Monday, November 17, 2014

Is Our Food Safety System as Strong as We Think. Private Sector vs Public Sector

Is our food safety system as robust as we think it is? And are we better served by the public or private sector?

Last week I blogged about my issues getting the mobile cowshed evaluated by inspectors.

The way the food safety system works, is the government agency via The Ministry of Primary Industries (MPI) set the food standards. When a company sets up a food business, the verification services are provided by the private sector.

In New Zealand we have AsureQuality, which is a state owned enterprise, but it operates as a for profit business. There seems to be only two other providers, Eurofins & SGS in NZ who can offer dairy evaluation services.

The problem I have struck is there are not enough staff within these three businesses to evaluate and verify my business.

Lack of food safety specialists

I've spoken to quite a few people in MPI, AsureQuality & Eurofins over the last few months. They all say that the demand for their services have boomed in the last 2 years. 

The Fonterra botulism issue has absorbed a lot of manpower, but there is also a large number of new dairy businesses starting or expanding. 

There are a number of large dairy processors expanding, like Fonterra's Edendale & Darfield plants. But there is also a number of new factories (many backed by Chinese money) popping up across the country.

There is also a boom in the numbers of small producers like myself setting up.

As an aside; I found it interesting that there are only 3 people in New Zealand who can assess dairy heat treatment facilities. The same person who assesses massive milk powder plants is also the guy who assesses my 300 litre/day pasteuriser.

All these things combined have meant that the demand for their services has increased dramatically.

Why not just employ more people?

They are trying to, the problem is these roles are quite specialised, they can't just put an ad in the paper.

I've noticed almost all of the people I have dealt with, from food safety consultants, evaluators and assessors all seem to be over 50 years old. These people have been in the industry for over 30 years. Many are on the verge of retirement.

Where are the young people?

It seems they don't stick around. 

One person commented 
"we used to employ graduates, but they all seemed to leave after 1-1.5 years. The problem is it takes us 2 years to train a graduate to the point where they can operate unsupervised."
I haven't received my bill yet for my pasteuriser inspection, but I believe the hourly rate that I pay for the time the inspector is travelling is $90/hour. While they are inspecting and writing the report, the hourly rate is over $130.

Upon hearing the rates they charge, I thought there must be some serious money to be made in dairy verification.

Yes there is, but at the same time no there isn't.

It appears that for some companies, dairy verification services are just too hard to provide. I've come across at least one company that no longer does dairy evaluation because their evaluator left and its just too hard to replace them.

Private sector vs public sector

This has got me thinking, is New Zealand's food safety system best served by the private sector?

My reason for asking this is. 

A private company needs to make a profit. If a company employs a verifier and spends considerable resources training them, they want to be sure there's enough work for them so the new employee can pay for themselves. 

It appears to me that these companies take a "wait and see" approach before committing to employing more staff. This make perfect sense to any business person.

Meanwhile, the countries food businesses are being held up by a bottleneck in the form of insufficient number of inspectors & other services.

What about the public sector? 

Well, MPI is able to conduct evaluations, but
 "we don't want to be seen to be competing with the private sector". 
Before MPI will step in they need to be sure that none of the private sector providers are able to provide the services.

In my case, MPI have said they will step in & evaluate my RMP because the private sector businesses are unable to do it.

I wonder how larger export businesses are faring? I'm sure I'm not the only one battling these sorts of delays?

Efficiency vs Resilience

This has got me thinking. We always hear about companies and departments focusing on efficiency. But maybe it's in the best interests of the country to have some inefficient departments. 

The more efficient you become the less resilient you are. An efficient department is one where the minimum number of people are meeting the required standards. But as soon as something unexpected happens like botulism. You find yourself stretched and it takes time to catch up.

It appears to me that the combination of Fonterra's botulism scare and the ever increasing demands of our export partners is stretching our food safety system. I have no hard facts to prove this, but my little experience with the food safety system makes me wonder if our system is really as strong as we think it is.

Maybe its best to have MPI overstaffed a bit, with the experienced staff investing in training the next generation of food safety professionals. Even if they can't justify bringing these new staff on at the moment.

The payback may be in 10 years time.

Saturday, November 8, 2014

Mobile Milking System, Bureaucrats & Regulations

When I decided to actually build the mobile cowshed & process my own milk, I knew that the regulatory requirements would be the hardest part.

New Zealand trades on our food safety reputation. We need to protect that reputation. I'm aware that even small scale producers have the potential to put our whole reputation at risk too.

With this in mind, I delved into all the regulations that a mobile cowshed would have to meet. 

The regulations for the farm dairy side of things are in a document named NZCP1.

People wanting to process milk will also need to know all the requirements of DCP1, DCP2, DCP3 & DCP4. 

There is also the "Heat Treatment Code of Practice" & the "Operational Guideline: Dairy Heat Treatment" documents that need to be followed.

After wading through those documents, I had almost lost the will to live. But I somehow managed to get through the "Operational Guideline: Dairy HACCP plans" & "Operational Guideline: Dairy Processing Premises" as well.

An important point is, if someone wanted to use a mobile cowshed to supply a dairy company, they would only need to comply with NZCP1. 

Over the last 2 years I've tried to design a mobile system which I think will meet all these requirements. 

I met with a number of people in AsureQuality & I had an experienced food safety consultant look over my plans. This was to ensure that what I had planned to build will meet the regulations.

But you never really know how it will go until you actually try. So I just had to bite the bullet & do it.

Risk Management Programmes
Anyone wanting to milk cows need to operate under a risk management programme (RMP) that is registered with the Ministry of Primary Industries (MPI). For example, all Fonterra farmers operate under Fonterra's RMP. Fonterra outline these requirements in their suppliers handbook. 

As I am my own dairy company I need to have my own RMP for the farm dairy & an RMP for milk processing.

MPI provide template RMP's on their website. The templates are essentially a "fill in the boxes" document.

I submitted my template RMP's to the Ministry of Primary Industries and waited.

Eventually the Ministry of Primary Industries responded to my risk management programme application with the following:

"Construction of yard and races – photos show gates directly onto the paddock.  The requirement is for a concrete or similar impervious yard, and the mobile milking trailer would need to be sited on a concrete pad."
"Our opinion is that a mobile milking unit such as you propose are likely to not meet the requirements.  Some modifications to your unit may be required such as having it permanently located or alternatively re-locatable to pre-approved sites where suitable facilities such as a concrete pad,........."
 A concrete pad, kind of defeats the purpose of the mobile system.

If we take a look at the requirements of NZCP1.
NZCP1 6.1 Floors, Yard Surfaces and Races  
All the floors of a farm dairy (i.e. in the milking, milk receiving, and milk storage areas, yards and associated storerooms and offices) must be made of concrete or a similar impervious material. These floors and yards must be uniformly graded, be able to be readily cleaned after every milking, and have a fall to allow drainage to approved outlet points.
The intent of "impervious material" floors, "readily cleaned" & "have a fall to allow drainage" is to ensure that effluent and waste water is not flooding all over the place & causing a smelly health & environmental hazard.

I have designed the system to ensure that all effluent, waste water & wash water is contained within the cowshed and drained to a single point where it is spread with a sprinkler. 

But we obviously don't have a concrete holding yard, which the code requires.

Instead of a concrete holding yard I am proposing an alternative method of ensuring waiting cows do not create an environmental & health risk.

Basicly I milk a small herd of cows and we move after every milking. So the cows are not waiting in the same area day after day and making a mess. We also ensure that the cows waiting to be milked do not wait more than 30 minutes. We also ensure the cows wait on new grass, this way they graze happily while they wait.

These measures combined ensure very little effluent is produced & we will meet the intentions of the regulations.

I'm confident that the mobile system will meet the requirements, it just a matter of getting it through the official channels & that is what is taking the time.

MPI have said:
"For alternatives to be considered a RMP would need to be developed specific to the nature of operations and these must be evaluated by an MPI recognised dairy evaluator then submitted to MPI for registration"
It's important to note the difference between an evaluator, verifier & an assessor. I have already had the cowshed approved by an dairy assessor, these are the same people who conduct dairy shed inspections on dairy farms. But I need an evaluator who seems to be the next level up from an assessor.

The problem is getting a "dairy evaluator" to inspect my cowshed & RMP. There simply is not enough people to conduct the work. Everyone in this field is flat out busy. I can't even get these guys to answer emails or return phone calls.
These evaluators are the same people who inspect the major dairy companies & I suppose I'm at the bottom of the pecking order.

Anyway, I had anticipated MPI may respond with the requirement for a specific RMP.

So I had spent the previous 4 months writing a custom RMP (consisting of over 7,000 words) that would cover both the farm dairy & the milk processing operations.

I would have submitted my custom RMP immediately, but I'm waiting for an approved evaluator to inspect the system & a verifier to inspect my pasteuriser.

Meanwhile, I'm milking my cows and spending money and going broke very quickly!

I can't sell my milk until MPI approve my RMP.

I can see a scenario where I submit everything again to MPI and they take their 20 days to respond, where by they ask a few further questions and then promptly close for Christmas!

Tuesday, October 21, 2014

Testing The Mobile Cowshed

It's been a busy month testing out the mobile cowshed. I took this video about a month ago & I have only now found the time to put it up. I've been getting a few requests for a video.

It's just a quick look at how the system works. I'm still in the testing phase & we are ironing out all the little issues. 

At the moment I'm only milking 8 cows & the neighbours are taking the milk to feed to their calves.
I can't start selling our milk until I have been approved by the ministry of primary industries. That journey is turning out to be a bit of a drama, but I'll write about that another day.

The cows were still a little bit jittery when I took the video. The buggers wouldn't walk on, but they have calmed down quite a bit over the last month.

Saturday, September 13, 2014

We're Mobile Milking!

I've been milking for 3 weeks now and it's been a hectic 3 weeks. I've finally got a moment for a quick update.
I'm really happy with how the cowshed is operating. The second hand milking plant runs really well, the cows are walking on to the cowshed happily & I've learned how to manoeuvre the cowshed through gateways and up and down hills, while keeping both gateways & the cowshed in one piece.
Mobile Milking

It's funny how over the last year I have thought about how to design various parts of the cowshed & pondered every little detail. Yet it only took 10 minutes of the first milking for me realise I had made mistakes with the layout of equipment etc.

I'll be honest, the first milking did not go to plan. I have bought 7 Heifer cows. They had just calved and they have never being milked before let alone on a mobile trailer with no yards to contain them.

I wised up for the second milking & came prepared with some gates, that I set up as a makeshift yard. 

I managed to get the cows on to the platform & milk them. Although they didn't always face the right way.

Mobile Milking

The cows are now used to the cowshed and the system. Cows love routine, so I've kept everything the same. 
I turn up at 9am every morning, the cowshed is always in the next days break of grass. I run a portable electric fence around the cows to stop them tearing around the paddock. After milking they always exit the cowshed onto a new break of grass with a bin full of meal.

When I arrive the cows are usually waiting for me at the entrance of the cowshed. I've done away with the gates that I used as temporary yards now & I just use portable electric fences at the entrance.

Mobile Milking Parlour

I'm not able to sell any of milk at the moment as I haven't got my food safety paperwork sorted yet (thats a long & painful story).

I'm just putting the finishing touches on the processing room & the pasteuriser over the next week or so & hopefully we will be selling milk in the not too distant future.

Saturday, July 26, 2014

Grow Movie- A Great Documentary Which Outlines Young Urbanites Turning To Farming

I watched the Grow Movie the other night. 

It's a documentary that tells the story of how young urban people are being attracted to farming.

The movie follows a few young farmers in the US state of Georgia. We learn how they found themselves farming & why they love it.

Most of the people were highly educated with degrees in finance, engineering & soil science etc, but they have chosen the small scale rural lifestyle.

The documentary focuses on, what we in New Zealand we would call "market gardeners". 

GROW! Movie Trailer (2:09) from Anthony-Masterson on Vimeo.

Two things stood out for me:

Most of these people started with no knowledge of growing vegetables or farming. Most had no money or land. But they started working with a farmer and in some cases simply agreed to work in exchange for accommodation and knowledge. One thing led to another and they now run their own farming businesses.

I found it interesting how one person explained that he got into farming because of his ideological beliefs. He said he now had to balance his ideology with the need to run a viable business.

I found that interesting considering, there are many people in New Zealand giving farmers plenty of advice (including me). It's one thing to talk about how you should farm & another thing to actually do it and stay viable.

Saturday, July 12, 2014

Don't Laugh At Wheedle, Good On Them For Having A Crack

The demise of the trading web site Wheedle, is no real surprise. The web sites aim was to take on trade me which is the New Zealand version of ebay.

I'm certainly no business expert, but I've been thinking about it this morning as I did some housework, and there are two aspects of the businesses failure that have crossed my mind.

Firstly, lots of people are bagging Wheedle and its founder Neil Graham. Neil didn't need to start Wheedle, he founded the Mainfreight transport company which is an international success. He's worth an estimated $75 Million, so money is not a motivation. He's also no longer a young man & he has had health problems.

But he did it anyway, he used his own money and he took a risk and he gave it a crack. That deserves respect in my book.

I'm sure that the reason he is successful is because he has backed himself and taken risks in the past.

The second point, is that this is another example of a successful person trying to start a business in an area that they are not experts in. Neil's background is transport & logistics. I think a technology company is very different to a trucking company. The things that make a tech business successful are very different to what makes a trucking company successful.

Some signs of this are that Wheedle seemed to rely on traditional marketing like sponsoring the Crusaders rugby team and TV adverts. When we look at successful tech companies, they don't do traditional advertising. You don't see Twitter, Facebook, Xero or Vend advertising on TV, radio or sponsoring a sports team.

Suzanne Paul is another example of a very successful person who turned to a different area of business. She made her fortune via informercials & sales but then took her money and invested it into a tourism venture which didn't end well & she lost the lot. She is now back doing what she does best, which is informercials.

Richard Branson is a unique example of someone who has been successful in many different categories, such as music, airlines, trains and mobile services to name just a few. It would appear that he is an exception.

The third aspect I find interesting is that most people don't have a problem with the current online auction site. Wheedle were promising lower sales fees. Saving a few dollars on my trade is not enough of a motivation for me to change.
Wheedle wasn't different enough.

So I think it is great to see people backing themselves and taking risks but I think it's really important to stick to your area of expertise & if you are going to take on the big players in the market, you really need to be substantially different & offer something really unique.

Monday, July 7, 2014

You Can Afford A House in NZ, Despite What People Say!

I’ve had a few conversations with people who I’d describe as being middle class New Zealanders. They are earning around $100,000/year, yet they claim they can’t afford to buy a house.

As we talk it over further, it becomes clear that they actually can’t afford a house of the required standard in the desirable area of the major city in which they live.

It’s pretty hard to buy your first house in Queenstown, Christchurch, Auckland or Wellington, especially if you are not prepared to live in the cheaper suburbs.


It occurs to me that people have priorities in their lives and when they say “we can’t afford to buy a house”, they really mean that they are not prepared to make the sacrifices required to get into home ownership.

Some Examples

I have 3 friends who live in & around Rangiora. All of these people have average jobs, they all have young children, all of the wives have chosen not to work & instead stay at home with the children.

They all own their homes.

One friend was in the army for 6 years and left as a private, he now works in forestry driving a digger. He and his wife bought a small slightly rundown house in Rangiora, which they live in. They continued to save his average wage (by NZ standards) until he had a deposit & bought another house around the corner, which he rents. I estimate these two houses are worth $250,000.

He’s now looking for his third house.

Another friend drives a forklift has a special needs child. His wife looks after their child during the day. They bought an average house in Kaiapoi right next to the motorway. It’s a comfortable house but nothing flash.

My third friend is a builder/hammer hand, he has 3 kids which his wife home schools. They managed to buy a house in Rangiora when they were first married. They recently sold it & purchased a larger house on a lifestyle block.

All these couples bought very average properties with flaws. For instance, situated right next to a motorway or slightly rundown or had a very small section. But they did it and they have gained financially as the properties have increased in value.

I just did a property search on trademe. It showed 485 properties in Canterbury under $250,000.

I bought my first house in my early twenties.

I was working as a dairy farm worker in 2001 earning $30,000/year when I saved $5,400 and purchased a property for $54,000 in Invercargill. I rented it out and it was cash-flow positive.

In 2004 my wife and I cobbled together $10,000 & purchased a house for $100,000, which we lived in. It wasn't located in a great area & it had a shared driveway. We spent the next 2 years renovating it ourselves. We sold it five years later & more than doubled our money on that property.
Renovating the laundry

It sounds so easy just writing these examples down now. But the one thing all these people have in common is they sacrificed things in order to be able to buy their properties.

In my early twenties, my friends were buying $12,000 motorcross bikes & spending their weekends racing, others were borrowing money to buy $20,000 cars, while others were travelling the world.

I missed out on all of that. My wife and I lived a very simple lifestyle. Most weekends were spent painting or hanging gib board or simply staying at home as we had no cash.

I do regret not travelling and my wife reminds me constantly about how unacceptable it was to not have a real honeymoon & rather use the money to buy our first house. 

She’s right though; it was unacceptable to not have a honeymoon. I’ll have to make it up to her. I was so focussed on getting ahead.

Money gives you options

When you are young you have no money and I think all money does is give you options. 

When you have no money you have limited options and you have to focus your limited resources.

It’s totally possible for young families to buy a house in New Zealand. The question is are people prepared to make the sacrifices required?

When I look at the people who tell me they can’t buy a house, I notice that they all eat out at restaurants regularly, there’s lots of money being spent of manicures and salons & plenty of nights out on the town & shopping trips to Australia.

The same thing applies to farming. I saw my parents move from Zimbabwe with nothing in there 30s, working as farm workers to buying their first farm 11 years later.

My first employer started dairy farming at 17 and was sharemilking 400 cows at 28 and at 40 years of age owns a large dairy farm, among other things.

These are all examples of ordinary people with ordinary intellect just getting on with it and getting ahead.

It’s all about priorities, attitude & peoples willingness to do what is required.

I'm developing a pot belly. But its not a priority for me to get rid of it and I'm certainly not prepared to make the sacrifices required to get rid of it. So, I can't complain about not having a flat stomach, if I'm not prepared to do what is required to get flat abs.

Saturday, May 31, 2014

Quick Video Of The Mobile Cowshed

A quick video of the mobile cowshed & a look inside the milk processing room.

Friday, May 30, 2014

The Reasoning Behind My Micro Dairy Business

In the next 2 months, I'll begin milking a small herd of 15 cows. I'll sell the milk direct to the public. I'll milk my herd on leased lifestyle blocks, using my mobile cowshed.

In my last blog post I outlined 5 points that I wanted to achieve with my new business.
  • Create a truly environmentally sustainable dairy business
  • Create farming opportunities for young people that also provided a great lifestyle
  • Keep control of the value chain
  • Offer real unaltered whole milk to the public
  • Concentrate on building a brand rather than owning land
It's taken a few years of thinking about the issues and I wanted to briefly outline how I have come to settle on my current system.

Question Everything

I started off by questioning every aspect of traditional dairy farming.
I asked:
Why do we do what we currently do? 
Why do we need irrigated land? 
Why do we use ryegrass & clover pastures? 
Why do we milk twice a day? 
Why do we need a big concrete cowshed? 
Do we really need laneways? 
Why are their less small herds around now?

I investigated dairy farm cost structures and profitability.
I asked why do farmers supply dairy companies like Fonterra or Synlait? 
How do people progress in the dairy industry? 
How much money do dairy farmers make?

I questioned what we know about the environmental aspect of farming.
How exactly are water ways affected by farming?
How do nitrates work? 
Where do the nitrates come from? 
Why do we deal with effluent the way we do now? 
What is Phosphate & how does effect our effect the environment?

Environmental System

I started with a blank sheet of paper. The first priority was to design an environmentally sound dairy system. I’d worry about how to make it profitable later.

The research tells us that nitrates are the greatest pollutant caused by dairy farming in New Zealand. Turns out that the cows urine patch is the biggest contributor to nitrate leaching by a long shot. I learnt that the wetter the soil is, the more leaching occurred. Large amounts of nitrate are leached over the winter months. I discovered that plant root systems are the greatest absorbers of nitrates.

I thought, if we forget everything we know about farming and just designed a system that would leach no nitrate.

What would that farm look like?

We’d want to reduce the amount of urine on our paddocks, which means we want a lower stocking rate. We don’t want our cows on wet soils. So wintering cows on crops on a small area of land (as is the usual practice) is not going to work for us. We also want to use un-irrigated land because it leaches much less nitrate. We want plants/crops with deep roots to absorb the nitrate, which means ryegrass & clover pastures probably won’t work for us.

All these points put together basically mean, we would leach very little nitrogen. But more land is needed & that land will produce less because it’s not irrigated. Our wintering & feed costs will be a lot higher too.

It’s pretty clear that this farming system would not work financially, if we supplied Fonterra or another dairy company, we simply would not be profitable.

Make the farm fit around my desired lifestyle 

With the environmental aspects sorted, the second priority was how could we design a dairy farming system that I wanted to work in and that suited the lifestyle I wanted to lead. I assumed that if I could achieve this goal, then it would also be attractive to the best of today’s young people.

There are lots of brilliant young farmers out there, but we need more. Many great people are choosing other occupations and agriculture has to compete for good people.

So again I questioned every aspect of the daily duties on the farm.
Why do we start milking so early in the morning? 
Why do we milk twice a day? 
What activities take the most time?

Milking the cows took the most time and you can easily spend over an hour herding cows to the cowshed each milking.

So milking once a day milking is an attractive option. The research shows that most cows milked once a day were producing 19% less milk, but had less animal health & feed costs. Trading 19% less milk for about 40% less work still feels like a winning situation to me.

But the main attraction to once a day milking, is that dropping the afternoon milking gives you much more options for giving staff (& me) more time off. It allows much greater flexibility on when the jobs get done.

While milking once a day may help with a better lifestyle, the other half of the solution to attracting young people to farming is financial opportunities. This system had to be achievable and in reach of young (& cash poor) people.

Basically it needs to be cheap to set up.

Attainable to young people

I concluded that it needs to be small scale system. It's easier to find the money to buy 20 cows than 200 cows. Also when you have a small herd the amount of equipment needed is greatly reduced.

Land is by far the biggest expense when setting up a farm. The land required for a small 20 cow operation would cost at least $1,000,000. Which is hardly in reach of your average young person.

My solution is to lease land. But you are hardly going to build a small cowshed on land you don’t own. This is where the mobile system becomes important. If I could build a fully contained cowshed that is totally mobile, then milking off leased land becomes an option.

My research into dairy farming financials showed that interest paid on land was one of the biggest expenses on a farm. By leasing land rather than buying it, I could save a lot of money. Which could offset the extra costs & lower production caused by our no nitrate leaching measures.

As I thought about this more, the mobile system looked like it could save a lot of time on farm as well. For instance, I would not have to spend time herding the cows to the cowshed as I’ll milk the cows in the paddock. No concrete yard to clean, which saves time & water. No need for a conventional effluent system, which is one less cost. No need for lane ways or permanent fencing either.

At this point I had a rough idea of how I could farm dairy cows and leach very little nitrate. I worked out that a mobile cowshed could be achieved & the mobile system made it possible to set up a small scale herd on leased land for a relatively low amount of money.

Who will buy the milk?

Now it was time to ask the question, who will buy my milk & how can we make it financially viable?

From my research, it was clear that there are a number of people who would love to buy a sustainable or eco brand of milk. This is a brand that can promise its farming practises do not adversely affect the environment. 

The public are aware of the environmental impacts that dairy farming has on our water ways & a good number of people say they would support a brand that stood for more eco dairy farming practices.

There is also a growing number of people who are concerned about what is happening to our food in these modern times. The whole food movement is growing.

There are clearly people would buy my milk if they had the opportunity.

Could I make it pay though? 

The following thoughts were going through my head; 

All the trends are for farms to get bigger and have greater scale & I’m proposing going smaller!

On farm costs have been increasing which is putting pressure on farm profitability. I’m proposing even higher costs combined with production drops in order to meet my self imposed environmental & lifestyle standards.

A trip to the supermarket showed that 1 litre of Organic milk was retailing for $3.40, 1 litre of Anchor or Meadow fresh blue top sells for $2.45.

If I could receive $2.50/ litre for my milk, then I could make it work financially. I worked out that if I could keep the money that the farmer & the processor get, then I could break even. 

But breaking even is not a very sustainable goal. I would also need to retain the 30-40% margin the the retailer receives in order to make the business viable.

So, I would need to be the farmer, the processor, the delivery man & the retailer in order to be profitable.

In conclusion:

I've just described, very simply the thought process that occurred over a couple of years that has brought me to where I am now.

I hope that I have found a way for us to milk cows sustainably that is attractive & within reach of young people & profitable too.

We’ll see if it works. Stay tuned.