McIntoshes
Partnering for success
Overview
For
Wanganui farmers Dougal and Di McIntosh, joint venture forestry has
proved the key to survival through tough times, enabling them to
maintain their forestry plantings and generate cash flow for farm
development. Now a new type of partnership with Horizons Regional
Council is taking their hill country sheep and beef farm to an even
higher level of sustainable land management - and they're still
planting.
Today the property runs 6,830 stock units, mostly as a high performance
sheep flock, but it's been a long slog to get it to its current level
of productivity.
Dougal's grandfather bought Ratamarumaru just before the first World
War with the bush still on it. However no-one in the family lived on it
until he and his brother came and lived on it in the late 60s. The two
became partners in 1970, then Dougal and Di bought the family out in
1980. At least half the farm at that stage was scrub and gorse. A lot
of effort went into clearing this in the 60s but Dougal says he's been
battling gorse ever since. "That's the irony - if we'd had the
foresight to clear the scrub and put it into trees we would be on our
third rotation now," he says.
Dougal and Di's vision is to develop a sustainable farm business that
will help support future generations of their family as well as provide
for a quality lifestyle in retirement, and afforestation is helping
them achieve these goals.
They've always been committed to planting trees for timber production
and for aesthetics on their property. However following two severe
weather events trees have assumed even greater importance, with the
McIntoshes entering into a ground-breaking joint venture forestry
partnership with Horizons Regional Council that is enabling
erosion-prone parts of the farm to be converted into forestry.
The Whole Farm Plan prepared as part of the process by Landvision
consultants Lachie Grant and Sarah Dudin identified some 181ha of the
home farm vulnerable to erosion and not suitable for livestock, and 75
percent of the land so steep that livestock farming is limited. And
with the fundamental viability of the farm at risk if future severe
weather events caused further erosion, "business as usual" was no
longer an option. Forestry is adding a significant income stream to
farm revenues while converting vulnerable hillsides to a more
sustainable land use. At the same time annual cash flows from the joint
venture will allow the McIntoshes to boost productivity on the rest of
the farm, offsetting the economic impact of such significant land use
change.
Land description
Environmental issues
Farm Operation
Soils
Fertiliser and Nutrient
Management
The roles of trees on the
property
Clouds with a silver lining
Forest management
Harvesting
The returns
Land description
The McIntosh's traditional sheep and beef farm is in moderate to hard
hill country in the upper reaches of the Kai Iwi catchment, at
Brunswick north of Wanganui. Although the farm is considered summer
moist, an autumn dry period can often be experienced. It rises from
180m up to 420 m asl. The total area of the property is 1,124.9 ha with
an estimated 594.9 ha in pasture, 333.1 ha in forestry and 182.4 ha in
indigenous bush or scrub. Approximately 81% is hill and steep land
formed from weakly consolidated sandstone - siltstone base, and the
remainder is undulating to rolling downlands formed from volcanic loess
and alluvial flats.
The Whole Farm Plan has identified a further 200ha that needs planting
to strengthen farm sustainability, with a consequent reduction of
1300su.
Access throughout the farm is good, with well established logging roads
and farm tracking.
Stock water consists mostly of natural stream water within the harder
hill country and reticulated water throughout the better country.
Large areas of indigenous bush remnants and regenerating scrub (more
than 100ha in total) are a feature of Ratamarumaru and most are fenced
off from stock.
Click here
to see
Land Use Capability map.
Environmental issues
The major environmental concern for the McIntosh's property is erosion
and the resulting sediment contribution. The erosion risk ranges from
moderate to severe for large areas of the hill country, mostly as soil
slip and gully erosion, and dramatically
|
| The McIntoshes main
access track
(below), with the manager's house and county road above |
worsened by severe weather events in 2004 and 2006. Flooding
highlighted the vulnerability of culverts and bridges to high rainfall
events particularly with summer high-rainfall events on north-facing
sandstone country that tends to dry out.
Many perennial waterways are already well protected with non-pastoral
vegetation. Large areas of sensitive hill country have already been
afforested for erosion control as well as commercial returns, with some
areas now into their second rotation.
Farm Operation
The farm winters around 6,830 stock units in total, in a ratio of
65:31:4 sheep:cattle:deer. A flock of approximately 4,400 MA ewes plus
1,200 ewe hogget replacements is maintained, and a herd of 200 MA Angus
cows. The increase to an extra 200 ha in forestry will reduce the total
stock by 1300 su.
The ewe flock is a Composite breed and has had Highlander rams go
across the base flock for the past eight years. The lambing performance
has been improving in recent years with a docking result of 125% now
being achieved.
Lambs are sold either prime or store depending on pasture cover, time
of year and market prices. Typically 300 - 400 (12%) are sold prime off
mum at weaning at 32kg or better liveweight. Post weaning the target
drafting weight is lifted to 38kg liveweight.
Ewes are shorn pre lamb in July and then again in January (including 2
tooth's) following weaning. Lambs are also shorn in January. Ewe
hogget's are shorn in July.
The Angus herd is of a smaller frame size to aid in stock mobility on
the hill country. Calving commences in September normally behind a
wire. Heifers calve for the first time as three year olds. Calving
performance is good averaging 90% annually. All progeny born are
retained to 18 months of age with the top 50 heifers mated and the
remainder sold. Steers are sold store in the autumn period. All dry
cows are sold along with any cow that fails to rear a calf.
A small herd of fallow deer (200 hinds and replacements) is maintained
on the property but for all intents and purposes this represents a
hobby with little or no financial gain.
(top)
Soils
The soils on the farm are primarily derived from volcanic parent
material so have characteristically high ASC levels. This slows the
speed at which soil phosphate levels can be improved. However, a
positive of this feature is that the soil does not require regular
sulphur applications.
In 1998-99 the McIntoshes became part of a SUBS (Soils Underpinning
Business Success) group. These government-funded discussion groups were
driven by AgResearch. Typically each consisted of around 10 farmers who
would visit each property, and identify soil types, strengths and
weaknesses, and possible opportunities and options. Dougal says that in
some ways this was a forerunner to the Whole Farm Plan.
"It was a neat programme and the most stimulating thing we've done
because it proved to be the first step to everything we've undertaken
since. That same philosophy goes for all farms... identify your soil
types and acknowledge their strengths and weaknesses."
Click
here to view
farm soil map (pdf)
(top)
Fertiliser and
Nutrient Management
Soil fertility is variable on the farm. An average of 240t of
superphosphate is applied to the farm each year, equivalent to an
average phosphate input level of 31kg/ha. This is above maintenance and
the investment being made in lifting soil fertility is underpinning
improved livestock performance, with the lambing percentage lifting as
a result of improved pastures.
The roles of trees
on the property
History
Forestry is
the logical and most
appropriate land use to control
eroding hill country and protect the farm from the impact of future
severe weather events, but it's been on the McIntosh radar for over
three decades.
Dougal planted his first block of radiata pine in 1974, with the help
of a Forestry Encouragement Grant and the support of NZFS extension
officer Tom Muir (a.k.a. "the wee Scot", as Dougal affectionately calls
him). He says the grants were good schemes, in that the cost to the
government was a relatively cheap way of getting the trees into the
ground, especially after taking the tax, income and employment that
flowed on from that.
Planting was also encouraged by Ian Moore, the field officer for the
Wanganui Kai Iwi Catchment Scheme. More trees followed thanks to the
Forestry Encouragement Grants, in 1976, '77, '78 and '79, and by this
time totalled about 120ha. However by the beginning of the 80s the
grants were harder to get and cash flow from farming just wasn't there.
Dougal McIntosh recalls how it all collapsed in 1984 when the forestry
grants were taken away by "that bloody Roger Douglas and his mates",
which suddenly made the forestry investment a huge liability.
"It was extremely worrying. Along with the rest of farming, hill
country farming just ran into a brick wall, particularly if you had any
form of debt - and I think the bulk of us did. It was a very bitter
time and a very tricky time for forestry."
Even so, they planted two more blocks of radiata in 1985 and 1986,
pretty much in the spirit of "going down fighting". There wasn't much
option... the blocks needed to be planted because they couldn't keep
the weeds off them as there just wasn't the cash flow to do that. Ever
positive, Dougal recalls that he was starting to gain the benefit of
hindsight he should have had 20 years earlier - realising the
importance of integrated land management.
Joint venture opportunities
Worse was to come, however. By about 1990 the McIntoshes were virtually
broke and looking to change banks. No-one else would take them on,
until one bank said they would if Dougal and Di could come up with a
certain amount of money. The only
saleable
asset other
than the whole
farm was the forestry. They formed the 120ha of forest into a joint
venture made up of 24 shares and Dougal and Di kept half of it. A
family trust took another 3, and they sold the other 9 shares to
outsiders. However they consider themselves fortunate in that they knew
the people who bought the shares.
The new investors not only brought finance into the forest but also
brought an urban perspective and business skills, which Dougal sees as
the strength of the partnership. There is still one of the original
partnership's blocks left to harvest, in 2012. Two new partnerships
were formed in 2000 and 2002 and the bulk of the original partners are
also involved in these ventures.
Another crucial step came during a SUBS field trip to the farm.
"One day I was looking at this really steep hill with one of the guys
from Horizons. It was due for its next weed re-spray, it was eroding
and an awful paddock. I asked what would you do with this piece of
ground, and he replied, plant trees. I exclaimed, well how on earth can
I afford to plant trees! And he said well we'll give you a kick off...
so we got something towards planting trees."
Everything
was coming
together at the same time, with the realisation
of the relative strengths and weaknesses of different land pockets, the
encouragement from Horizons and rising farm prices.
"The boom of 2000-2004 was a wonderful time," says Dougal. "It was then
that I thought why not try another JV. I put it to the partners and the
neat thing was that our children and some of their children came in as
well, so we are into the second generation of partnering.
"We formed these next two partnerships to plant steeper country. In the
first year we planted pine, then I became aware of the interest in
redwoods so we planted redwoods the second and third years. With the
joint venture providing cash flow there was a cash input from the
forest I could inject into the rest of the farm with fertiliser and
fencing etc so we actually increased our stocking rate despite taking
nearly 200ha out of production and putting it into forest. So it was
all very exciting."
Then came the extreme storm of February 2004, the first of three
1-in-100 year events to strike the McIntoshes in a two year period.
|
|
| 2004
windthrow in [then] 12-year-old
pines |
Wind
thrown pine
after the 2004 storm |
|
|
| The
devastating
effects of flooding in
the Ruakarora Stream |
|
|
| The site
has now been replanted in Douglas fir, some redwood and red alder |
(top)
Clouds with a silver lining
In response to the 2004 event, Horizons Regional Council set up its
Sustainable Land Use Initiative to develop a package of solutions with
the aim of protecting people and assets from future storms, protecting
the soil asset upon which the rural economy depends and reducing the
region's future reliance on government relief.
|
|
| This
east-facing paddock shown after the
2006 storm was planted in pines during 2008 |
The eastern face above the Kai Iwi stream. |
|
| A
ground view of the same face
today. The Kai Iwi stream marks the boundary with the
neighbouring property on the left. |
The key tools underpinning this strategy are the One Plan and Whole
Farm Plans (WFPs). The One Plan is a new regional plan to manage
natural resources for the next decade, combining six separate Regional
Plans covering air, water, land, river and lake beds and the coast,
plus the Regional Policy Statement. Hearings on the proposed One Plan
will continue until the middle of 2009.
While the One Plan is rule and regulation based, Whole Farm Plans are a
voluntary, non-regulatory, incentive-based approach to achieving
similar goals. The focus is primarily on resource conservation (soils,
land, water, vegetation) and sediment management, but it also extends
into enterprise development, acknowledging that the environment and
farm businesses cannot be treated separately.
After initial scepticism, more than 130 farm plans were completed in
the first two years. Horizons aims to work with 1500 farmers by 2017 to
help fund environmentally sound land management techniques including
retirement, conservation and commercial plantings, fencing off wetlands
and watercourses. Both Horizons Regional Council and the farmers commit
to ongoing responsibilities for the implementation and maintenance of
each plan.
|
| Planting on the eastern Kai Iwi Stream
face - redwoods below the bluffs and pines above |
The McIntoshes say their WFP process has been a very positive exercise.
Produced by LandVision consultants Lachie Grant and Sarah Dudin, it
included:
- A review of the existing farm business using benchmarking, a SWOT
analysis etc;
- Assessment of land, water, living heritage and farm production
resources;
- Identification of environmental issues and recommendation of
tailored best practice;
- Planning of an integrated long-term farm business plan and 5-year
environmental programme, and
- The design of a follow-up procedure to clarify responsibilities,
monitoring, maintenance and support.
The report identified that some 181ha of erosion-prone land should be
retired from pastoral use to ensure the long term sustainability of the
land and given the potential for financial loss as a result of severe
flooding and erosion caused by severe storm events.
|
| Planting
on the eastern Kai Iwi Stream
face from the ridge above. |
While problem areas are inevitably a major focus, many complementary
strengths have been identified that could create real opportunities for
the farm business. These will help offset the reduction in stock units
from retirement of land - for example, by continuing to lift sheep
performance levels, further intensification of the better parts of the
home farm, and utilising the equity level of the farm to develop the
property further, as well as lift farm cash flow as a result of higher
livestock productivity levels. The WFP also included recommendations
for fertiliser and nutrient management, grazing management, pasture
production and intensification strategies.
"We're lucky because our better land is on the top of the hills, so
we've got the versatility and we have huge riparian buffers," says
Dougal, acknowledging that other land owners in the region don't always
enjoy the same flexibility.
The Whole Farm Plan acknowledges the huge amount of work the McIntoshes
have already undertaken, noting the large areas of sensitive hill
country already afforested for erosion control and commercial benefits,
and waterways well protected with non-pastoral vegetation. Large areas
of indigenous bush remnants and regenerating scrub enhance the
biodiversity value of the property.
However with the erosion risk ranging from moderate to severe for large
areas of the hill country (mostly as soil slip and gully erosion) the
Plan's recommendations centre on changing the land use where current
usage in the long term is considered unsustainable.
|
| Planting
on the eastern Kai Iwi Stream
face from the ridge above. |
Soil slip erosion is one of the most common forms of erosion on the
property. Where it is only slight and there is adequate soil depth it
can be controlled with space planted trees, but where the severity is
greater or the soil depth shallow, afforestation or retirement was
proposed.
Ten blocks covering approximately 200 ha were recommended for
afforestation. Harvesting, access, site and species suitability have
all been considered for selection of the recommended forestry sites,
with species selection including eucalyptus, C. Lusitanica, radiata, a
gully in red alder (Alnus ruba), Himalayan cedar for production
purposes, blackwoods using regenerating scrub as a nurse crop, and
Douglas fir.
Approximately 12.5 ha has been recommended for managed retirement from
grazing, mostly areas with moderate to severe erosion that struggle to
carry more than four stock units, but where there is poor access or
conditions for short rotation forestry. Sheep grazing will be continued
in the short to medium term, but with no further inputs such as
fertiliser or scrub clearance. With time, these areas will naturally
revert back to native bush. One 7.0 ha managed retirement block will
have oaks planted for long rotation, high value timber production and
beautification.
Controlling gully erosion in the soft sandstone belt is a high
priority, as active gully erosion creates over-steepened hill faces and
soil slip erosion. The areas of highest priority are those adjacent to
roading or tracking infrastructure and good pastoral land. For these
areas a series of debris dams in association with gully planting has
been recommended.
Other key recommendations include targeted space plantings on easy to
moderate hill country prone to erosion, controlling persistent weeds
and enhancing indigenous bush. The WFP also identifies shade and
shelter as an important animal health issue, noting that while the
property already contains significant vegetation for shade many
paddocks need more provision for shade during the hot summer period.
For more information and a map of recommended plantings
click here
For more information about the estimated cost of afforestation
recommended in the Whole Farm Plan
click here
So how has Dougal reacted to what the sceptics might describe as a
bunch of bureaucrats telling him what to do?
"Well, we had a very large part in accepting how the whole farm plan
was written, so it wasn't just a question of it arriving and us saying
heck they're really hitting us hard? We had a lot of input, right down
to what species we wanted to plant where, and whether the boundary of a
particular piece of erodible land should be expanded or shrunk.
"No, in our personal instance it was an empowering thing, because when
we were with Lachie and Sarah they'd keep asking "well what do you want
to do?". We sought their advice, but the decisions written into the
plan can really be sheeted home to Di and me. That's why I think that
for our farm the Whole Farm Plan was a very positive exercise.'
He believes people who have been on their land for a long time, even if
they have not had access to lots of finance and high tech advice, do
have an instinctive ambition for their land and a feeling for its
capability and potential. For the McIntoshes, the Whole Farm Plan drew
on their hopes and dreams, and is also a mechanism to demonstrate the
vital role of trees as part of an integrated land management strategy.
"We're bona fide farmers, not just nice tree hugging people," he
stresses. "The whole point of what farm forestry is trying to achieve
is exactly the 'whole farm' philosophy."
In 2006 the Brunswick district suffered a very local storm which
affected only 90-odd farms. It was a deluge, causing catastrophic
erosion in the hill country. In places the McIntoshes lost over 20% of
the grass. This event got no publicity, but it was a much bigger blow
to those affected than the 2004 storm. Two years after the 2006 event
the scars were just as vivid as the day after the storm.
|
| Gully
erosion from the 2006 storm, since replanted in pines and
redwoods on the north side of the gully, with Cupressus ovensii on the south
face and a mix of exotic deciduous trees and conifers, including Cedrus
deodara, on the slopes nearest the council road. |
"I have this huge fear that if we have another one of these, suddenly
the farm would rapidly become uneconomic, because if we keep losing our
pasture we're stuffed," says Dougal. "That's why I really fell over
myself to get a whole farm plan, to see what I should be doing and
whether that gave me any ability to attract outside funding. I'm most
concerned that we finish getting the trees in and growing because we're
still vulnerable for at least 6-8 years before they start having a
positive effect in terms of root mass."
However none of this comes for free. The WFP arrived after three
cataclysmic climatic events "and there was no cash ability". While the
WFP identified areas that urgently needed to be planted no-one was
investing in forestry. The solution, after considerable negotiation,
was an innovative joint venture partnership with Horizons.
"There was initial criticism of Horizons for being slow to respond
after the '04 storm, but I think we were all so intimately involved?
the devastation was just outside our windows and all the rural people
could think of was what are they doing to help me. But Horizons had to
get their One Plan established so that it was (a) workable and (b)
bomb-proof. This is why they had all the public meetings, to get the
best for the region.
"We went to a monitor farm just after the '04 storm when Horizons was
talking about the concept of the One Plan and there was just withering
scorn poured on these poor guys? Now more and more farmers are asking
how they can take part in the whole farm plans and get the benefits
from them. That's the reality sinking in and the benefit of a bit of
thought and time. No farmer will turn 180 degrees overnight - your
whole life is bound up in the farm and you've got to have a mind change
to adopt new things, but particularly something that is so completely
alien - to have, in effect, bureaucrats advising you what to do.
"There are the personal benefits to our individual farm - that's
where
you really start off - but then those benefits flow on to a wider
community and ultimately to the wider community of New Zealand as a
whole. It's not just the McIntoshes up at the head of the valley who
are responsible for all the mayhem and damage down the river so
therefore I think that there's got to be a partnership. The whole point
of the One Plan and the whole farm plan is an exercise in prudent land
use and it still gives the farmer the individuality to do many
things...unless he's flying in the face of sensible land management."
(top)
Forest management
|
| Some
of the Fijian silviculture crew that has carried out all
Dougal and Di's planting and pruning for six years now. |
Because of the terrain, the basic planting regime is 1100 stems per
hectare, thinned to 200. Everything is pruned because Dougal believes
that small farm-sized woodlots have got to keep all their options open.
Because their forests are so isolated - and all very high cost hauler
country - the McIntoshes really need to get the highest value from all
of their products. The work is done with a crew of full time employees.
After the 2006 storm they managed to straighten up some of the
windthrown pine, but also replanted. With little information available
a few years back on windthrow risk and how to alleviate it, they had
followed the popular treatment of the time, which was to do all the
pruning and then just one final thin when the trees were about 10 or
11.
"We hadn't quite finished the block, and it was devastated because it
was just these tall, very vulnerable spindly trees. Now we're going
back to the old system of two or three thinnings so that we're always
taking out the crook trees, the double headers or whatever and we're
getting down from about 1000 to about 500, then from 500 down to 250,
toughening them up progressively."
(top)
Harvesting
The 20ha planted in 1974 was harvested in 2000, the McIntoshes' first
and only planned harvest. Everything since has been because of storms
and wind throw, but with the 2000 operation they were able to get roads
in and do everything in a planned way.
The one unplanned thing - and something of a cautionary tale - was
during road lining (cutting trees out to put the tracks and skid sites
in). Dougal thought he could do all the marketing, but realised after
two days ringing around trying to market the logs that he just didn't
have the necessary skills.
"I
realised how out of my depth I was and turned the road line over to
someone else straightaway," he admits. "It's a bit like selling your
stock - you've got to have a stock agent, and you've got to have a
marketing agent for forestry, I'm convinced of that. If you're selling
specialty timbers and in direct contact with New Zealand buyers and
users it's probably different, but with radiata the different logs have
different markets and different end uses and it also ties in with the
freight. Sometimes logs seem to travel vast distances but because it's
all part of a contract the freight is often cheaper to a distant mill
than it is to a closer mill so the net return is better."
A lot of roading was required, including a 5km main access road. This
was completed at a cost of approximately $22,000/km including a
concrete bridge - not bad when the council allows for $150,000 per km
for this style of road. Dougal describes the resource consent process
as a very practical exercise, and they got a 20 year consent which will
get them through all the trees planted before 1986.
The returns
How did revenues compare to other farming operations? At time of
writing Dougal based his calculations on five sheep to the acre, which
he described as "pretty good".
"If you assume 100% lambing - 5 lambs - and they were worth, say, $60,
that's $300. Then the other income might be wool and whatnot, but then
you've got the weeds, the fertiliser to come out of that so
perhaps you're looking at $250/ha nett annually (and we never have a
nett here!).
"Then say you harvest 500m3/ha and it averages $30/m3 nett - that's
roughly $15,000. Based on a 30-year rotation that's $500/ha/pa nett -
that's the simple arithmetic of it. But when we did that 2000 harvest,
the one that we planned, we actually netted $57/m3 and the dollar was
high so there's a huge difference. You could add all sorts of things -
the cost of money, forest cost which is about $2000/ha spread over
that, $1000 to plant it and $1000 for silviculture, and all those
details - but the basics are pretty obvious, that the forestry is still
ahead even at a time when forestry was low and meat was reasonable. And
you should be able to get 550m3 with better silviculture...500m3 is not
a very high volume return, particularly at 30 years, but it's easier to
calculate."
(top)
