Stopping the bus to let townies on

THE misty rain shrouds us in a grey dampness and in the murk the Ruahine Ranges seem to loom ever closer. The woolly ewes scamper away at the sound of the car, their fat lambs bleating beside them.

It’s a wet spring day on Robin Hilson’s farm on the dull-green rolling slopes below the ranges.

He’s a sheep man through and through, the founder of the high-profile One Stop Ram Shop, supplier of fertile and meaty finn-texel-based rams to farmers from one end of the country to the other.

But this self-confessed “sheep nutter” is turning over part of the farm to dairying. Is this heresy?

“Not a bit of it,” the 70-year-old says and flashes his trademark broad grin. “I’m still a committed sheep man. That won’t change. But at the same time I’ve always thought this land would be a dairy farm. This is something planned and thought about for years.”

It is, after all, just 187 hectares of a 1200ha farm. And, he points out, it is in an area surrounded by dairy farms, all high milk-producers.

“This was put into dairy by the first settlers and stayed that way for decades. It’s just returning to its best use,” he says.

The conversion is unusual. Mr Hilson is working with agribusiness specialist Steve Goodman, of GoodmanRural, to sell a $3.5 million package to investors. It includes buying the land from Mr  Hilson and building a milking shed, regrassing the paddocks, grading laneways, putting up fencing, buying machinery, cows and Fonterra shares, and financing a $2m debt.

The plan is that a company, Maire Hill, will be formed to buy, build and run the farm. Mr Hilson does not intend to be a part of it.

He likes the idea that the investment – at a minimum of $250,000 – allows young dairy farmers to get a stake in farm ownership and also gives urban investors a chance to share in a buoyant agriculture industry.

He describes farming as a bus – a bus that it is becoming difficult to catch a ride on. “I’ve stopped the bus so someone else can get on,” he says. “If I just sold to another dairy farmer, we’d only be swapping drivers and it would carry on empty. This way, more people can join the journey.”

Mr Goodman says the land “has dairy written all over it”. “It has the soil, the rainfall and the location.”

The soil is Takapau silt loam, free-draining and not prone to pugging. The skies begin to clear and Mr Hilson points to a new track graded on his steep hills, not part of the new farm. “The soil is two metres deep of young brown loam. No wonder it grows plenty of grass.”

Average annual rainfall is 1500 millimetres. “Irrigation is cheap, it comes straight out of the sky,” he says holding out his hands. However, like all of Hawke’s Bay, the area has been hit by drought in recent years and water will also come from mountain-fed creeks and springs.

Mr Goodman says 450 cows will make up the initial herd, producing 144,000 kilograms of milksolids. This is expected to increase to 160,000kg by the third year as the herd increases to 500 cows.

This is based on the Ministry of Agriculture and Forestry’s lower North Island model dairy farm. Milk production of 320kg a cow and 900kg a hectare is conservative compared with the neighbouring farms that this year are tracking more than 1000kg a hectare, he says.

Income projections start at just under $900,000 in the first year and rise to more than $1m within two years. After expenses, an economic farm surplus of $320,000, rising to $420,000, is predicted.

These are based on a milk payout of $5.88 a kg, compared with Westpac Bank’s forecast of an average of $6.95 over the next four years.
Investors’ returns are put at around 9 per cent, better than most other offerings, Mr Goodman says.

The former Westpac banker slips into sales mode. “I’ve been involved in  farming since 1987 and there’s never been a more compelling time to invest. It’s a safe place to have your money.”

He expects rural investors to jump at the deal, but hopes many urban people will also see this as a way to invest in the dairy industry. “There’s nothing like this on the sharemarket; this is literally the ground floor, where the money is being made.”

Food commodity prices are staying high and markets are expanding in Asia. “Things are starting to move. The banks know that; they’re back, letting farmers know the money is available.”

He regards urban investment in agriculture as a largely untapped market, but finds it a tough sell.  “Why? The capital needed to purchase a farm outright is out of the reach of most urban investors and many don’t have the skills to judge a good agriculture investment or how to run a farm. It is in the too hard and too expensive basket.

“But this way, buying shares in a farm that will be run by a professional equity manager, who we see as a farmer with ‘skin the game’, and overseen by a dairy consultant, makes perfect sense.”

He says interest in the deal has been building through word of mouth and he wants to put it all together by the New Year so planting of new pastures can start.

This is not Mr Hilson’s first dairying experience. He owned a dairy farm for a few years in the 80s. “It was quite an enjoyable experience, but it was someone else’s expertise,” he says.

He was a perendale stud breeder on his Takapau farm in the 80s when scientists told him about the finn and texel sheep that were being imported from Europe.

He put together a joint venture of 43 farmers with the Ministry of Agriculture and set up a quarantine station on his farm. For the next few years, he ran the imported breeds alongside his own perendales.

"I was amazed at what I found, " he says. "I thought my sheep were pretty good; after all, they had won royal shows. But I soon realised that meant nothing. These new sheep were outstandingly better - it was a hard pill to swallow."

The finns were hardy, lived longer and were prolific breeders while the texels were also tough and sported big, meaty back ends. He reasoned that if these traits could be passed on to New Zealand's whiteface sheep - the mix of romneys, perendales and coopworths roaming the hills - it would be a shot in the arm for the industry.

So he opened the One Stop Ram Shop to sell rams and advise farmers on how to get the best results from them. He began a crossbreeding regime on his farm which has led to 10 types of rams - including four stabilised composite finn-texels and two prime sires, as well as dorpers.

These days, his farm has expanded from its original 190ha of wild, wet hill country to 1200ha, mainly on the Takapau plains. He has 12,000 sheep and 300 cattle on land he has transformed with a programme of continually planting shelter trees.

Farmers phone him wanting to improve their production and he works out a crossbreed or composite to suit their country. He sends off the rams they order, then gets in his car and drives out to help them achieve their goals.

He is on the road for months at a time visiting hundreds of farms a year, and reckons he knows most country roads throughout New Zealand intimately.

Lately, that has expanded to include overseas farmers, particularly South America.

He says he will use the sale of the dairy land to reduce debt.

A new bank of misty rain drifts up from the south and the sun disappears. “Land doesn’t stand still,” Mr Hilson says. “That doesn’t seem to make sense, but what I mean is that this land is entering its next development phase.

“The milk business can generate more income from this land and I’d like to give the next generation a helping hand to take their part in it.

“And I’d like to give urban people a chance to understand what happens on a farm. If they get involved financially they will discover more about agriculture, understand that New Zealand’s future is in growing grass.

“It’s what we do – grow it and turn it into something the world wants to buy.”

--Jon Morgan writing in THE DOMINION POST, December 8, 2011