The Townshend family has been farming on the Hauraki Plains since 1924. Mark’s father Gray started with 20 hectares (ha) and 45 cows in 1952 and now Mark and his wife Diane have multifarm business operations. The Townshends have learned what it takes to be competitive in the global dairy sector. At age four, Mark Townshend knew the name of every cow in his parent’s small herd. With over 40 years' experience, he's also had plenty of involvement during that time with dairy sector governance (NZ Dairy Group, the NZ Dairy Board and he was a founding director of Fonterra). In 1997, he and Diane won the inaugural A.C. Cameron National Award for Excellence in Farming in New Zealand.
From 2005 onwards, the Townshends joined forces with like-minded people and began acquiring farms in Southern Chile, and Missouri, USA, and for a brief period, a cropping farm in Eastern Russia. Today Mark’s farm life rotates around Hauraki, Canterbury, Southland, Chile and Missouri. Some of their farming businesses are owned by family, some are owned by family and friends and some are equity partnerships between themselves and close friends, old footy mates or ex-employees. Other operations are larger scale corporate farming entities – Manuka in Chile and Canterbury Grasslands (Canterbury, Southland and Missouri USA).
Mark and his wife Diane acknowledge their parents’ and grandparents’ emphasis on the importance of growing their original farm and their additional farming businesses as a key influence on their getting to where they are today. It’s why they are so focused on continuous improvement, growing their competitiveness globally and ensuring their operations and their people have the resilience to keep up with local and international change.
“It wasn’t about being given money, it was about being given a vision for the future. We are indebted to our families for this,” says Mark. “We thought this was normal for all young farmers. As time went on, we realised that many young farmers had their ambition unintentionally killed off by parents who said, ‘our farm is big enough' or 'you don’t want to take on any more bank debt’. They didn’t see that in the 1930s a 20-cow farm was an economic unit; by the 1950s a 50-cow herd was economic; and by 1980 a herd of at least 100 cows was needed to still be fully viable.” He's also very aware that any growth needs to be environmentally sustainable.
Overnight success in farming takes about 15 years, says Mark. His farming life has had four distinctive phases and because these have been wrapped up in one career, at 62 he’s still extremely happy to go to work each day.
Gaining the edge
Two approaches by the Townshends help them keep their businesses competitive locally and globally. First, they concentrate on net outputs, not gross outputs. For example, they believe that farmers should aim to achieve a profitable farm operation at a $5 milk price while keeping their focus on investing and growing their farm business based on a long-term $6.25 milk price. “This ensures survivability, but captures both growth and profits,” says Mark.
Benchmarking is another useful tool. “Multi-farm operations have the downside of diluting the time of key personnel, but they provide the ability to benchmark - it’s what I call a ‘nowhere to hide’ tool.” Mark says doing better environmentally is another aspect that can’t be ignored. “Today I believe most farmers are doing much better than their city counterparts with urban sewerage, chemicals and road runoff,” he says.
However, he emphasises that farmers’ improved environmental efforts so far are “absolutely no reason for farmers not to try and do better”. He’s adamant that continuous improvement in this area and across many other factors contributing to global competitiveness and resilience should remain at the front and centre of dairy farmers’ long-term planning.
Mark has several views on what’s contributing to New Zealand’s competitive edge on the global dairy stage - and how we can improve on that. It’s tempting to focus first on the impact of New Zealand’s temperate climate, but while this is very important, Mark says there are other more significant factors.
“New Zealand farmers freely share information; few other New Zealand or global industries share better and more successful techniques with their competitors.”
He believes this means that very few farmers need to invent anything, because “the most we do is take other farmers’ good ideas and improve them a little”.
He also thinks that because dairying has an important place in New Zealand’s economy, the sector's and its farmers can attract attention at the top levels of government and with important stakeholders. “This has opened many doors for dairying. However, some of this influence is now at risk from anti-dairy campaigns. Some of the criticism is fair, but in my view, most is selective and unbalanced.”
The New Zealand Dairy Board and Fonterra have also played a part in driving the sector's competitiveness and resilience, says Mark. “There has always been an open door for new entrants to enter the sector. This is a vital ingredient to introduce new blood, energy and ideas. The sector has always benefited from keen and hungry new entrants with no pre-conceived ideas. We see very successful closed co-ops like Tatua or NZ Dairy Goat Co-op that serve their shareholders well. But I believe that New Zealand dairy would never have created the scale, momentum and productive innovation without an open entry and exit policy.”
Mark and Diane’s efforts in this area include two other companies which they’ve set up in recent years, each with half a dozen young people. He says the companies’ model is about opening the door to young people to invest in farms. “It gives them access to competitive banking packages, exposes them to good farming governance practices and provides good equity growth options. In some ways, this is the most satisfying model we have.”
Focusing on what's important
Mark says DairyNZ’s focus on the ‘license to operate’ space is very important. “Without it, the New Zealand public will be further influenced by those who don’t appreciate the positive impacts of dairy on the New Zealand economy and to society in general.” He agrees that that focus sits alongside DairyNZ’s other core priorities on research and improving farm profitability. However, he notes that while his own approach of focusing on net output rather than gross output helps to create a more sustainable sector, it also delivers less levy income for DairyNZ to work with. According to Mark, this dilemma is further complicated, because “they also need to keep the dairy populous happy to ensure levy approval every six years”.
He’s also keen to see a wider range of people getting into dairy sector governance, including at DairyNZ. “Through the ballot box, there’s a danger of electing only nice and compliant people. At management level, DairyNZ has many good people, but to be really effective and to complement the good compliant people, DairyNZ needs its share of visionaries who vigorously and relentlessly push boundaries.”
Mark recognises that DairyNZ has another challenge: having to cater for all sections of the farming community. “If we break the farming community into areas of profitability and efficiency, DairyNZ has to cater for them all. The reality is that most concentration should go into the top performing areas. Looking through the telescope 10 years out, those at the bottom will be gone (this has happened for the past 100 years) and yesterday’s top performers will have dropped to second place as new higher achievers come through.”
Maintaining the edge
Overall, Mark believes that what’s been happening at every level in the sector – from on-farm to national and global developments – means that New Zealand dairy’s competitiveness has lost some edge. “New Zealand is still a very good place to dairy farm though,” says Mark, “although I think that the majority of kiwi farmers have become more interested in gross outputs rather than net outputs – and that worries me. I believe that being a system one or two farmer with reasonable outputs, but very good net returns, has become unfashionable.” He also says that that ignoring new technologies while other countries take them up will make us less competitive. “For example, I think that there will be some genetic modification (GM) techniques that are logical and safe that will also keep the price of food at a reasonable level.”
Mark is keen to see the dairy sector continue to try to take New Zealanders along with them and connect with the public in ways that make sense and are meaningful to them. “Today the tide is still going out for the dairy sector. Over centuries, populations connected with food producers through wars, climatic extremes and famines. Joe Citizen now takes food for granted and doesn’t make the link to how it’s produced. Yes, producing food has some consequences, but a shortage of food or expensive food has much greater consequences. It’s worth remembering that New Zealand has high carbon emissions per capita, but low carbon emissions per unit of food produced. This country of five million produces food for 50 million. If NZ cuts back on dairy production, either people in the world will go hungry, or others in the world with less focus on environmental issues will replace what we were producing while creating a bigger global footprint."
Continuous improvement is vital if New Zealand’s dairy sector is to keep and increase its competitive edge and resilience locally and globally, says Mark. “New Zealand's 12,000 dairy farmers alone produce the annual calorie intake for 20 million global citizens. This means that a Joe-average 320-cow New Zealand farm feeds 2000 people each and every year on this planet. That is an amazing statistic and one that every New Zealand dairy farmer should be proud of. But is that enough? Could that average 320-cow New Zealand farm feed 2500 people with the same land and global footprint?”
“That is what our most efficient farmers do. And they are not satisfied with that – they are still seeking continuous improvement. What is good and competitive today will be less competitive in five years and uncompetitive in 10. The best form of resilience will be associating with the most successful farmers. They won’t be a constant group. Keep looking for the next group of movers and shakers.”
The Townshends now own/operate multiple farms in NZ and overseas. Here’s what they’ve learned about competitiveness and resilience along the way:
- Focus on net outputs, not gross outputs.
- Use benchmarking to stay on track.
- Encourage young people and fresh ideas.
- Good environmental sustainability can always get better.
- Continuous improvement across all factors is the key.
This article was originally published in Inside Dairy March 2018