Kotuku block

October 2006
About five years ago Government assured Landcorp that the State Owned Enterprise and its assets were not about to be sold. A decision was made to balance the Landcorp portfolio by growing its dairying portfolio. At the time the company owned three dairy farms in the South Island Thats since jumped to 11 South Island dairy farms, nine (including the Kotuku block) on the West Coast of the South Island.

Throughout New Zealand, Landcorp milks 18,700 cows.

Kotuku is a 549 hectare seasonal supply dairy farm; one of five adjacent Landcorp blocks four dairy and one drystock developed in 2003 from a drystock farm called Weka. Each has an independent manager, although they do regularly gather around the table to share knowledge and experience.

Landcorp takes a company-wide approach to farm investment. Managers each put forward a wish list which is considered by management, with funds provided where returns will be maximised.

Pakihi-type soils characterised by an impermeable iron pan had restricted production at Kotuku. Not only were the soils infertile, but they had no drainage and could become extremely waterlogged.

The solution has been a massive development programme. Three hundred and eighty hectares has been humped and hollowed. Meanwhile, a QEII Trust open space covenant has been placed over the whole farm with 50 hectares of native bush fenced off and a further four hectares to be added.

In its original state, the property would have struggled to carry one cow per hectare but development has lifted carrying capacity to around 2.6 per hectare.

We have reinvented the landscape to something thats firm underfoot where cows arent up to their guts in mud, says manager, Shane Kelly.

Average rainfall on the property is 2250mm, which falls mainly in spring with dryer summers.

Kotuku milks 1050 cows, plus runs 240 rising one-year cows off-farm.

The Kotuku block has just completed its first full season as the Westland focus farm, established in late 2004 by a group of farmers supported by Dexcel, the South Island Dairy Development Centre and Westland Milk Products.

Part of the aim is to lift dairy production on the West Coast, targeting especially the bottom 25% where the greatest gains can be made.

The programme fills a need for locally relevant information, which has previously been unavailable with most dairy trial results coming out of the Waikato and Canterbury. The emphasis is on seasonal management; the nuts and bolts of farming rather than big picture decision-making. There is a strong emphasis on providing facts and figures farmers can benchmark against.

Farmers are generally happy to share production information but reticent about opening up their accounts, Shanes found. Our figures are totally up front and honest. If something goes wrong, well point it out rather than try to hide it.

An example was a disastrous silage season last year, when Kotuku cows refused to touch silage that all the tests said had a high food value. Further testing at Lincoln revealed high acid levels. When that information was shared at a field day and through the local newspaper, it turned out to have been a widespread problem with the solutions applicable across the district.

Kotukus development programme has made it an ideal focus farm, with most farms in the area having a block or two of undeveloped land. Seeing the costs and returns in black and white had helped farmers realistically analyse probable costs and returns of development.

We are not flash Harries, says Shane. Being a focus farm is useful to the district in that its an opportunity to open up the farm and both share what weve learned with others and also learn from them.

Kotuku has been extensively developed by humping and hollowing. The first step is digging a series of 1.5 metre deep pilot drains about 35 to 40 metres apart, from one end of the paddock to the other. Soil from the side of the ditch is thrown up into the centre, with the mound then buried in half a metre of gravel. The ground is levelled by bulldozers or tractors with a levelling bar, and smoothed out so it can be sown over and fertiliser applied.

Six weeks after humping and hollowing is done, the land is sown down in grass a sparse crop, because of all the stones, explains Shane.

When I first started here in May 2003, we had about 35 diggers working on the farm at once plus trucks driving up and down with gravel to lay the races out.

To the untrained observer, it looks like you are burying your fertility, says Shane. However, not only are these soils extremely infertile but also whats needed to make this country farmable is paddocks that are firm under-foot.

Dry weather is critical. Much of the soil at Kotuku is glacial moraine, made up of cementy lumps of gravel and massive boulders which once they have been broken up becomes a fine powder that turns to porridge when wet.

The potential for massive run-off with soils being washed downstream is extreme, in the vulnerable stage between humps and hollows being formed and grassed, Shane explains. A resource consent is required to carry out this work, with the main condition being the digging of silt traps (basically deep holes) to capture any soil if there is heavy rain before grass has grown.

These fill in once pasture has established.

The humping and hollowing technique has been around for about 15-20 years, but no-one had done it on this scale on the West Coast until Landcorp started its big development programmes five years ago. With four new farms on the Coast, it had developed about 1200 hectares in three and a bit years.

The productivity and more importantly profitability of the Kotuku herd is steadily improving, due to both breeding (using the Livestock Improvement Corporations Friesian Jersey crossbred sire team) and feeding, with soils gradually becoming more fertile.

In the year just finished, milk production was below the 370,000kg of milk solids budgeted for, at 347,000kg (816kgms/hectare). Profits however, were well ahead of budget at $423,000 (after $120,000 in depreciation had been deducted) compared with the predicted $363,000.

It just goes to prove that productions vanity, profits sanity, quips Shane.

This years budget is 344,000kg of milk solids, the drop on last season recognising that there will be a lot of first calvers in the mix plus the loss of some land to a neighbouring Landcorp block.

Angus instead of Jersey bulls have been mated with some heifers this year, with their crossbred calves raised from three weeks to 18 months of the adjacent Landcorp dryland farm. This is a win-win for both properties, earning more for Kotuku than the $25 if youre lucky paid for Jersey crossbred calves sold onto the bobby truck and providing an inexpensive way for the drystock property to build up its beef numbers.

Grazing management is the responsibility of herd manager Jason Wilson, whose wife Stephanie plate meters the property weekly. The aim is to graze to 1500kg of dry matter per hectare.

The emphasis is on how much grass we are leaving behind in the paddocks. If we start to leave pasture behind we pull the rotation out from say 20 to 30 days, so the cows get a smaller amount and graze harder. Once the grass really gets going, we take paddocks out for silage.

This is still a developing farm, Shane points out. You drive past and it looks a million or six million dollars, but the reality is there are still a couple of years ahead before we start to get the level of production seen on more established farms.

Fertiliser costs are probably $100,000 more than for a similar sized farm in Canterbury, with nitrogen the main input.

We tipped the soil upside down when we humped and hollowed, burying fertility that it takes time to re-build, Shane explains. A lot of the nitrogen is used up in getting the organic cycle started, with not much surplus left for growing grass which starts to yellow after about 20 days with no fertiliser.

Far from its reputation as being a backwater, the West Coast is now one of the most go-ahead regions in the country with high growth and virtually no unemployment, says Shane. This can make it hard to find staff, in all industries including dairying.

A plus of farming on the Coast is supplying Westland Milk. The fact that it costs $1.50 per share to become a shareholder versus $5.80 for Fonterra undoubtedly had a bearing on Landcorps decision to base much of its dairy expansion on the Coast. In 2005/06, the Westland Milk payout was $4.15kg/MS compared with $4.10 for Fonterra.

While a great admirer of Fonterras success in pulling together the New Zealand dairy industry, Shane also appreciates the personal touch that comes with supplying a smaller company.

I can still ring the laboratory and talk to a technician about my milk test results.

A plus of the climate is that we dont get a howling Nor West when its hot or a roaring southerly when its cold. On the downside, spring rains can reduce pasture utilisation. This has largely been overcome with the freer draining environment created by hummocking and hollowing encouraging cows to keep grazing rather than hanging about in miserable mobs.

We cant control grass growth by applying water and urea when needed, says Shane. Here, we can go from growing 60 to 70kg of dry matter per day to 10 and it might stay like that for 10 days.

Isolation and associated transport costs is another challenge of the district.

When developing Kotuku, five to 10 metre buffer zones were left along each side of waterways and fenced for eventual planting. As well as excluding livestock, fences are barriers beyond which fertiliser is not spread. Landcorp and Shane have a good relationship with local Department of Conservation and Fish & Game, who have helped with planting and provided advice..

The only problem is that wekas and pukekos rip the young plants out.

As an SOE, Landcorp has to be seen to be squeaky clean environmentally, says Shane, otherwise well be used as a political football. Staff also have a strong personal commitment to conservation.

A farmer attending a recent field day said, you buggers are setting too high a standard that the rest of us wont be able to follow.

Shane acknowledges that at Kotuku, Landcorp has the advantage of starting from scratch which means the farm can be laid out in a way that incorporates environmental values. Its much simpler than on a farm where cows might have crossed a certain stream for 20 years, and the farmers suddenly asked to find $50,000 for a new bridge. I dont know how they can do it, sometimes.

But when it comes to fencing streams, Shane reckons its not that big a deal. Its just a few dozen fenceposts and some coils of wire.

Unusually, the entire Kotuku block has a QE II Trust open space covenant over it, rather than several separate covenants over small areas of bush which would have involved complex surveying.

People have asked why the hell were giving the land away, but its not like that. We are not in the business of knocking over mature native forest, or wed end up looking like Canterbury! Even from a farming point of view, Landcorp would not want stock in the bush as this would make bringing the cows in for milking extremely difficult.

Landcorp has developed a quality assurance programme known as FarmPride, which embraces the company's commitment to production, processing and marketing of premium quality farm products. The programme sets high standards of animal health, welfare and environmental stewardship which are then externally audited.

When Shane first started working with Landcorp at Kotuku three years ago, he thought FarmPride was way over the top. Now hes convinced that sustainability is important. There is no point in developing a farm thatll be highly productive for a few years then ruined.

Landcorp has become extremely aware that all its products must be traceable right back to the farm, and that every effort must be made to not only do things right but to keep track of product and management practices.