Monday, 12 July 2010

Generation Next ......

I was priviledged to meet two genuine first generation farmers in South Australia. Both were almost twice my age (I like to think); both had started with a big block of scrub and not a lot else but now I was meeting their sons who had built upon the land their fathers had cleared and apon the hardship their fathers had endured. These land clearers didn’t just start at square one it was almost off the board, in the margins, square zero. Both sons had built hugely upon their fathers work - one in sheep, the other mainly with pigs.

The second generation have built the on the efforts of the first. The sheep man managed his debt so that it never increased, servicing it through excellent production practices and also using these proceeds to invest in drainage and clay spreading (on his running sand soils) that transformed the productivity of the land. These practices combined with the natural increase in land values has seen his equity increase dramatically.

The pig man was a revelation. He was one of the very few I’ve met who has increased a significant proportion of his equity through production. He borrowed big and seemed to have balls of brass but he was able to service and reduce this debt through the cashflow a 1000 finished pigs a week provided. He was an innovator and an early adopter. He concentrated on systems rather than procedures and was the first in Australia to farrow, wean and finish in strict batches, his inexpensive growing sheds reduced capital input (see picture) and his farrowing shed was state of the art. He had expanded when others thought it was crazy but he trusted his gut then referred to his head for an objective opinion and has thus far ridden the market fluctuations incredibly well through his expansions to 1800 sows. He may have taken risks but he made sure big risks were of low risk by doing things exceptionally well.

It has been apparent since Washington that Cash is King and given the problems getting hold of land, an intensive enterprise needs to be considered seriously in order to build a farm business of true worth. I have been talking to a company that would want up to 70 finished pigs a week but are quite happy for me to start at as little as 18 gilts. A gilt is just over £200 and promises to give me 20 odd pigs per year; compare this to a gimmer at over £120 to provide 1.5 lambs a year. Obviously what life I have will be taken away from me and cash outflow would induce long periods of buttock clenching; but maybe this is a true opportunity. It would be a vertical learning curve but I have a market and should just work backwards. I am seriously considering this - am I mental? Must go - the yellow van is here to pick me up.

1 comment:

julesandtim said...

Oh dear Michael! What are you on? Pigs are truely the path to complete madness---you think sheep are bad but listen---sheep eat grass, put them in a field and forget them---pigs eat everything and anything and need expensive food non stop. Pig buyers lie and then lie again---you spend ages (and lots of money) producing fat piggies and them mysteriously the price crumbles leaving you with heaving debts (wrong interpretation here---should be bankruptcy)

You should also look at your definition of a farm business of true worth---do you mean a large lump of accrued capital at the end of your days? Or do you mean a business that works around your life? Why do you need a large lump of capital (farm business of true worth) when all that happens at the end of the day is that you break your back getting there and then your kids piss it all up the wall when you keel over---Enough deep thought---send more sheep pics