Friday, February 23, 2024

Future lies with ‘good cows’: LIC’s Ellis

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General manager for NZ markets full of hope for sector as he moves on.
Malcolm Ellis, LIC GM NZ Markets, at Rukuhia Innovation Farm, Waikato, Wednesday 16 February 2022. Photo: Stephen Barker/ Barker Photography. ©LIC
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Reducing methane emissions from cows by focusing on cow efficiency is a challenge the dairy industry is well positioned to meet.

It presents a huge opportunity for the industry as it makes this shift while retaining production, Malcolm Ellis said.

“This is where the future is, in celebrating those good cows.”

After 12 years as LIC’s general manager for NZ markets, Ellis is leaving the role on December 22 for a new position in February with Fonterra as a strategic adviser. He will be part of the Farm Source leadership team.

Ellis said he is happy about the industry’s growing awareness of herd improvement and the value that cow efficiency will play in the future.

“I think we have switched from that ‘a cow is a cow’ mentality, to ‘every cow and their efficiency counts’.”

He also likes that LIC is investing in other aspects of cow breeding in long-term projects such as heat tolerance. It means the industry is also well positioned for emissions intensity reductions, which will be needed over the next decade.

While herd improvement will remain LIC’s core value, the focus on cow efficiency and the ability to positively impact Scope 3 emission intensity reduction targets give Ellis great hope for the industry’s future.

He supports Fonterra’s decision to focus on an intensity target rather than on absolute reductions, saying it secures the future for the next generation of farmers.

“If we had waited for regulation to come down the line, I feel very confident – and I was worried – that we would have finished up with an absolute reduction target.”

That would have resulted in a country where cows are “carved out of the landscape”, milking less and allowing for less efficient countries to fill that deficit when taking a global view, he said.

Having that emissions intensity target allows for the focus to switch to individual cow efficiency. 

“What we have recognised is that there is a 30% difference in kilograms of milk solids and kilograms of liveweight between the highest performing cows in NZ and the lowest performing cows.”

A methane CO2 equivalence of that data equates to an 18.5% difference between the top and bottom group of cows. 

That data is based on over 500,000 cows recorded in MINDA and herd tested.

That curve got so wide because of the industry’s focus around cow volume. Those in the highest and lowest performing group are cows farmers see in their herds every day, he said.

Farmers just need to identify which cows belong to which group in their herd. If they can replace those low-performing cows with high-performing animals, they will be in a strong position to reduce their emissions profile.

One of his first goals at Fonterra will be to get farmers to stop seeing emissions targets as a regulatory burden, and begin to treat cow efficiency on farm as an opportunity.

“It’s really lifting up the ‘how’ and the ‘why’ of Scope 3 emissions targets.

“I think the future looks very good for dairy when we unlock the opportunity of closing that gap.”

Ellis said he has stepped down from LIC to allow a fresh voice within that senior leadership role. He informed chief executive David Chin of his intentions 12 months ago, before announcing them in July.

Ellis joined LIC in 2011 as a bull acquisition manager, having previously been milking 1000 cows on two farms near Pirongia, south of Hamilton, with wife Jody.

They sold one of those farms when he joined LIC. 

He was appointed to the role of GM for New Zealand markets in 2016, reporting to the chief executive. In that role he has been responsible for the strategic direction of the farmer-owned co-op’s sales, marketing and customer relationships. 

His farming background and the fact that he is an LIC shareholder give him skin in the game – and he feels the impact when there are issues that negatively affect farmers.

But he also feels it gives him authenticity when fronting farmers around some of these issues, he said.

He points to the recent issues with fresh semen as an example, as well as last season’s non-return rate problems with sexed semen.

“The product did not perform to expectation and I find that, with my background as a farm owner, to be challenging, because you know the product hasn’t delivered as you would have hoped.”

To date, no further issues have been detected regarding fresh semen, and the co-operative is still completing its investigation into how it occurred, he said.

When looking back at the challenges in the role over the past decade, Ellis points to self-management and preservation.

“I’ve absolutely lived and breathed and enjoyed this role and at times it can be all-encompassing.”

He said the decade has flown by.

“What I have learnt as a fourth-generation dairy farmer is that it is cyclical. There will always be challenges, but there will also be opportunities.

“The biggest challenge since 2011-2023 is the dairy having to acknowledge and come to grips and reset in a peak cow environment.”

Cow numbers peaked at just over 5 million in 2015. This was after 23 consecutive years when cow numbers had grown by 100,000 every year.

“Cow growth absolutely fuelled the productivity and prosperity of the sector.”

It fuelled the economic growth and transformed towns such as Ashburton and Oamaru, he said.

“It opened up real opportunities for farmers to recognise that if they are not going to be milking more cows, we have to be milking better cows.”

It switched the focus within LIC and the wider industry to cow efficiency.

Ellis said he was not daunted when numbers started trending down.

“I had identified a massive difference between good and average cows and that difference had largely been created by that cow-to-cow mentality. Anything and everything had been milked and was part of that growth model.”

Ellis said he is also proud of the personal development of the people he has worked with over the past decade.

“It’s been an enormous learning. I’m grateful for that and proud of the development that I have seen amongst others. 

“It’s been a hell of a privilege and a ride.”

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