What really drives profitability on pastoral farms – the right story

What really drives pastoral farm profitability?

This is the second article in a series reflecting on the building blocks of profitability on pastoral farms in New Zealand. My particular interest is in sheep and beef farming, occupying 70% of New Zealand’s pastoral land.

This article focusses on the farm system – a fascinating animal-pasture game of matching the ever-changing pasture growth with a livestock business.

I am lucky to have spent time with farmers who are far ahead in thinking: my role has been to understand this thinking and how it can be incorporated into a system. Theirs is a whole story because it includes the battle to get the time to think when everything else is happening – farm succession, regional council consents and farming with your brother…

Helping a farmer involves either supporting them to find the right story and or helping them make the right choices with the story they have chosen. The first is strategy and second is tactics, and this article is about strategy (my next article is about tactics).

Let’s pause for a moment to discuss the animal-pasture game and the size of the prize. In quantifying the value of precise knowledge in pasture management on dairy farms Beukes et al (2019) estimated $385/ha can be gained with improving knowledge of pasture biomass (average 15% error) – also referred to as pasture cover, and a further $155/ha could be achieved with perfect knowledge of paddock biomass, at a price of $6.33/kg of milk solids – a 27% increase in profit.

The study found a 26% increase in pasture production between poor and perfect knowledge. Can we translate this to NZ sheep and beef farms? We can assume an average sheep and beef farmer is dairy’s poor category[1] so the move to perfect knowledge would increase pasture productivity of 6.5tDM/ha by 1.7tDM/ha. A farmer should be able to convert this into revenue that would double the profit of average hill country sheep and beef farms. And, that is what we see the top farmers are doing in almost every benchmarking scheme I have seen or been part of.

The dairy sector knows exactly how they would use perfect knowledge – using a feed wedge and the Spring Rotation Planner (developed by DairyNZ) to manage grazing rotations. Sheep and beef farms are more complicated with many more mobs all with different metabolic demands running on different landforms with different pasture composition, quality and soil fertility.

So, can a sheep and beef farm double its profit through more perfect knowledge? I think this is theoretically possible and entirely worth the effort. I see three preconditions:

  1. Pasture cover measurements – easy and accurate
  2. The farm makes good seasonal decisions – when required, with good measurement
  3. The farm system is well design – and can adapt to its climatic variability.

Let’s work through these:

1. Pasture cover measurements – easy and accurate

There are great farmers dedicated to measuring their pasture covers paddock by paddock limited only by the accuracy of their technique and state of the technology. But that dedication is beyond the mettle of the remaining 92% of farmers.

Accurate measures of pasture cover on New Zealand sheep and beef farms is extremely important if we want to win the game and double profit. One example is the decisions made in the autumn season. New Zealand farms minimise expensive supplements by accumulating pasture cover to use in winter, while leaving enough to set stock (open the gates) at the start of lambing and calving.

Too little pasture cover pushed forward, and lambs and calves are born underweight on bare pasture – keeping the pasture bare slows regrowth as pastures exhaust their root reserves, reducing annual pasture production by 20%. But the worst effect is that it prolongs the period where mothers cannot wrap their mouths round enough pasture, they roam, and lambs follow an udder that is not full. If a dry summer follows, the farmer starts with poor condition animals.

Too much pasture cover and pastures quickly enter the reproductive phase with too much pasture length: this will mostly be lost to decay and up to 30% of the annual pasture production will not consumed. If the grazing rotations have not been well planned, then the dead and decaying pasture will not be isolated but will instead be through most of grazing area, slowing lamb growth rates.

Getting this right should not be mysterious, it requires good measurement, good information to base predictions and good computation (thinking). Not having an easy and accurate pasture cover measurement and no quantifiable probabilities of future pasture growth rate creates the mystery.

2. The farm makes good seasonal decisions – when required with good measurement

Farms are biological systems and decisions are based on keeping things both alive and thriving. A farmer must manage pasture to keep it vegetative while enabling it to restore root reserves. The complexity comes with maintaining a whole livestock business that supports the management required of pastures.

If a farmer does this without measuring things, they will be on the spectrum between lousy and good.

  • The good intuitive decision-maker really interests me. In my rather informal study, I have found they look closely at things: for example, they drive over their pastures regularly, perhaps mentally calculating what is coming up in their mental grazing plan. They also have a good memory, particularly for how the farm’s situation compares to previous years and in those situations what they did (or should have done).
  • The other three quarters of farmers also interest me. Often the other things going on in their story are just too distracting and may be a higher priority.

3. The farm system is well designed – can adapt to its climatic variability

I’m going to discuss this topic in more detail.

Designing for variability is all about understanding the strategy of the game. This is best illustrated to me by farmers who always find variability traumatic. The farm seems to operate well less than half the time. In good years there is a big catch-up to be made and the farm is not setup to capture the onrush of pasture. In poor years stock are not sold in good condition and markets are poor. The solution is usually to invest in thinking – why is the farm so brittle?

The highest value from investing in strategy is in farms with diversity in landforms and variability in climate and who have not yet optimised their systems. This is perhaps half our sheep and beef farming area.

The first step in analysing any farm system is to create a good electronic map of the farm, using this to map out the different landforms. New Zealand has seen many attempts at mapping products but most are designed by people who are not closely engaged with sheep and beef farmers in formulating strategy, so there is no concept of things such as area, effective developable area, effective area excluding scrub, and area in puggable soils.

The next step is matching each area (as above) with its seasonal pasture growth profile. Almost no farmer knows the seasonal growth profile for each landform. Given the size of the prize in winning this game we may be underinvesting.

The next few steps depend on the farmers. They involve looking at changes to the way the livestock policies work, or even replacing these with different stock that the farmer may have no experience with. A moderately complicated sheep and beef farm may have three enterprises, some having several mobs such as ewes, hoggets, sale lambs – so understanding what can feasibly run on a farm is complex.

How do you go into the unknown?

Fortunately for New Zealand farmers in the early 80’s a doctoral student called David McCall went about creating a computer model called Stockpol. Stockpol evolved into the Farmax farm modelling software which supports precisely these questions. Dave’s brilliance was in designing it at the right level of biological complexity to answer most optimisation questions.

But Farmax is only as good as it’s professional user, who may be anywhere on the talent-spectrum from costing a farmer through the resulting bad decisions, through to stories that are transformational.

Good farm modellers have the knowledge to both reduce the number of assumptions made and know where to look for opportunities. The assumption-gap is widest in the knowledge of local pasture growth on each landform. Closing this gap is a worthy cause.

A strategy creates direction, and an example of this would be:

  • Strategy: Reduce the variability in ewe productivity by managing condition score 
  • Direction: “At weaning we will prioritise getting ewes to 3 condition score and adjust the number of finishing lambs accordingly”

I love it when farmers have bold strategies that are based on solid logic. Such strategies spell out what needs to be measured. These farmers talk in metrics that line up with the decisions they expect to make. I have visited many farmers who are measuring things without knowing what they will do with the results. I like farmers who have these side hobbies, but if they are measuring just because they are guessing at what might be useful, this article is encouraging them to invest in strategy first.

The farmers story is bigger than their farms profitability.

Farmers may discount a direction because they have no affinity to it and know they will muck it up: some farmers do not like trading (buying then selling) stock for example. This discount may push it well down the list despite its apparent profitability – I am always amazed but I respect a farmer who is living the dream.

So, how can technology help New Zealand sheep and beef farmers to formulate the strategy needed to double farm profitability? Here are a few things that would excite me:

  1. Hill country pasture cover measurement
  2. Calibration of pasture cover measurements
  3. Pasture database library
  4. Improved pasture modelling
  5. Weighing ewes
  6. Condition scoring ewes

Hill country pasture cover measurement

As rising plates and other devices are not useable on hill country. You just cannot buy enough remote sensing devices to get accurate measurements for each paddock. Farmers are limited to visual assessment with a sward stick. This takes considerable confidence, is not accurate on diverse landscapes and takes at least a day to do well. If satellite measurement technologies can prove accurate this is the prime candidate.

Pasture cover measurement calibration

No matter how good the RBG satellite image is it will not pick up much of the dead material. This may need some in-paddock calibration. The prime candidate for this is a mobile phone and artificial intelligence to give accurate measures of biomass and the proportion in dead material.

Pasture database library

There were hundreds of pasture growth rate trials during the old MAF and DSIR days and there continues to be more. But it is a grovel to get these data, most is still in hardcopy. It’s good to hear of progress being made to build such a resource.

Improved pasture modelling

The Pasture Growth Forecaster and Farmax simply needs more investment in handling the dynamics of dead and reproductive material across more locations and sward types. Some work is being done here with lucerne but more needs to be done with the gradient from ryegrass/clover to Browntop, Yorkshire fog, kikuyu pastures.

Weighing ewes

New Zealand companies lead the world in yarding, handling, and weighing technologies. The holy grail on the animal side is real-time measurement of liveweight change in a sample of a mob. I do not think this needs to be calibrated to actual grams of liveweight gain but if shepherds could know when animals are going down when they should be going up. There are some exciting satellite based technologies being trialled.

Condition scoring ewes

Condition score is directly related to ovulation rate (and weaning percentage) while human eye assessment of a ewes lightest has been shown to be poorly related. The solution is grasping ewes in the small of the back and feeling how much fat is there – so plenty of room for operator error and very time consuming. Lifting a 2.5 CS ewe to 3 CS is one of the highest return investments on farm – a technology that drafted accurately as sheep flew through the yards would be an exciting development.

What’s next?

This article covered strategy in the pasture-animal game. My third article will take you to the frontline. We have learned what moves a knight can make; it will be time to make the right moves within a farm’s season.

References

Beukes PC, McCarthy S, Wims CM, Gregorini P, Romera AJ. 2019. Regular estimates of herbage mass can improve profitability of pasture-based dairy systems. Animal Production Science 59: 359–367

[1] Sheep and beef farmers are limited by accuracy of pasture cover measurements on diverse landforms and in-paddock variability (soils, slope, stock camps).

What really drives profitability in pastoral agriculture?

Unique, profitable, and complex

New Zealand pastoral agriculture is uniquely based around grazing pasture in the paddock while it is growing. In most countries agriculture is relentlessly dependent on diesel, machinery and chemicals to establish forage crops, spray weeds, harvest them, transport them, wrap them in plastic for storage, then fed them out often in capital intensive feeding systems.

If one side of the coin is fossil fuel hungry, high cost, monocultural farming then New Zealand is on the other side of that coin. Our farmers are skilled shepherds who ensure pastures are abundant and nutritious through their understanding of the ecology of perennial pastures as livestock follow a natural grazing pattern that meets their changing requirements with room to feel freedom and contentment.

We often define farmers who are in the top 5% in profitability. We can also define a group of farmers that have grazing systems that are well designed and are implemented with precision. There is no group of pastoral farmers who have sub-optimal grazing systems, make mediocre grazing decisions and who then find themselves in the top 5% for farm profit – that combination don’t exist.

I have been fascinated by this fact. It has taken me on a unique journey through 35 years of farm consultancy, farm system analysis and development of models to help grazing decisions. When computers became common-place in the late 1980’s I started using spreadsheets to perform tasks that I had performed long-hand with a calculator. I developed the view that if I did a task regularly it was worth developing a spreadsheet and as my interest developed, develop a simple software application.

The true potential of software is in handling complexity and in the mid-1990’s I managed AgResearch’s Decision Support Group and we built industry platforms that are now standard in New Zealand agriculture. These perform tasks that were previously impossible such as managing nutrients (Overseer), modelling farms (Farmax), and evaluating genetic potential (SIL).

In 2004 we left AgResearch and formed Rezare Systems. We loved working with the inspired people New Zealand agriculture seems to be good at producing. They have a spirit about them that I think comes from being part of a biological system. We needed to develop a way of working that could keep pace with them and shares their inspiration. To achieve this we work hard to grasp how software development technologies can be relevant to their biological systems and core staff who have a good grounding in what drives profitability on a farm.

Growing and managing plants that thrive in the environment

This is the first of three blog posts for readers who are interested both in the technologies and the business of farming:

  • Growing and managing plants that thrive in the environment (this post)
  • Designing a feed demand that fit with changes in feed supply
  • Making timely meaningful decisions

The fourth pillar is the importance of people, and I’ll incorporate this topic in each of the posts.

In my experience sheep and beef farmers are stock people who understand their farms through observing the behaviour and performance of their stock. When I get down on my knees and start looking at their pastures few can name more than five pasture species, and none can name all 20 that probably make up their sward. When I studied for my degree in agriculture our agronomy lecturer, Parry Matthews showed how the presence and absence of species and their condition was a lens through which we can understand the environment, soil fertility, past management practices and future growth potential. Indeed, the pastures on a farm are perfectly adapted to the farmer – it is the result of everything that is being done, both the good and the bad.

In most farm systems the pasture species that can support a highly profitable farm system are present on-farm, in the sward or on a neighbour’s farm. To encourage these to be more productive involves understanding their ecology and therefore how we must manage them. In a pastoral system management can only control two factors: soil nutrients and the frequency and intensity of grazing. We could add to this control of competing plants but if you cannot get the first two right then competing plants become a bigger problem than they need be.

I spent some years working in the drier regions of the South Island. It seemed obvious to me that lucerne was a plant that thrived in high pH, well-drained soils. After a drought it would rise like a phoenix from the burned landscape providing abundant high-quality feed well before any other plant had woken up. And, amazingly the drier the environment the longer it lived – a lifespan of 15 years being commonplace. Did farmers see this? Many farmers were planting grass/clover swards. Many were choosing drought tolerant ryegrass. But on the spectrum of drought tolerance across all pasture plants grass and lucerne do not even overlap.

Example of system change – Marlborough

I started working with Doug and Fraser Avery on a project called the Starborough-Flaxbourne Project initiated by Don Ross of the Landcare Trust. Doug was emerging from a period where he had been beaten by drought and unable to see the opportunities directly under his control (his words).

The project was initially focussed on establishing saltbush on eroded sunny facing slopes. It seemed too easy to say “there is the problem, those eroded sunny facing hill slopes – lets fix it by growing saltbush there”. My biggest contribution was in questioning this focus. On the team was New Zealand’s expert on grazing shrubs. He was passionate about saltbush, but he had no understanding or interest in the farm system. He couldn’t tell me how much it would cost to establish and how much forage it would supply.

It also seemed that for grazing to suit the physiology of saltbush on New Zealand farms, it couldn’t be eaten when you needed it and you had to graze it when you had ample feed elsewhere. When we started to develop estimates of the cost of establishment and the forage produced it seemed to me an illogical investment in the farms most unproductive soils and in my rough estimation I concluded the more you planted the broker you got.

In comparison lucerne produced five times as much forage, at the right time, of higher quality and for a tenth of the establishment cost. I simply asked Doug and Fraser how much area could they possibly grow in lucerne – why not base the farm system round this plant. In reviewing livestock grazing habits they concluded lucerne could be grown in the same paddocks that included uncultivatable hill slopes. This increased the potential area from about 8% to 20%. Given the cultivable 20% produces threes time the pasture on hill slopes, it would provide around half of the feed supply.

They worked with Professor Derrick Moot from Lincoln University to understand the plants ecology and how they could base a grazing system around it. Derrick has an incredible knowledge of the lucerne plant and, what is most important a real desire to understand how it fits into the grazing system. I co-authored a paper that describes this system (Avery et al, 2008[1]) so I won’t go into further detail here.

Systems in the North Island

In the North Island where I now reside hill country pastures are based around browntop which thrives and can out-compete all other species if it is poorly managed, particularly if soils are low in phosphate, more acidic and particularly if this acidity causes a high level of aluminium. Browntop has a deep rooted aggressive rooting system that if allowed will completely take over the root zone tying up available moisture and nutrients.

Management is about controlling the aggressive nature of browntop so that more productive ryegrass and clover can thrive through grazing frequency and intensity. To do this well a farm needs paddock sizes that match the size of mobs – ideally, a mob should enter a paddock well before the pasture starts producing reproductive stems and take no more than four days to graze the pasture down to the required pasture height – called the post graze residual, which keeps the sward in a vegetative state.

Under the right management browntop is kept at less than 50% of the sward and ryegrass and clover can thrive. At this point a good financial return is achieved from increasing soil fertility (particularly phosphate) and soil pH. The difference between a sward that is well controlled and one dominated by browntop is an increase in feed production of 30-40%, proportionally more of this extra production being grown in the shoulders of the season when it is most valuable – autumn, winter and early spring. This is equivalent to a 400ha farm purchasing a further 140ha but at a tenth of the cost.

In summary, if a farm system is based on plants that thrive in your environment and management is based on the plants ecology then it allows nature to work with you. If it isn’t nature will beat you at every turn.

Technology and ecology

How has technology helped farmers understand plants that thrive on farm and their management requirements? I would conclude this is not where digital technology has helped. What does help is being able to see what other farmers are doing then trialling these in a meaningful way. It is then no coincidence that farmers who are out-going, ask plenty of questions, participate in farmer groups and are keen to experiment are more successful in changing their systems. Clearly, there is a whole mindset involved in change and Doug Avery’s[2] book The Resilient Farmer describes this better than anything I can write.

People and ecology

When I read Doug’s book it seemed clear to me the Avery’s had been growing lucerne successfully for many decades mainly for making winter supplements and feeding lambs. It wasn’t until Doug and Fraser (with the help of Professor Derrick Moot) really studied the plants ecology and how it could provide half of all livestock grazing that the farm’s profitability soared. So, who in the farm business needs to understand the ecology of the plants it is based on? Is it enough to send the shepherd on a pasture management course?

Understanding the ecology of the plants that a business is based on is a lifetime endeavour for the farm owner and everyone who makes decisions about grazing.

It may seem curious that as a technologist I have started this article series by concluding the first step in optimising a farm system does not involve digital technology. However, in my 35 years as a farm systems analyst I have never seen a highly successful business based on plants that don’t thrive in the farm environment – so, it cannot be ignored.

In the next article I’ll discuss ‘Designing a feed demand that fits with a changing feed supply’. In this step we start to enter the world of digital agriculture. There are good programs that can assist but there is so much more that can be achieved – and I’ll discuss where technologies are being developed.

[1] Avery D., Avery F., Ogle G.I., Wills B.J., Moot D.J. 2008 Adapting farm systems to a drier future. NZ Grasslands Association Proceedings 70: 13-18.

[2] The Resilient Farmer 2017, Penguin Books, 288pp, ISBN-13 97801437707787

4 reasons why bespoke software development may be the right choice

Is bespoke development always the expensive option?

It is hard to think of a business today that does not rely on software to improve efficiency, compliance or reaching customers. As businesses grow the opportunity to encapsulate functions and processes within an information system increases. Indeed, your software may define your business success.

One of the first questions our customers ask is ‘what off the shelf solutions are there?’. Often there are candidates and the next question is ‘will this off the shelf solution meet my needs and provide the cheapest option?’

Assessing potential candidates is not easy – in reality, its only once you are using the software that you can evaluate if it really fits your requirements. Making the wrong choice causes disruption, demoralises staff and makes you look bad. Assessing candidate software is not just ticking features off the checklist. It is about how the software will help grow your business – how the software fits the way you do business, how useable it is, how it will evolve to meet your changing needs and in so doing create great solutions.

There are times when it is also worth considering custom or “bespoke” software developed precisely for your needs, rather than what is available off the shelf.

Let’s look at four compelling reasons for bespoke software

  1. The value of any software can be measured by uptake; either by your customers or internally. While customer uptake is easier to measure, a low internal uptake may just seem like staff being lazy, or they seem to need a lot of training – it may just be that the software is hard to use. The greatest chance you have for achieving a solution that exactly meets your needs is by building it that way.

Workflow – Your software should reflect the efficient way you wish to manage business. As the creator of Visual Basic, Alan Cooper described, software should take away the pain. The worst case is an off the shelf solution simply does not fit with your workflow – and forces your business to needlessly change instead.

Functionality – Build only what you need and make the experience satisfying to users – great software should be a delight to use. Feature laden off the shelf solutions add no value if these features are not used. In fact, they reduce the value as users navigate through a mess of user interface that is irrelevant. As a subscriber of an off the shelf solution you are paying for all features even if this cost is spread over many more subscribers.

  1. Software innovation has proven to turn problems into unique solutions.

Software not only has the potential to increase the efficiency of your current business processes it can analyse and solve challenges and connect people so that problems are now unique solutions for you and your customers. Indeed, today businesses have innovated with bespoke software to create solutions that are the reason for their phenomenal growth. They haven’t achieved this with off the shelf software their moderately performing competitors are using.

  1. Your business needs and opportunities should drive your development roadmap.

In our software development business, we use agile processes and lean development to ensure you are buying functionality that has the highest priority for your business growth. You are in control. Providers of off the shelf products must meet the needs of a diverse user group. If you can see the providers roadmap you may be surprised just how long you may wait for your features; at worst your highest priority requirements may not even be on the roadmap. In such case you will need the provider to undertake bespoke development. Often they will do this when it is convenient and there is little incentive for their price to be competitive.

  1. The very process of planning and undertaking bespoke development can have wider benefits in reviewing your processes – leading to innovation in the way you do business

When we develop software, we use Design Thinking to understand the business goal and innovate with you – not just with the software but also the interaction with people, processes, hardware and data. As a result, your unique world view and people can unleash transformations well beyond the software.

This is not an exhaustive list of benefits in bespoke development but focusses on four areas often unaccounted or undervalued.  In summary bespoke development can be the best option where uptake is essential, where innovation can lead to business growth and where a business wants a competitive solution.