Thursday, 27 February 2014

A sucessful family company

 I visited Peter Mitchell who farms near Omarau, and is a fifth generation farmer. The farm business structure is relatively uncommon for NZ as Peter farms with his uncle and cousins, and run the Mitchell and Webster company. All the different family members have different skills which are matched to the role they play. The company is split into four separate smaller companies, each with its own board of directors. Each board holds a bi-monthly meeting and includes external consultants to add skills and expertise the family members may not have

Peter Mitchell in a crop of canary grass

The arable business forms one company and comprises 1400 ha of owned and leased land of which 600 ha can be irrigated. Crops include wheat, barley, canary seed, sunflower, forage maize, lucerne forage, ryegrass for forage and seed and oilseed rape.  RTK guidance is used on the tractors to improve efficiency. Some variable rate lime and phosphate applications are used to correct specific areas using grid sampled data.  Variable rate irrigation (VRI) is used to control water applications, the land has been EM (Electromagnetic conductivity) mapped and divided into soil zones which have moisture probes installed. Peter has been working with Landcare research on a water monitoring project where the moisture sensors are monitored remotely using telematics, every 15 mins. This information is accessible from either the office computer or a smartphone, there is the possibility it could lead to a fully automated system. Weather data is also monitored and is used in the decision making process, which would be improved if an option to look at what if predictive modelling was also possible, according to Peter.

A dairy conversion was just starting on a 170ha block of arable land. The conversion will be run as a separate company and will be milking 600 cows by August in only 6 months time. When I visited it was all arable land, with no irrigation, milking shed or dairy infrastructure, the speed at which a conversion happens is breathtaking. The decision to start dairy farming was multifaceted it is more profitable than arable cropping on that block, to the point that irrigating arable crops is too expensive but grass it down and add some cows makes it sensible. Dairy farming is scaleable, helps with succession planning bearing in mind the business structure, and  adds diversification. One more reason is that converting marginal dryland arable land to an irrigated dairy farm doubles the value of the land overnight! In a country without capital gains or inheritance tax it all makes perfect sense.
Arable land to be converted to a dairy unit

 Peter commented:  “If you don’t keep growing, you get run over!”

The third business is a bird seed business, Topflite. Topflite started in 1993, after growing sunflowers for oil which was not profitable, and a buyer in Christchurch become unreliable. It started small with all the seed mixed by hand in a concrete mixer and has grown to an automated process producing 1400 T of Bird and small animal seed per year. Not all of the seed is grown on the farm as some has to be imported to get the correct mix for the different products. The majority is sent to the north island, due to the larger population. The business is based on offering a good product with good service, to maintain a higher price, and deals primarily with pet shops and not supermarkets.
New Topflite bags
Products ready to be delivered
Range of products produced

The last company is a passive company with commercial property assets including a rest home.

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