Business Rural Autumn 2021

28 | Dairy futures market Virginia Wright MEAT & WOOL » Avenel Farming: Nick Garden I t’s over ten years since Nick Garden’s father Pat started talking to him about succession and what they might do with respect to Avenel Station, their family farm. The result was that Nick and his wife Aimee decided to put their respective careers on hold, his as a commodities trader, hers as a business manager in a design firm, and move from Auckland down to the family’s sheep and beef farm in Millers Flat. “Aimee and I said let’s give it a go,” explains Nick. “although in the back of our minds we probably retained the option to go back to our old careers if we wanted to.” In 2018, having established the systems they thought could sustain without their active presence, that’s more-or-less what happened as they moved back to Auckland with the addition of their two small children. They now run the farm from there with Nick also working back in finance and Aimee studying midwifery and raising the children. After a period of adjustment and some trial and error they realized they’d underestimated their own contribution to the running of the farm, and put more of a burden than they’d intended on the team they’d left behind. “I’d like to think farmers can be like everyone else and not have to work 24 hours a day seven days a week,” says Nick. “We wanted to promote that balance so we put another labour unit on the farm which meant we had to recognize the cost to the viability, but it also meant we were plac- ing value on the team that’s not purely economic. We were prioritizing the importance of our social impact.” 18 months later the farm remains economically viable, which, given Nick’s background in finance is not something he takes for granted. What’s more he now combines his two areas of expertise in a way he hopes will help other farmers achieve financial stability. In his words Nick’s day job is “developing the derivative markets at the NZX, and a primary one is the Dairy futures and options market.” What this means in practice is something that Nick spends a good deal of time explaining to dairy farmers around the country. Essentially the NZX has futures and options contracts listed that are tools farmers can use to fix their milk price for future seasons and thus reduce their vulnerability to fluctuating income. “The idea isn’t for farmers to speculate but to use these tools to manage the risk posed by the volatility of milk pricing. So that’s about them saying ‘what’s the impact of prices falling on my business, and how can I use these tools to smooth my income or manage my margin over break-even’ – or simply to remove uncertainty,” explains Nick. Financially farmers are juggling risk all the time including interest rates, working expenses and milk price, which tends to be the most volatile by far. Nick likens the relatively new concept of manag- ing that volatility to using a fixed rate mortgage as a way to manage the risk posed by interest rates going up. “Over the last 12 years volatility of milk price has had six times the impact on farmers bot- tom line as volatility in interest rates, so we really believe it’s worth managing, especially if you have limited capacity to handle any fluctuations, or even simply a limited appetite for financial risk.” Closer to home Nick’s always looking for op- portunities to make the most of their farm’s natural attributes through innovation as well as managing costs. To this end he and his father Pat have been part of the Legumes for Hard Hill Country Project which began as a research trial with Ag-research. “The project’s about putting nitrogen-fixing legumes into those really harsh environments which represent a large proportion of New Zealand’s sheep and beef country. Thousands and thousands and thousands of hectares fit this category,” says Nick. A combination of relatively poor fertility, acidic soils, and poor climate result in land with a low carrying capacity. The challenge was to sustain- ably increase that carrying capacity and the trial started by assessing whether higher protein forages could be established in those areas, which account for roughly half of Avenel’s 2200 hectares. The Gardens put in nearly 600 hectares of Lotus, a legume similar to Lucerne which handles really very acidic soils. The results more than made up for the costs involved and together with Ag-research they are taking the research further with the intention of making Lotus a viable option to increase the profitability of otherwise non-cultivatable harder hill country . “There was a lot of research done about it in the 70’s and 80’s,” explains Nick,” but like with Lucerne and Fodder beet, how the plant could successfully be integrated into a grazing system to maximize its value is only relatively recently being appreciated.” At a recent field day held at Avenel alongside Beef and Lamb and Ag-Research Nick described the impact Lotus has had on their high country with the carrying capacity of the area over-sown having already increased from .5 of a stock unit to 1 stock unit per hectare. Nick believes Lotus has real potential and it’s research that he’s happy to keep going with. “The idea isn’t for farmers to speculate but to use these tools to manage the risk posed by the volatility of milk pricing. So that’s about them saying ‘what’s the impact of prices falling on my business, and how can I use these tools to smooth my income or manage my margin over break-even’ – or simply to remove uncertainty,” Avenel Station’s Nick and Pat Garden describe the impact of oversowing harder hill country with the legume Maku lotus at a recent field day. David Gale 0274 989 205 Graeme Gale 03 489 7322 Email: heli@heliotago.co.nz Quality Guaranteed Why Wait, Call: For more information check out our website www.kelsokontracting.co.nz Or call us, Hamish: 0274 306 869 Office: 03 204 8112 • Stabilising • Rock Crushing • Stump Grinding & Mulching • Reefinator • Earthmoving & Excavation • Laneways www.aoteaelectric.co.nz Phone: 03 445 1374 Email: cromwell.reception@aoteaelectric.co.nz Providing a full range of services to Residential, Commercial and Industrial Customers Aotea ELECTRIC