Term Medium Term

Long Term Large Leaved Ryegrass

Medium Leaved

Fine Leaved

Tama

Galaxy

Corvette

Ariki

Embassy

Samson

Airies H D

Progrow

Moata

Cordura

Geyser

Marsden

Nui

Impact

Exalta

Concord

Manawa

Supreme Plus

Ellett

Marathon

Crusader

Flanker

Banks

Yatsyn

Pacific

Conker

Marbella Sud

Quartet

Bronsyn

Ruanui

Greenstone

Nevis

Vedette

Kingston

Maverick Gold

Dobson




• Market & Regulatory demands– Environment




• Market & Regulatory demands– Environment– Traceability (food safety)


Traceability





• Technology advances


( ): Lamb growth rates

0

50

100

150

200

250

300

prew eaning post w eaning av erage

gm

/day

1994/95

1995/96

1996/97

1997/98


Cumulative lamb sales for 4 seasons

0

1000

2000

3000

4000

5000

6000

7000

0 50 100 150 200

Days from Weaning

Lam

bs

sold

97/98 96/97 95/96 94/95

w eaning 10/12





• Technology advances

• Size & scale


Critical Success Factors

• Have a competitive advantage that allows you to be in the top 20% in your target market-

• And capitalize on it.

• If you don’t, life expectancy = < 15yrs


What Wrightson is doing

• Spends $6 million on R&D each year– Forage– Genesis Research & Development Ltd


What Wrightson is doing

• Spends $6 million on R&D each year– Forage– Genesis

• Industry Solutions– ILM (Integrated Lamb Marketing)– IFM (Integrated Fibre Marketing)


What Wrightson is doing• Spends $6 million on R&D each year

– Forage– Genesis

• Industry Solutions– ILM (Integrated Lamb Marketing)– IFM (Integrated Fibre Marketing)

• On farm solutions– IFS (Integrated farm solution)– Elite Forage


This year, totally paperless


Solutions Example WCS Package (10 ha)


Current Grower Cost - 10ha WCS

$0

$2,000

$4,000

$6,000

$8,000

$10,000

8 10 12 14 16 18 20

Yield

Cultivation & spraying


Current Grower Cost - 10ha WCS -Seed Break down

0

2000

4000

6000

8000

10000

8 10 12 14 16 18 20

Yield

Cultivation & spraying Base cost of Seed production

Profit to Wrightson Seeds/Research Retail profit margin on Seed



$0

$2,000

$4,000

$6,000

$8,000

$10,000

8 10 12 14 16 18 20Yield

Cultivation & spraying Seed Seed margin



$0

$2,000

$4,000

$6,000

$8,000

$10,000

8 10 12 14 16 18 20Yield

Cultivation & spraying Seed Seed margin Chemical Chemical margin



$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

8 10 12 14 16 18 20Yield

Cultivation & spraying Seed Seed margin

Chemical Chemical margin Fertiliser

Fertiliser margin


Summarized Grower Cost - 10ha WCS

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

8 10 12 14

Yield

Disbursement cost of inputs Normal profit margin on inputs


Now Future

$0

$2,000$4,000

$6,000

$8,000

$10,000$12,000

$14,000

$16,000

8 10 12 14 16 18 20Yield

Normal profit margin on inputs Disbursement cost of inputs




Now Future

$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000

8 10 12 14 16 18 20Yield

Cost of monitoring package Normal profit margin on inputs

Disbursement cost of inputs



Now Future

$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000

8 10 12 14 16 18 20Yield

Cost of monitoring package Normal profit margin on inputs

Disbursement cost of inputs Price to client



Now Future

$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000

8 10 12 14 16 18 20Yield

Solutions Profit Cost of monitoring packageNormal profit margin on inputs Disbursement cost of inputsPrice to client


Cost to Client per kg DM

$0.00

$0.01

$0.02

$0.03

$0.04

$0.05

$0.06

$0.07

$0.08

$0.09

$0.10

8 10 12 14 16 18 20Yield



Now Future

$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000

8 10 12 14 16 18 20Yield

Solutions Profit Cost of monitoring package

Normal profit margin on inputs Disbursement cost of inputs

Price to client


$0.00

$0.01

$0.02

$0.03

$0.04

$0.05

$0.06

$0.07

$0.08

$0.09

$0.10

8 10 12 14 16 18 20

Yield

Cost To client per kg DM


Benefit To Client

(10ha sold @ 18c/kg DM)

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

8 10 12 14 16 18 20

Yield

Production Cost Gross Income

PROFIT


Benefit To Wrightson

$0

$2,000

$4,000

$6,000$8,000

$10,000

$12,000

$14,000

$16,000

8 12 16 20Yield

Solutions Profit Total cost to deliver packageNormal profit margin on inputs Disbursement cost of inputsPrice to client

Profit from capturing IP and System Information in a Solution

Package


The Future?

• Technology will keep advancing

• Prices (in real terms) will keep dropping

• Increasing complexity & scale

• Increasing precision

• Divergence of systems to niches with best competitive advantage

• Vertically integrated systems, managed through supply contracts


Our future is in your hands

Goldn Hills 28 th Sept Goldn Hills, Securing our Future ? Colin Brown Wrightson Solutions Dunedin.

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Transcript of Goldn Hills 28 th Sept Goldn Hills, Securing our Future ? Colin Brown Wrightson Solutions Dunedin.