goldn hills 28 th sept goldn hills, securing our future ? colin brown wrightson solutions dunedin
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Gold’n Hills 28th Sept
Gold’n Hills, Securing our Future ?
Colin BrownWrightson Solutions
Dunedin
Gold’n Hills 28th Sept
You are here
Gold’n Hills 28th Sept
• Create Solutions in Agriculture
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Topics
• Importance of Agriculture to NZ
• Some historical trends
• Issues facing farmers
• What Wrightson is doing
Gold’n Hills 28th Sept
Some historical analysis
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Agricultures Contribution
• 8% of the workforce
• 12% of GDP
• 53% of exports
Gold’n Hills 28th Sept
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)
Gold’n Hills 28th Sept
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%
Gold’n Hills 28th Sept
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%
Gold’n Hills 28th Sept
Some Economic & Production Trends
Gold’n Hills 28th Sept
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)
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Wheat - NZ Average $
0
50
100
150
200
250
300
350
1970 1975 1980 1985 1990 1995 2000
NZ
$ Nominal
Real
Gold’n Hills 28th Sept
Wheat - NZ Average $
0
50
100
150
200
250
300
350
1970 1975 1980 1985 1990 1995 2000
NZ
$ Nominal
Real
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
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 %
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Historical Analysis
• Profitability of farming has steadily declined for all of this century
• Disguised by inflation and commodity price cycles
Gold’n Hills 28th Sept
And it gets worse
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
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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
Gold’n Hills 28th Sept
Issues facing farmers
• Increasingly technical
Gold’n Hills 28th Sept
Go from this
Gold’n Hills 28th Sept
To this
Gold’n Hills 28th Sept
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)
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Issues facing farmers
• Increasingly technical
• Market & Regulatory demands– Environment
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
Issues facing farmers
• Increasingly technical
• Market & Regulatory demands– Environment– Traceability (food safety)
Gold’n Hills 28th Sept
Traceability
Gold’n Hills 28th Sept
Issues facing farmers
• Increasingly technical
• Market & Regulatory demands– Environment– Traceability (food safety)
• Technology advances
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
( ): 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
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Issues facing farmers
• Increasingly technical
• Market & Regulatory demands– Environment– Traceability (food safety)
• Technology advances
• Size & scale
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
What Wrightson is doing
• Spends $6 million on R&D each year– Forage– Genesis Research & Development Ltd
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
What Wrightson is doing
• Spends $6 million on R&D each year– Forage– Genesis
• Industry Solutions– ILM (Integrated Lamb Marketing)– IFM (Integrated Fibre Marketing)
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
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This year, totally paperless
Gold’n Hills 28th Sept
Solutions Example WCS Package (10 ha)
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Current Grower Cost - 10ha WCS
$0
$2,000
$4,000
$6,000
$8,000
$10,000
8 10 12 14 16 18 20Yield
Cultivation & spraying Seed Seed margin
Gold’n Hills 28th Sept
Current Grower Cost - 10ha WCS
$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
Gold’n Hills 28th Sept
Current 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 16 18 20Yield
Cultivation & spraying Seed Seed margin
Chemical Chemical margin Fertiliser
Fertiliser margin
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
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
Solutions Example WCS Package (10 ha)
Gold’n Hills 28th Sept
Solutions Example WCS Package (10 ha)
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
Gold’n Hills 28th Sept
Solutions Example WCS Package (10 ha)
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
Gold’n Hills 28th Sept
Solutions Example WCS Package (10 ha)
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
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Solutions Example WCS Package (10 ha)
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
Gold’n Hills 28th Sept
$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
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Gold’n Hills 28th Sept
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
Gold’n Hills 28th Sept
Our future is in your hands
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