Te Rua o Te Moko’s win at the 2014 Ahuwhenua Awards is testament that the vision has become a reality, led by three individual land owners and their business performance team Te Tumu Paeroa.
The Ahuwhena Awards recognise excellence in Māori farming, with judging based on farming efficiency, governance and financial reporting and analysis.
From the eight judging categories, Te Rua o Te Moko excelled in financial and benchmarking, social, environment and governance and strategy.
In 2012, Michael and Ruth Prankerd became 50:50 sharemilkers on the farm, working alongside the farm directors, farm consultant, Rob Gollan, and Te Tumu Paeroa – who provide governance decision support.
As past finalists in Taranaki Sharemilker of the Year, Rob says the Prankerds were hand-picked based on their proven performance.
Benchmarking for success
Te Rua o Te Moko has used DairyBase, DairyNZ's business analysis tool, to benchmark the farm for the last three years, looking at both physical and financial factors.
Financial analysis shows a strong business generating good profits with low debt. Liabilities account for only 3.5 percent of the asset value, compared to North Island farm owners with 50:50 sharemilkers who average approximately 17 percent debt to asset ratio.
“Operating profit margin (the gap between operating expenses and gross farm revenue) has been above the North Island average (27 percent) for the last three years, consistently being 44 to 45 percent,” says chairman of Te Rua o Te Moko, Dion Maaka. He credits this partly to one of the main drivers of the business – to focus on cashflow rather than capital gain.
“The high profit margin has created a resilient business. It ensures we can withstand significant changes to milk price and input costs and still be viable,” says Dion.
Long term view
Sharemilker Michael Prankerd emphasises that even in a season with a low milk price, it’s important to keep your eye on long term goals.
“You can withhold some capital spending, but continue to work towards your plan and goals.
“Understanding your business and working efficiently before a bad season happens will put you in a better space to cope with a low milk price,” says Michael, who recommends monitoring, budgeting and benchmarking as standard practice.
The high profit margin has created a resilient business. It ensures we can withstand significant changes to milk price.
“Review costs and look at cost per kilogram of milksolids. Know where your business is at so you are better placed to make decisions around spending, investment and planning. A number of small changes can add up to make a big difference.”
Michael also recommends tapping into support networks and rural professionals for advice.
“Make use of your accountant, farm consultant, bank manager and DairyNZ consulting officer.”
Whole Farm Assessment provides big picture
Te Rua o Te Moko farm consultant, Rob Gollan, says a Whole Farm Assessment was completed with DairyNZ Taranaki regional leader Katrina Knowles and DairyNZ project manager Paul Bird.
“It highlighted the farm’s areas of strength, as well as areas we needed to work on,” says Rob. “The process provided an opportunity to firm up our goals and direction and really nail down what we wanted to achieve.”
It’s a positive strategy to engage and train local Māori and get them involved in agriculture on their own land.
Growing industry potential
The owners and the on-farm team are passionate about developing capability in the industry, and in 2013, a training operation was set up with Land Based Training for young local Māori aspiring to a career in dairy farming.
“It’s a positive strategy to engage and train local Māori and get them involved in agriculture on their own land,” says Rob.
The students are training towards a level three National Certificate in Agriculture; Michael says they work alongside the farm team, gaining valuable hands-on experience.
“We get to see them develop their skills and support them into employment – there’s a lot of personal reward in it.”
Farming for the future
The farm, which encompasses five kilometres of Waingongoro River, also scored highly for its environmental initiatives.
“All waterways have been fenced on the farm,” says Rob.
“We’ve planted about 80 percent of the 15ha of riparian margins – our planting plan sees 3000-5000 plants go in each year.”
While the farm is consented for a treated effluent discharge from ponds to a waterway, effluent is applied to land only and solids from the pond are applied to crop paddocks.
“It’s about making use of the resources available to you,” says Michael. “As well as being better for the environment, it’s a cost saving on fertiliser.”
Soil testing is done every two years to determine P and N levels, as well as deep-N testing, allowing them to make informed decisions on fertiliser application and effluent spreading. As a result, nitrogen leaching is under 27kgN/ha/yr.
Governance and strategy
The governance and strategy of the farm was another standout factor for the judges. Rob and Michael acknowledge the owners’ vision in creating a unique farming model which enables the full utilisation of land.
The strategy is embraced by the whole farm team. “At the heart of our decision making is an intense focus on profitability, increasing our ability to provide free cashflow. For this reason, our focus is on good production, exceptional cost control and quality day-to-day decision making.”
Michael says going through the award process was a priceless learning experience in itself.
“When Te Rua o Te Moko won, 70 people stepped up on the stage to receive the award. It really shows what a team effort it is.
“It highlighted the team culture, the passion and the history of the land – all which are central to the farm.”
*Dairybase figures are from the 2012/13 season.
This article was originally published in Inside Dairy April 2015