Saturday, December 2, 2023

Work’s begun on the moat around our farmily business

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Right now it’s a shallow ditch with promise, and we are going to need help to deepen it, says Daniel Eb.
Taking on a hive & honey partner has led his family to consider diversity in its tree planting, and ‘in designing our agroforestry, we’re also thinking about … future production systems like nuts or poultry’, says Daniel Eb.
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In the long-term, we’re going to build a moat around our family farming business. We’ll have a direct-to-customer food brand built around health, environmental regeneration and customer experiences unique to our little patch of the planet. Our key metrics will be customer feedback and product quality. We’ll probably ignore the meat schedule.  

But we are a long, long way from that future. Today, our Angus cattle are still trucked to a large processor, with the finished product going God knows where around the world. For now, we are a commodity beef business. 

I’m finding that the most interesting part of our journey towards the moat-model isn’t the destination – it’s the first-step opportunities that are right in front of us today. Done right, these set us up for the future while generating at least some real income now. Through these marginal diversifications and experiments, we are going to inch our away out of the commodity beef business. 

These opportunities are a local hive & honey collaboration, agroforestry plantings designed for both the cattle and Emissions Trading Scheme payoffs and incoming biodiversity credits. 

I think these are great first steps. They allow us to explore new forms of land use without the need for significant investment. They don’t feel particularly risky, and that’s reflected in their minimal revenue return. 

Like all business decisions, this work comes at a cost. Instead of poring over agroforestry species lists, ETS requirements, carbon price research and of course planting, we could be doubling down on the beef. 

Expanding the farm, leasing more land and increasing the stocking rate are all options too – but less realistic given our size and family business structure.

Similarly, we could go down a well-travelled margin-seeking route and enter into a compliance and labelling framework with a leading processor – something like Silver Fern Farms Carbon Zero Beef range or (if we were in sheep) Merino NZ’s ZQRX regenerative certification and premium programme. 

We could also chase margin by going certified organic or partnering with a niche processor. All are good options too and may well be a part of the business going forward. For farmers who are interested in changing their systems to make a margin, there seem to be more and more options available. 

Ultimately, though, these margin-seeking plays should match farmer’s values and interests. Our values and interests sit around ecology, regenerative practices and community building – pushing us towards options like agroforestry and biodiversity credits. 

I can imagine farmers who are led more by data and hard-science would get a kick out of controlling their carbon life-cycle count, and there are others who would love to work with international fibre brands more closely through something like ZQRX. 

I see our margin-seeking plays serving as bridges to the moat-building future we’re aiming for. We have a hive & honey partner who is focused on diversity of feed for the bees, which encourages us towards more diversity in our tree planting. In designing our agroforestry, we’re also thinking about how our actions today might set us up for future production systems like nuts or poultry. 

The promise of a biodiversity credit system has us exploring what native species are left in our bush blocks and how we might integrate their protection with some eco-tourism plays down the line. It’s exciting. 

But we can’t be expected to traverse the commodity-to-margin-to-moat journey alone. We need support from industry, local and central government. 

So far, financial and technical assistance from Northland Regional Council and the Kaipara Moana Remediation team have been instrumental in kick-starting our planting programmes.

Looking ahead, we’ll need a robust biodiversity credit framework. We’ll also need an ETS with rules that work for small landowners and a carbon price that genuinely reflects the severity of the climate crisis and isn’t depressed by short-sighted, polluter-friendly government policy as it has been. 

Shorter value chain retailers that value our environmental credentials and help tell our farm story would help too – like Ooooby (out of our own backyards) or Supie supermarket. 

Ultimately, though, seeking margins will come down to us as a family. We’ll need to learn to be agro-foresters and ecologists as well as farmers. We’ll need to accept additional compliance to play in new frameworks. 

To achieve first-mover advantages we’ll need to invest time and money with no guarantee of return. When experiments fail – which they will, and have already – we’ll need to be okay with it and keep going. 

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