Low-cost systems lift lamb profits

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Source: Rural News - Management - 10 July 2007

Article: Malcolm Mountfort

Head down, tail up. Craig Fagan carried on something of a family tradition for 10 years, shearing 50,000 sheep a year around the world before taking on the family farm at Mairoa Downs, 25km west of Te Kuiti in the King Country.

The heart of the farm when Craig took over from his father Robin and grandfather (the late Chris Fagan) was a Romney stud. So it was still head down with plenty of shearing involved running a traditional stud sheep farm. And like other sheep farmers, Craig found that increasingly he was not seeing financial daylight. He felt locked into a traditional high-cost lamb breeding system as a price-taker.

There were too many middle men in the supply chain. And they keep tripping over each other trying to make a living.

Meat and wool returns kept dropping while farming costs soared. He did most of his own shearing on the home farm but still had to go off-farm for contract shearing to put bread on my young familys table.

So he stood back to have a really good look at the whole farm picture with wife Sarah. They believed there had to be a better way forward.

What resulted is one of the most comprehensive reshuffles in meat and wool farming practices on any one farm in the district.

Now we can see daylight, Fagan says.

The high-maintenance Romney stud was dropped. Fagan looked at climate and geography and decided that his farm, rising to 400m above seas level, was best suited to finishing lambs on flush spring and autumn pasture and on the shoulders of these flushes.

The farm gets icy southerlies direct from Mount Ruapehu. These make winters gnarly and difficult for stock.

This year the farm will turn over 30,000 lambs. But in mid-winter, when Rural News visited, there were barely 1000 head of sheep on the farm. Fagan destocks to almost zero over the coldest winter weeks. This means minimal need for supplements with only a few hectares of silage made last spring and much of that sold to other farmers.

Dairy heifers grazed from June to June are given the job of tidying up pastures over the whole farm ready for the next lot of lambs. The heifers do a good job of close-cropping down to a tidy, healthy sward of local ecotype grasses and clovers over the whole farm of 545ha.

Fagan buys Romney and Perendale lambs from selected farmers and tops up from saleyards, buying in a tight weight band around 30kg per animal, selling in a similar band of 40kg and slightly above. He wont buy overbred composite sheep.

In the five weeks that each draft is on the farm, Fagan ensures lambs puts on at least 2kg live weight per week. He checks every animal over scales in the woolshed before it goes on to the truck.

Mairoa Downs supplies direct to an English supermarket on tight criteria. These include roast size, taste and tenderness.

Weight data are downloaded from the scales to the farm computer to check criteria are being met and for farm performance analysis. Animals are selected at weighing so the best go to the English customer.

Key drivers of the farm system lie right here: lamb production during optimum growth periods set to tight specifications for sales to a niche market.

The Fagans can now farm to margins that ensure profits.

And they have pulled out all unnecessary inputs to the farm system - no nitrogen fertiliser, no superphosphate.

Fagan soil tests regularly for essential trace elements like cobalt and selenium and these do go into the system, along with plenty of lime fertiliser. He says lime helps unlock soil nutrients. Despite many limestone outcrops over the farm, Mairoa ash soils need added calcium.

With liming and trace elements alone, soils are sweeter and lamb from the farm has become more tasty and tender, Fagan says. Soil health translates to animal health and vigour; the farm has a 1% mortality rate each year.

Average farm cover when the lambs are on is between 1800kg and 2000kg/DM/ha. Stocking rates are conservative so the farm generally has a feed buffer.

We work on the theory that grass grows grass, so we leave good pasture residuals.

Lambs get one anthelmintic drench when they come on to the property and are shorn. With numbers so large, contractors do the shearing these days. Despite what Fagan calls the terrible state of the wool industry, the wool side of the business returns a profit.

Fagan says disarray in lamb and wool means many of his fellow farmers have run at a loss for two years now.

Thats too long between drinks. All aspects of farm life are stressed when money is short, you cant afford labour and youre working seven days a week trying to catch up.

I keep thinking of the dairy industry model, with one big, co-ordinated marketer. Next season dairy is looking at a record payout.

Lamb and wool will come right the hard way, with only the strong surviving. There will be casualties.

We have a fantastic product in lamb that consumers are happy to pay for.

Mairoa Downs is close to being an organic farm, relying on sun, rain, soil microbial activity and plant biology rather than high chemical inputs. And when market volumes warrant making the switch to fully organic, they are well on their way to making the transition.

We try to work with nature rather than fighting it.

Mairoa Downs is a heads-up to other farmers, with around 25 from Huntly south to Taumarunui at a recent business cluster club meeting on the farm showing a keen interest.

The farm participates in Rural News columnist Peter Floyds eCOGENT business cluster programme.

Vitally for Craig and Sarah Fagan, pulling out unnecessary maintenance and inputs means the farm is run as a five-day working week. They have weekends off with their young family, Monique (4), Sonya (3) and Cullen (1).

Sarah handles the farm administration and computer work, as well as running the couples internet business, providing an international clientele with business promotion products.

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