Monday, February 26, 2024

Water storage and ice cream frame Murray King’s life

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Nelson-based Murray King has combined dairying with irrigation, a 20-year pattern he began in his time at Lincoln University
LIC board of directors, photographed at Zealang Tea Estate, Gordonton, Hamilton,Thursday 9 February 2023. Photo: Stephen Barker / Barker Photography. ©LIC
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In this year’s Land Champions edition, we celebrate domestic and imported people in agriculture, from the Italian clan that owns a slice of North Otago wool production to the teacher rebooting ag education in the hort heartland if western Bay of Plenty.

Kingsway Farm in the Appleby district of Nelson province may be one of the smallest milk collections for Fonterra, because of its priority commitment to the nearby Dairy Dessert Company, trading as Appleby Farms.

The A2/A2 herd is between 180 and 200 cows, split calving, on 54ha in the lower Waimea River flats near Richmond.

Kingsway principal Murray King, the former chair of dairy genetics co-operative LIC until October, has an ice-cream manufacturing business with fellow entrepreneur Julian Raine.

Appleby Farms sends products around New Zealand to retail and hospitality outlets and overseas to Singapore.

The Waimea Plains, where King and Raine farm, stand to benefit from the water storage behind the Waimea community dam, in the Lee Valley through the Wairoa gorge behind Brightwater.

King is a director and chair of Waimea Irrigators Ltd, representing some 200 shareholders who have financially backed half of the construction cost of the dam.

The Plains are 6000ha and total shareholding in Waimea Irrigators has reached 3000ha.

The Tasman District Council holds the other half of Waimea Water, in a council-controlled organisation that has spent $200 million on the dam construction over the past four years.

It is the largest dam built in New Zealand during the past 20 years, during which King has been involved in several capacities.

It will be commissioned in early 2024, two years behind schedule, and begin releasing water down the Upper Lee River, recharging aquifers and waterways that have been over-allocated in resource consents.

Regular droughts have also plagued the Waimea Plains and well levels and permitted water takes have been unreliable for several decades.

Some reticulation delivers to 1000ha in the Waimea East scheme, drawing from the river, where big water users include the Hoddy family’s Vailima Orchards, and the O’Connor family’s Appleby Fresh market gardens.

Matthew Hoddy and Mark O’Connor are directors of Waimea Irrigators, among about 20 shareholders who have more than 50ha.

King says the commercial change to higher land use includes nurseries, pipfruit, grapes and vegetables, some of it now being carried out under canopy shelter from hailstorms.

“What used to be up to 100 small dairy farms back in Nelson history are now down to three,” he says.

“I have been involved in Waimea water management for longer than the age of all my children but ultimately for the long-term benefit of them and their children’s children,” King’s profile on the Waimea Irrigators website says.

“The whole community will benefit through environmental, recreational, urban, rural and regional economic gains.”

Shareholders have spent $5500 to $6300/ha for the right to irrigate 30mm/ha/week along with $1050/ha annual operating costs.

King says the security of water gives big investors like Waimea Nurseries, T&G Global and the NZ Super Fund the confidence to invest in large-scale horticulture.

No slouch himself in large-scale investment, Murray King and his family own three irrigated dairy farms in the Culverden district of North Canterbury and have equity in a number of others.

That enabled him to identify and relocate the A2/A2 cows prior to Appleby ice cream getting started. It is now a unique selling point for the products.

“Over time the national herd is migrating towards A2/A2 anyway, as LIC bulls and preferences indicate.”

King’s involvement with LIC goes back to family connections with regional livestock improvement associations and herd testing and his own two years as a young AI technician.

He began at Lincoln studying horticulture and finished with a B Com Ag, followed by three years’ private farm management consulting and overseas experience.

In the late 1990s he joined a Kellogg intake at Lincoln, followed by a Rabobank executive development programme and then he went on a Nuffield Scholarship.

His Kellogg study was the groundwater resources and water uses of the Waimea Plains, followed by more than two decades in various volunteer roles aimed at irrigation development.

Recently he joined the board of the NZ Rural Leadership Trust, which oversees both Kellogg and Nuffield.

He served as a LIC liaison farmer and on the shareholder council before election to the board in 2009 and as chair in 2011.

During his tenure, the two-tier share structure was simplified, and the governance and representation roles reviewed and changed.

Big co-ops need structural refreshing from time to time, witness Fonterra and Zespri, while retaining farmer ownership, King says.

At May 31, there were 9000 shareholders and two-thirds had fewer than 15,000 shares each.

In recent years LIC has paid dividends and returned good yields on share ownership but the price has fallen over the past 18 months from 165c to 95c now.

That may be some cash-strapped farmers selling what they regard as discretionary shares, he says.

Transactions are limited and liquidity low.

“People outside of the industry would love to invest in it, but that will not be the case.”

The basis of genetic improvement is access to farmers’ mating, calving and herd testing data and therefore farmer ownership and security over that information is paramount.

King defended the $100m purchase proposal for half of Israeli agritech company Afimilk, voted down by LIC shareholders in 2020.

“We had been trying to get close to Afimilk for some time, attracted by its in-line milk testing technology, and other things, and the opportunity presented when a private equity partners wanted out.

“Agritech in Israel is incredibly innovative and very good at bringing products to market.

“Covid-19 was the big upset for that deal, and we will never know what might happened and so we must move on.”

On King’s watch LIC subsequently sold its Protrack automated cow-drafting business to MSD Animal Health for a net $24m and made a special dividend of 10c in January 2022.

LIC has a strong balance sheet with close to $400m in assets and no debt.

Since King’s predecessor as chair, Stuart Bay, stood down in 2011, annual revenue has grown from $165m to $276m and assets from $236m to $382m.

Each year more farmers opt for the co-op’s premium bull teams to breed high genetic merit cows that produce more milk and have a lower emissions footprint per kilogram of milksolid.

Cow efficiency is now the name of the game, for milk production, calving and carbon emissions.

“We don’t need to milk more cows, we just need to milk the best cows,” he says.

LIC invests 6-7% of revenue each year into research and development, one of the highest rates in agriculture.

More recently that R&D spend has been on genomics and the genetic links to methane emissions.

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