Saturday, April 13, 2024

Catalyst to conversion: succession a big factor in dairying switch

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There can be a lot of moving parts in running a dairy farm and making it work for your life stage, one Taranaki family found.
Mike Kavanagh came back to his home farm near Pākaraka in Taranaki to run it with parents Danny and Eileen in support.
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This article was one of the most popular articles on farmersweekly.co.nz in 2023.

The depths of Waitotara Valley in South Taranaki were a bit far from civilization when Mike Kavanagh and his sisters were starting school.

So their parents, Danny and Eileen, sold the steep hill country sheep farm and moved to a smaller block closer to Pākaraka.

They eventually left sheep farming behind and switched to a rolling dairy grazing block up the road. In time it was converted to a dairy farm.

After school, Mike made the trek down the road to Palmerston North to study for a diploma in agriculture at Massey University. He always knew he wanted to be a farmer, but was not sure what type. It was the structure of dairy farming that appealed in the end.

“During school I worked for neighbours, milking, doing stock work and in tractors. I loved it all,” Mike says.

“And after uni, I spent a season on a dairy farm near Palmy. That was what sealed the deal.”

After having enough of Manawatū he headed back home and fell into a role helping out a neighbour when their son was crook. 

After 18 months he ventured overseas for a working OE, spending three months in Ireland and contract-milking in Wales for 12 months.

“It was an incredible experience, but a real eye-opener to how innovative the New Zealand dairy sector is.”

When he landed back in New Zealand he was back into dairy farming in Taranaki, managing and contract-milking on various farms. He and his partner at the time won the New Zealand Dairy Industry Awards Farm Manager title for the Taranaki region in 2013. 

A wee while after that, when they had gone their separate ways, Mike was thinking about heading back to Ireland when his parents mentioned they had been considering selling to buy a dairy farm.

“They had been looking at how they could stay involved but also be less hands-on themselves and saw dairy had more opportunities for succession and the future.

“So I pointed out they should consider converting the farm instead, but the deal was I had to stay to help out.”

Eileen Kavanagh still helps out on the farm over the busy spring period.

Mike moved to manage a farm close by while the conversion was taking place and then came home to run the farm, with Danny and Eileen as support.

There was a lot of learning in that first season. It was a shock to the system for Danny and Eileen to navigate the spring outlay with a delay in income. 

They still had a sheep and beef mindset. But having Mike to guide them helped a lot and they eventually got into the groove. And the idea was they would eventually step back after the transition, although rising costs delayed that plan.

“With costs and labour constantly going up it didn’t work out how they envisioned. They’ve been very involved till recently,” Mike says.

They are milking 240 cows and last year were looking at their options for the future, another crossroads decision.

“It’s an awkward-size farm and workload, too much for one person but not enough to justify hiring someone.

“So it was either increase intensity and move to a higher system, or the opposite, wind it back.

“And we figured it was easier and less pressure to wind back, so we sold the herd and bought a herd that had been on once-a-day for 12 years.

“It also means the business is more resilient to the payout fluctuations. We aren’t locked in with infrastructure trying to keep things going.”

Kicking into their first season, OAD was also a good opportunity to change the business structure and set up their succession plan

Moving from a partnership that leased the farm from a trust, they created a company in which Mike, Danny and Eileen are shareholders. The plan is for Mike to eventually take over more of the company. 

“We had a lot of meetings to plan succession, there was a lot of good support around that gave us ideas of what could work for us.”

While Danny and Eileen still helped through spring, now they have more flexibility and can spend more time with their grandkids in Wellington. 

And despite being on the fence about going dairying in the first place, Mike is pleased he took the plunge and will continue to chip away at lowering the cost structure to build the lifestyle.

This article first appeared in the November edition of our sister publication, Dairy Farmer.

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