Thursday, December 10, 2015

Bobby Calves, Palm Kernel, N Caps Are Beautiful Opportunities, Not Constraints

I’m reading a book called the beautiful constraint.

The premise of the book is that the thing that constrains your business can also turn out to be your biggest advantage.
I can’t help but think New Zealand agriculture and our dairy industry in particular could benefit from looking at their current constraints in a different light.

The book gives examples of people or businesses that had to deal with a constraint.

Often the constraint forces you to look at the problem differently and explore other options that you would never have thought of, if it were not for the original constraint.

The result can be a unique solution that is truly unique and beautiful.

Dairy Farmers Constraints

Dairy farmers in New Zealand feel like they are being subjected to a number of constraints in recent times.

A few examples from recent weeks are:

Palm Kernel

Palm kernel is a result of the palm oil industry, which is a major cause of deforestation in parts of Asia. The use of palm kernel is a major issue for many consumers.

Farmers viewed the suggestion defensively; many see this cheap feed as a necessary part of their system & to not be able to use it is a threat to their financial viability.

Bobby Calves
Last week a television show ran a story onthe treatment of bobby calves in New Zealand. While much of the public know the footage was from a very small minority. The show highlighted the practice of sending infant calves to the freezing works.

The response from farmers was “robust”, with farmers defending their treatment of calves and the hashtag #caringforcalves being formed.

Many farmers missed the point that the public were concerned that a milk dependant calf can be transported to the works and killed at such a young age.

I don’t use palm kernel & we don’t send our calves away to the works either. In fact we leave our calves with their mothers to feed naturally. Once the calves are weaned they are grown as a beef animal.

PKE & bobby calves are opportunities
While many farmers see the lack of palm kernel and having to keep their bobby calves as a constraint. I’ve found them to be a wonderful opportunity.

Babby Calves with their mothers

Two of the most common questions I get asked at farmers markets or while delivering milk to cafes is; what do you do with your calves? & do you use palm kernel?

My answer ensures that I attract a new diehard fan.

I’ve faced a number of constraints while setting up my milk business

I had no money to buy land, so I leased bare land. But a major constraint is, how do you milk cows on leased land? The answer is the mobile cowshed.

Many people wouldn't even get to that stage, the logical answer is "You need a cowshed so you can only lease an existing dairy farm". There are lots of other options.

But then I was constrained again because no dairy company would take milk from a mobile cowshed. 

The solution was to start my own milk factory. This is something I would not have considered had the dairy companies being more welcoming of a mobile cowshed.

Again I was constrained by the lack of funds, I could only afford a small herd. How can I make money from a small herd when all over the world the small scale farmers are going out of business? 

The solution is to sell direct to the consumer. Again this is something I had not considered, but by consistently asking myself “how can I make this work?” l eventually came to that answer.

Which then led me onto what consumers want? They want high levels of animal welfare and low environmental impacts. I put a self-imposed limit on farming within a Nitrogen cap of 20kg N/ha/yr, and I set about learning how to do it.

Overseerer tells me we leached less than 13kg of N/ha/yr in our first year.

After working through each constraint with a truly open mind I’ve come to a place where I have the Nature Matters MilkCompany.

Dairy farmers will be receiving about $5/kgms this season. The most they have ever received is $8/kgms.

I’m receiving $32/kgms for my milk.

Every single one of the constraints listed above is actually a key reason why people choose to buy my milk. They are not constraints at all; they are actually key points of differentiation.

Looking back I can see that these constraints acted like a filter and forced me to distil my ideas into something that was a workable solution.

I’m not saying my system is for everyone, but I’d encourage farmers not jump to the logical answer and to instead keep asking “what if” or "how can we".

What if we didn't use plam kernel? what if we devised a different model for our unwanted calves?

The logical answer is holding Fonterra back

The world is looking for high quality, sustainable dairy, produced ethically that stands against the industrialisation of food production. 

I've spoken to people within Fonterra in recent months. A comment I've heard more than once is "our farmers just wouldn't accept that".

If New Zealand dairy farmers would open up to doing things differently, there is a whole world of high value opportunity.

To me, that’s the logical path to follow. 

But I’m aware most farmers think the exact opposite way to me and we'll continue to see farmers "fight back" with articles like this one, which just reinforces the public's opinion that farmers are a bit slow & simple, resistant to change and are stuck in a low value, production focused business model.

And we'll continue to see low value, undifferentiated milk powder sold to the world for the same price as factory farmed milk powder produced in the US or Europe.