Geoff Burke interview scaling regenerative organic dairy and organic kiwis


okay and we are recording okay so
welcome to the podcast I’m Koen your host of today I’m
joined by Geoff Burke founder of agro-ecological all the way down in New
Zealand this is an experiment where we tried to dive deep into regenerative
agriculture projects on the ground and we’re we’re also recording video as we
go over projects with Geoff today find all the links below in the description
and please let us know what you think Agricole ecological is a new
zealand-based impact investment manager and advisory firm focused on farm and
welcome Geoff morning thank you and so and good evening
yeah good evening good morning we’re we’re very far apart and there’s a
slight delay sometimes yeah yeah in the connection so it’s all it’s a it’s a
good experiment to do for the first time actually on this podcast we we have a
video connection so it’s gonna be is going to be very interesting to see how
that turns out but to start with with a personal question
why and how did you end up in soil I mean you are from New Zealand where
farming is a huge industry but but still you could have chosen many other career
paths I’ll try and keep it sure we could be
here all them all morning / evening and so essentially I’m from a farming
background and bought up on a beef and sheep property my father always said
that if we had have had a restaurant we would have done it from paddock to plate
so the family was involved with farming livestock buying butchery meat exporting
and pretty much everything else except restaurant
so I think it’s kind of in you and you have an appetite for it and you know I
wouldn’t study that at university but I think like a lot of young men in the
1980s who were from farming backgrounds I ended up an investment banking because
farming wasn’t looking terribly clever I don’t think in many places in the in the
80s so but I just got to their point in life where I think I couldn’t escape my
genes and they started sort of vibrating particularly strongly and so and ended
up pursuing particularly organic agriculture because I got interested
well you know firstly because I was with all with futures and options I started
to get interested from the deal point of view because this organic stuff seemed a
lot more expensive so therefore did that mean the farmers were making more money
and you know having covered some of it at university I could sort of
intellectually get my head round it and that New Zealand would probably be quite
good at it and so that’s why I went back and did my postgraduate work they can
you zealand at Lincoln University and and then it sort of expanded from there
so yeah that’s trying to keep it short that’s
how we couldn’t do because otherwise we could we could easily cover a full hour
probably on this I want to bring up the easy I will share my screen and bring up
actually the presentation of your company agro-ecological and you can
basically and say briefly and the same brief as you use now to introduce that I
can click through it if you want just just let me know which is you happen to
see and with that we go to the full screen there we are so move video to the
so you can actually see it so tell me Agri collage achill what it is what do
you do who is we and that turns how many people
are you and and why I mean you you are from New Zealand but what’s there yeah
the reason of the job is that oh we are started off in the UK
I’ve spent probably 20 out of the last 25 years and then in the UK because you
lived there for a long time yeah yeah that’s that’s right and worked at the
organic research center over there in Berkshire for a number of years so came
back to New Zealand about five years ago so yeah I mean the name the name is
because it’s kind of does what it says on the tin it’s one of those those names
that captures exactly what it’s what’s it what it’s about
and I think just what we wanted to try and G so we’re a small team there’s just
a handful of us and but I think what we really wanted to try and achieve was was
genuine transformation to drive change and one of the limiting factors around
the perception of of ecological agriculture or regenerative agriculture
review undetermined is that it is less profitable and their people do it purely
for philosophical almost as religious reasons and you know my experience of
having been on a lot of farms is that that that was wrong and particularly
here in a New Zealand context and that you had the ability to create a more
profitable system particularly if you could capture a premium but even
potentially without capturing their premium you had the ability to run a
leaner more resilient system and so really was about that it was about
proving that we could create a system that was more environmentally positive
and that we would also drive you know good if not better financial returns and
being able to demonstrate that through actually doing it so that’s really sort
of how it came about if you like and it’s really based because we used to
term organic a lot we used to term regenerative a lot for you it’s it’s
really that’s it’s almost a step Organic is the official certifier but
you cannot really be your again or the official certification you cannot really
be organic without being regenerative at least in in your experience and in your
circumstances yeah I mean that’s right that’s how I view it I know there are
different views around the world and people who say this sort of call for an
organic and stuff like this but for me if you’re doing it as well as you
possibly can then you’re relying on on ecological science or agro ecological
science and and they’ve and so if you like being regenerative there’s a
byproduct of implementing sound robust based if you like agro ecological
management practice which QED makes you organic because all those techniques are
things that fall within the sort of the sort of the specifics of organic
certification and really organic is just you know either way I view it as that
organic is important because it’s a stamp
it’s independently audited and it gives consumers some comfort and that drives
the premium and that’s important because it makes it more profitable and the more
robust and profitable it is and the more likely it is to drive more money into it
and then see more organic agriculture being rolled out and you know it’s been
successful for for 20-30 years but really hasn’t expanded you know perhaps
as much as we we need it to thinking about climate change and other and sort
of environmental challenges and thinking about how much capital goes
into agriculture as a whole but and how much of that goes into organic you know
and these are still a fraction yeah yeah exactly
and so there’s still a fraction of you know capital flow going into to you know
this very important or what we view is very important area in terms of creating
good food creating good environmental outcomes adapting to dealing with
climate change and the consequences or point yeah I just wanted to bring up the
next picture as you see the soil from from underneath I think there’s a
there’s a fundamental misunderstanding in or in organic where where many people
see it as just replacing a few the chemical inputs you’re using with some
organic inputs probably getting a year or lower yield if you do that like if
you don’t do if you don’t push the system as far as you’re doing as you’re
mentioning like you can really push it much further
meaning that you get a lower yield which are usually the farms you see in ending
up in research and thus you have that that tendency of saying we cannot feed
the world with this because everybody has 20 or 30% lower yields which is not
the case if you look at I mean it really depends where you take these these
examples plus there’s there’s only a fraction of the money went into research
so far a meaning that we’re really at the beginning I’ve seen farms that are
maybe five or and sometimes even ten times better in in yields and you’re
mentioning before and actually Nicole if we should focus on profit per acre and
not yields per acre but there where we haven’t pushed the organic system as far
as we can in yields but also in profits and also in quality and we’re just at
the beginning and it’s a twenty thirty year things compared to fifty or sixty
maybe in and so it’s there’s an interesting discussion going on around
that which makes me always feel a bit uncomfortable people say but can you
actually feed the planet with that I say yes well if you do it well but that’s
always the case if you do it in a bad way and you just replace a few things
here and there of course you can’t because you’re just you’re a bad farmer
basic yeah but it’s more estate yeah no but it’s good because it does come up
and then then we get into the whole debate for why is it the people are
going hungry is it because we’re not producing enough food or in the West
we’ve got sort of a high obesity level so clearly we’re not liking producing
food it’s about 2.5 billion with more much more about logistics and
availability and poverty and these types of things so we we don’t have a an
inability to produce sufficient food we absolutely do and from an organic
perspective certainly the systems I know know well there is minimal yield penalty
if any and certainly you know from our point of view from pastoral point of
view from poni crops such as kiwi fruit there is
no reason why we wouldn’t be in the top three 5% interviewee for production
certainly in terms of profitability so I think it’s a little bit of a dairy and
kiwi and yeah but let’s let’s dive a bit into the nuts
and bolts of not doing it the convention or let’s say convention okay so not
replacing replacing a few inputs from chemical to organic and then calling it
a day no you’re you’re saying organic is meant to be and I’ve had this discussion
before where people say the spirit of organic is constant tinkering and
constant changing and that’s how they designed it now the certification in
some places is very rigid but it wasn’t how the original pioneer started and and
so what’s your let’s say your take you can take it complete a concrete example
we might go into Kiwis a later on but if you want to compete example now and what
would be your your mission of regenerative or thank you would you
raise an interesting point and this is when I we often talk about and that is
that it’s often perceived to be so organic agriculture is often perceived
to be a case of substituting conventional inputs for organic inputs
and so that’s fundamentally flawed that’s not what it is and those are
usually the systems that that fail and so for instance you’ll see farmers who
say oh again it doesn’t work and generally what they’re saying is that there in we could
tell them beforehand but that was the case which probably say them a lot of
trouble so it’s much more or about not even redesigning your management system
at America’s only management system but it’s much more about creating a new
management system and in having an understanding of how you’re going to
create health in success in their systems our resilience Jeff can you just
because the connection froze for a sec and it was a crucial point I did cut off
at the moment we said organic doesn’t work so people say when it just things
are getting it yeah I’ve literally had that conversation with someone and but
they had effectively gone down their input substitution route so take the
commercial and put put the organic one in and so that you know that doesn’t
work and you know if someone was going to adopt that approach we could tell
them beforehand before me even got started that it isn’t going to work
because what you need to do is is redesign your system or if you’d like
even stay put in place a new system and that’s about management and it’s about
you know what’s going on up and here just as much as it is what’s going on
down in the soil and in the pasture so that’s and that’s where you get success
through creating their health and their resilience and so on and you or your
system but it comes back to that that management system it’s not just take
that thing out put that one and instead and that’s crucial because generally
most farmers will think that’s what it’s about because that’s how they’ve been
educated to think of farming is that done the most difficult piece like that
changing the mind of the farmer or or nudging the mind of the farmer or yeah I
I would say a certainly right now experience and he’s even does that there
are a lot of people who are very interested more than I have ever seen
before there’s much less of the sort of you
know laughing into your hand or you know and because people yeah because people
are recognizing that actually you know what the current system isn’t working
there’s a whole that our regulation she’s coming in around water quality
because water quality is not great as a consequence of
dairying and and people people in new zealand don’t like it who are people
anywhere don’t like their degrading water quality and so you know that that
change is being driven that’s not the only sort of change but through that
it’s stunning changing people thinking well how do i farm to be within the
regulations to be if you’d like to have have a social licence to farm and then
to also make it profitable so I can continue farming with my family and prep
acid onto my sons or daughters or whoever it is so those sort of questions
are really quite in play strongly in New Zealand and so that means I am finding
that I’m engaging with with farmers and talking to them about well let’s develop
the system this developed that system what are you thinking about doing and in
every one that I am talking with is saying yeah well we’re interested you
know finding out more about organic how do we do this or you know how do we make
that system work so I would say right right now and this is based on our New
Zealand experience that it’s it’s a really good time to be seeking to put
those systems in place because I think farmers are very open to that but
certainly the it’s up here that’s the most important part of the system to
convert and that as the appetite for it the genuine interest in it is good and
the great thing about New Zealand is they get a lot of very capable farmers
you know it’s a big sector here it’s a major sector and so capable young men
and women go into the sector we’d probably like to see more going in
but there’s plenty out there and what’s interesting is that if you like the most
motivated ones are the ones who are interested in pursuing this more
sustainable line you know they have more of an appetite for it and that’s good
because it does it does require you to be ahead of the curve a little bit you
know to be in sort of the top 10 20 percent of of conventional operators
that those are the guys who are going to make it make it work and they put your
truck which is trying to get in yeah yeah so let’s see what I don’t remember
here we’re going to talk about in a minute Kiwis and let’s see I mean
you’re a Greek illogical is interesting obviously he wrote a few very
interesting papers which I’m gonna list below on yield and all of that which is
which is very interesting and I think I mean some beautiful pictures in New
Zealand how big is the farming industry and you mentioned before in a
conversation we had it’s basically I mean you never have to put the animals
inside it has the perfect climate is there changing a lot in the climate as
well is that like 30 years remarkably benign climate you know we’re very lucky
with their climate so animals can be outside grazing on you around to some
extent that does depend on your your soil and that yeah look we don’t they’re
not there are not large parts of New Zealand turning on of large farming
parts that are under snow pretty much nowhere in the North Island will be
getting known in the farm except up on the peaks the hills or something but but
it’s not like Northern Europe or North America it just doesn’t and grass grass
will grow all year round in large areas of the country it might slow down or
stop in some places and in sort of July you know the middle of winter but
otherwise you know you keep growing so and you’d you know to compensate for
that lack of pasture growth you you’re far you harvest if you harvest in your
your peak season then you feed it out season so we’ve got a fantastic climate
we’ve also got rain and good soils and sunshine so we have sunshine we have
heat units we have water the availability craze outside all year
round and that ability to grow things is is the basis of the country’s economy
really you know there’s a certain amount of tourism which is pretty important
particularly wind sort of Lord of the Rings and films like that get made and
people can down a visit but yeah it’s really about food production and that
comes back to the climate the quality of the climate we have which is there’s a
real blessing and it’s almost all export I assume yeah look there’s four million
people in this country and I think we produce enough food so I’ve heard
various sort of measures but you know sort of 40 50
sixty million so I think literally 95% of what New Zealand produces is exported
so in the context of the global economy from an agriculture point of view were
extremely important dairy I think we’re around one third of globally traded
dairy product I think we’re the biggest exporter of kiwi fruit and all zest for
at least as the biggest export kiwi fruit the New Zealand kiwi fruit
marketer lamb with a number one exporter of lamb so and apples we’re not number
one but we’re very big from again from an export point of it just because you
know if pretty much everything we produce whatever it is will be going
overseas and and just on this slide one thing I was like to ask measurable
environmental performance what’s the what what are you measuring what would
you like to measure because it’s not always the same thing and what I’m
asking what are investors asking you’re working with what’s that what’s your
experience being your experience on the measurement part so there’s been a rise
and impact investment that invested as we are talking to seldom and Mike I
think I can only think of one but they’re seldom articulating we need
these particular metrics we need to see that you’re measuring this pretty much
everyone we talk to are super happy with the approach we’re taking and and that’s
kind of a case of we say well we’re going to measure these things and they
go wow that’s that sounds fantastic so and I think I think it’s so juxtaposed
with what they’re otherwise seeing so there’s such a sort of a separation
between if you like the norm in what we’re doing so in terms of what we would
like to measure well some of them are relatively straightforward to do and
it’s biodiversity is a fairly obvious one some are very important but much
more technically difficult to do which is water quality but in doing that if
there are mechanisms you can you can use and then also we’re looking to work with
regulators and certain catchments who are monitoring water quality and to do
that over time you know some of these things are not quick fixes
requite came to see see how we can record that that change in how their
happens at sort of a micro level so at the farm level and then also in the
wider catchment level particularly when you if you start to get multiple farms
under under management and then it’d be interesting to see how you can identify
those those differences and but otherwise it becomes things such as you
know you talk about putting particular environmental mitigations or management
actions in place that you say are going to make a difference so the first thing
would be to do to measure is that well have you actually done those things that
you said you were going to do and to some extent you know science hasn’t
caught up with good management practice so an example of that would be if you
saw a really diverse mixture of pasture you know something that’s pretty brutal
and so you’re better holding on to to nutrient in there that soil then if
you’ve just got really a very short rooted grasses well that hasn’t picked
up for instance in New Zealand in the the nutrient monitoring system so you
get no benefit out of having their pasture system versus having say a very
short rooted rye grass so the science to some extent has to catch up in terms of
its ability to measure those differences but you know nonetheless those are the
sort of things we’re putting in place because we know they make a difference
from a lot of different points of view you know health of the animals and and
performance as well as retaining nutrient and so and so forth so are you
measuring carbon like like your your neighbor Australia is doing and there’s
a sort of a market there but I don’t know the situation that well in just
sort of cranking up again actually and and probably literally the last couple
of weeks carbon has become much more of a topic with farmers that I’m talking to
so there is a billion trees program as it’s called here in New Zealand where
the government is encouraging people to get out there and plant trees and you
may be familiar with manuka honey you probably hold on your your toast this
morning and so there’s an opportunity the plant more of there’s Monica and
counter-current and make oil and honey and also you know lock up some some
carbon so it’s a really interesting area it’s just growing and super interested
in that because I think you know more silver pastoral type systems something
that is of interest to us that sort of totally links in with with that so and
they’ll be great to be able to measure that and create more income yeah so I
think that’s that’s something that you will see increasing and something we
will pursue on farm you know without yeah you’re probably one of the safest
ways as well to to do so to rebuild soil carbon levels as well absolutely in
trees grow super fast in this country you know some thing that might take 60
80 years and say the UK will grow here in about 20-25 so it’s you know
dramatically different and say it’s the warm width just make such a difference
great I think we’re gonna switch to as we’re talking about trees we’re going to
talk about Kiwis and okay which the presentation for a second and it’s fine
it’s rather than trees but ya know it’s slightly you can see my lack of
knowledge on so we’re gonna dive into that I mean they I’ve picked them before
and I’m not on a farm or in a small and they are place so it’s um you mentioned
before it’s one of the biggest you’re one of the biggest players as a country
I mean one of your marketing the marketing company that most people when
they eat a Kiwi at least one in two or something comes from from New Zealand
what is it with I mean this is a you know picture let me check the next one
did you have a nice background well this is a lot of text so we’re not going to
do that and let’s keep the the Kiwi one why are you pushing for regenerative
organic and why is that such an interesting development at the moment in
so the actual there’s is the interest circuit there’s the there’s the pure
market interest so you know tractor premium fitting organic and the market
is growing you know sharply North America and Asia so that that’s the
exciting dollar driven into it if you like and
which quite compelling and that there is a
marked shortage of supply and the ability to change that rapidly in a
short space of time just simply doesn’t exist
so there that’s very compelling the second thing from a production point
of view is that we have identified a sort of unique agronomic advantage in a
particular location and it’s connected to how kiwi fruit grow or how they are
made to grow and essentially kiwi fruit need to have winter chilling so they
need to be warm and it means we’re not finding chilling in a fridge no it means
you know you need and and then that stimulates bad break so growth and yield
which obviously means you get more fruit so that’s very important and there is a
there is a synthetic input used conventionally to to stimulate that
activity which is not permitted organically and that’s a factor in the
the biggest kiwi fruit producing region in New Zealand where there is a bit of a
lack of winter chilling they have to use there and so the the absence of there’s
in an organic system in that region means you tend to get a yield penalty to
summarize that the region where most of the Kiwis are grown now in New Zealand
either due to climate climate change or in general doesn’t have that cold winter
or doesn’t have the cold winter anymore meaning they have used a strong chemical
or a chemical substance to to fake that natural and means right yet they switch
to organic tomorrow because they they would not be able to use that substance
thus won’t have the same yield since before correct yeah so guys do guys do
their bit you know eventually get there but you
will the the average yield is lower and so I chose to beat somewhere else I mean
that’s the target a yeah a region where it does get cold
yeah look there’s no question that the region that we have identified is better
for growing organic kiwi fruit I just moved out and it’s because of that extra
winter chilling because actually in the summer the region I’m talking about has
higher heat units so it’s kind of a double whammy
you’re getting better winter chilling but then you’re getting more heat
through the summer so it’s yeah it’s significant it essentially means you can
deliver conventional type yields but with the organic premium on top and so
that’s the lower as well are you inputs in Kiwi production is that a bit well
your your license costs currently because later so just get weeks people
close or narrow but yes your your cost of license is cheaper and your your
production is high value the actual operating cost is is similar so there is
not a marked difference between the two it’ll depend on what you’re specifically
doing with your management system we think there is some scope to to be lower
in cost of production if you can set the system up right that’s what attract one
of the attractive things about doing a bln development and if you’re actually
going to secure gold organic license you actually have to have a peer lended
element take existing kiwifruit in the ground and cut across to gold under an
organic system it has to be bare land development there’s any exciting thing
about headers that means in the system sorry
what does does that development you mentioned a specific type B&L
development what does it mean so I really just mean yeah you know literally
fair land so really from the ground up starting from zero yeah how long does it
take before before the fines are not doing crepes but doing Kiwi fruits yeah
so you’ll get a harvest in year three it won’t it won’t be a really proper
commercial harvest you’ll get a more commercial type harvest in year four
you’d still expect to increase from that point on for a few years but yeah and
when does it mature or is there a certain moment it goes down again
doesn’t doesn’t go down they sort of go on forever they’re there they’re
absolute monsters kiwi fruit they’re just beasts so they they can be a little
susceptible to wet feet and to wind but the way you develop and you have sort of
nets and shelter and so on and so forth so they’re very well protected from from
wind and you you’re it’s obviously important to find out about your soils
that they’re going at you that they’re free draining you know fertile and free
training because wet feet are not good for kiwi fruit but if you have those
variables in place as I said they are they’re monsters they just and in terms
of visually and in terms of soil and what’s their impact on the soil is their
fertilizer necessary what kind of are you doing any intercropping is that is
it a monoculture plant or what what how does the kiwi fruit planned for your
vine feels happy yeah so obviously there’s largely a monoculture because
it’s a permanent crop but within that you know we look at doing a lot of
different things in between the rows you can so you know legume like clover and
then you go through and cutters and have it so that it shoots out of the mo are
under the vines so you’re getting a mulch which is obviously got nitrogen in
it and you can also plant plants that will attract beneficial insects so but
quiescent and 4c there and things like that so there are different things you
can do and and one of the things we’re very interested in doing which
which would be quite new and innovative is to is to plant habitat around the
outside so an extra shelter but also as a habitat for beneficial insects to sort
of create that reservoir if you like have beneficial biodiversity and we’re
quite interested in doing that and because kiwi fruit unnecessarily the
sexiest plants for pollinators so you you need to do your best to create an
environment where pollinators are motivated to to stay there and spend
some time there so that’s part of what we we seek to do with the system as well
which which isn’t generally otherwise done as a deliberate action in setting
up the system but that’s what I was talking about in terms of you know
setting have a sort of a purpose-built system for organic performance for
organic production and and in terms of of this structure obviously without
giving investment advice which is not what we’re doing but what are you look
at me you’re looking to develop a farm basically from the ground up you have an
interesting team here what’s in in terms of the invest or putting my invest or
head on what’s in terms of the invest impact investment what what’s the
structure you’re looking for is is a one-off thing are you going to do
multiple what do you see if we talk in a few years from now and the first one has
his first semi commercial harvest where what would you be looking at yeah I
think it’s interesting because it’s it’s not easy to deploy big chunks of capital
into into kiwi fruit and the average the average size of a kiwi fruit orchard in
New Zealand is something like 2.8 3 hectares for a goal it’s very small you
know that said one of the developments we’re looking at is would be about 15
hectares and the Kennedy would actually be quite large and in the particular
region we I think it’d be the second largest individual holding so there is
here just to be clear means canopy of trees or canopy of Nets yes its canopy
means if you like the area that’s got vines growing okay and so we think of it
as a knitted area because we have knits over the top
but basically canopy is really referring to the kiwi fruit the kiwi fruit kind of
be like the first picture we showed basically this one yeah that’s right so
where you can see all those sort of leaves because if you’re standing in to
keep yeah that’s a great picture to show you because if if you’re standing under
kiwi fruits in the sort of a peak of the season is it where there’s not a lot of
lights coming through you know it’s quite a lot darker and and then that’s
you put four Birds or what’s the purpose of the nets wind wind is the biggest
thing help with birds obviously but primarily it went and
would it be because I’ve seen systems on – I think propagated ventures was
sharing a system for I remember it was apples or something but in in I think in
Argentina where I planted a lot of very high trees around certain apple farms so
they basically caught the wind so they they created Nets but on the side and
made of trees and they’ve been doing that for twenty or thirty I think even
much longer and without netting it basically they managed to slow down the
wind that came through their their orchards because it was such a probably
the same with Kiwis it’s such a such a threat but not from above directly
they’ve had trees around them but some of the first trees they used to plant
they found they were they were havens for a pest the pests really loved to
live on that tree and then they’d sort of jump into the orchard so there wasn’t
quite so successful and so you know they’ve learnt a lot more about that and
it’s extremely effective and as I say we we will utilize trees as well well
perhaps you know shrubs motivated work for a few trees but ones that will
create habitats using a lot of native plants and so forth so so sorry there
was this the site just to come back to this you’ll be doing a one-off for now
is it nice oh yeah that’s right at the moment we’ve got we’ve got a one-off
project but there are other opportunities coming up in the pipeline
and say look you’re not going to deploy big institutional type amounts of money
into kiwifruit in New Zealand so if you are thinking that type of them there who
might look at this it might be you know high net worths
and family offices and those types of investors because yeah look one or two
projects but there will be the opportunity over time I imagine and
given what we’re seeing that’s our expectation that there will be other
other assets come up from a from an offshore capital point of view billion
development works as well as well as it does from the production sort of point
of view in the biases point of view and that’s because you have a the Overseas
Investment Office to go through here in New Zealand so that’s a process and and
there are boxes they have to be ticked if you develop from yeah because
currently the land is is used for Ida cattle or its bare land right
yeah well the sort of land we’re looking at is it’s either grazing it’s got
animals grazing on it or it’s being cropped for animal feed and other
properties they might be doing some annual cropping you know possibly onions
or something like that but whatever it is you’re doing you’re still taking it
and turning it into a much higher value product or land use are you turning it
to kiwi fruit great I think we’re gonna switch to you a much much bigger
projects you’re working on which is actually project regeneration which
obviously cognatic so let’s go do that so you mentioned dairy a couple of times
a we mentioned there actually a couple of times and we have a nice overview of
a number of very operations here and it’s a huge industry in New Zealand it’s
a big part of your economy and your the 30% of all dairy exported in the world
probably comes from from your place in the world what are the main issues why
is is this such an interesting space for let’s say an impact investor to to get
involved and why are you focusing on the dairy industry I think there’s probably a couple areas
where we be focusing on dairy one is it’s the biggest industry in the
agricultural sector in New Zealand and by some way the second thing would be
that it has a reputation for being dirty and polluting so as we can see in this
river here yes dairy is referred to as dirty dairying and there has been a
dramatic fall in water quality in these sort of catchments where dairy
intensification has increased over in a relatively short period of time you know
we’re not talking sort of 50 years we’re talking more like sort of you know 20
years and so that is becoming socially unacceptable yeah I was just going to
switch to the slide where you share a bit more about that like pika cow is I
think the first time we’ve seen that yeah that’s that’s right yeah so that
some of those headlines you know this is coming from the Minister of the
Environment in the in the Minister for Primary Industries or for agriculture
and effect so they’re saying you know we’ve pretty much think we’ve reached
peak cows so basically there’s this there’s this mood of change if you like
and it’s been boarded also by by actual regulation so nutrient loads are being
kept and so that the change is coming which is a good thing a lot of farmers
don’t think it is but we we saw that there was created an opportunity because
you know where someone sees I know that’s all changing and it’s bear and
we’ll have to leave or we see opportunity in that rather than
something to run away from and the opportunity is to go in acquire farms
transform those into regenerative systems that are generating better
environmental outcomes but also you know good financial outcomes and and make
also make make people sort of take a different view on farming that it
doesn’t have to be about just making dollars and sort of you know abusing the
environment that actually we can we can make that environmental outcome
sort of better we can deliver better biodiversity we can improve water
quality from where it is now and still make money and make you know milk that
has higher value so so create better financial outcomes as well as
environmental you know I think it’s you know intellectually we reject that
concept that there is a trade-off between environment in profitability we
see the two actually as linked you do a better job of the environmental and you
will achieve a better outcome on the financial and frankly it has to happen
that the sort of the the environmental consequence is no longer something they
can just be swept aside or or you know classified as someone else’s problem you
know there has to be deliberately confronted and regulators are seeking to
to confront and deal with it and that’s the environment we go into
and so that’s why it’s a good time in our view to be looking at dairy so
basically you’re you’re going in and and and is it going to be one watershed or
one region where because obviously if you are all sharing the same river with
all the farmers in the region maybe the farm you pick or that’s for
sale you buy you turn into you beyond organic organic regenerative are you
figuring out also which farm to pick to have the most impact on on that River or
is that something you’re you’re thinking about how to have that a good ecosystem
or watershed level thinking where are those I would almost call it in the show
every time acupuncture points where you can have the most potential impact is
that something you’re thinking about yeah absolutely it is and certainly with
the project we’re looking at at the moment it’s it’s very much focused on
the catchment now obviously there are neighbouring catchments that you can you
can look to as well but it is focus on a particular catchment and then you know
you know we’re looking to working closely with those who have been
studying those those areas you know particularly there are the regulator’s
I’m thinking have been rolling a lot of the formation and will have very good
insight as to you know those key areas but
you know certainly we’re looking to so we target farms for instance they will
have waterways going through them which isn’t actually that challenging Devine
is early a New Zealand and particularly in this particular catchment so there’s
there’s a real opportunity to make a difference there but that kind of
insight is really useful and valuable and I think the way we we will do that
in this situation is through that that sort of collective approach so working
in with other stakeholders in the catchments and that’s the great thing at
the moment their appetite to make a difference in how we go about doing and
this probably it’s always sort of been a bit of a steak oh you must stop doing
this and stocked up mares and you know that’s achieved a certain amount but
this becomes I think a much more powerful sort of driver of changed and
deliverer of improved outcomes so yeah but it’s a real look it’s a really good
question and but we do try and specifically target areas and even farms
that will have a an above the line degree of improvement and impact and and
in terms of let’s say you buy a farm and I would see it the first day or the day
before you bought it and five days five years later what are the main
differences apart from getting your organic certification what would I see
as many differences are different grazing under gonna be trees are the
cows looking different or they have different types of cows is there what’s
the the feel if you if a farmer would visit because I always Lee don’t see too
many differences I mean I would see a tree but if a farmer would visit and and
what would he or she see in in like a couple of years what would be the like
whoa okay that I didn’t expect or that that’s completely like for me from what
I know else will have really big smiles on their faces they’re just very much
happier you’ll see there but now in look in reality you will notice dramatically
different looking pasture and the number of species in their pasture going from
what to what what’s your goal no well generally you’ll be going from
potentially just pure I grass or rye grass with a little bit of white clover
to so that’s two varieties to something they might have
fifteen or twenty different species in it so a variety of clovers maybe some
loser there’s four trefoil chicory plantain he’s different noises you wrote
or you planned that in or it comes back naturally yeah yeah so you you have you
have a rotation so you don’t go in year one in and sort of you know plow up
everything in Sonya grass otherwise you’re going to be struggling to feed
your animals but you’ll have a system of renewal and you’ll you might accelerate
that a little bit you might increase it a little bit but broadly you will
operate on that rotation of renewal to bring the new pasture in and you’ll also
find to an extent that once you have a level of that new pasture in the cows
will also start to help spread it around the the farm and whatever livestock
system you have that would happen and so yeah that but that’s how you make it
sort of work so that’s a that’s something you will notice is a
difference treat you’ll see a lot more trees on farms that we’re operating and
that might be natives up into scrappy steep gullies that aren’t terribly
productive could be plantations in those areas could be more of a silver pastoral
type system where you have rows of whatever it might be could be apple
trees could be timber trees could be nut trees in paddocks if something that
happens already is that something that’s pretty pretty new because the pictures
I’ve seen the pictures shared in a presentation there there’s hardly a tree
inside particularly New Zealand dairy farms historically it’s always been seen
that if you had a tree it meant it was growing somewhere that couldn’t grow
grass so you had to get rid of the tree so you could grow more grass the idea of
sort of shelter for the animals and you know these sort of thing just didn’t
come into the equation it’s starting to change and so people are starting to
sort of see trees maybe as as being an asset which obviously they are so but
you will see a lot more trees on farms and in ways that you wouldn’t normally
expect to see trees on farms as well so I mean people will talk about riparian
planting in New Zealand but we will do that
and to a high level and I don’t just mean lots of it but in terms of thinking
about the species we are putting in place and what else are they doing apart
from retaining nutrient because there’s only there’s only so much there they’re
doing at that point you know when you’re a meter or two away from the river
there’s only so much there so doing but so well what else what are the other
benefits we’re getting out of out of those sort of systems and are there are
other things we can plant so you know I’ve you know we’ve talked in the past
you know about medicinal type plantings so the animals can self-medicate and
other sources of fodder as well as the shelter and you know just rubbing posts
you know this type of thing so there’s you know trees of trees are pretty cool
things and there are a lot of ways we can use them there’s a real drive to see
more trees being planted in this country and there’s the carbon sector and the
ability to to drive you know more income out of the use of trees as well so
there’s there’s a lot of compelling reasons and that’s that’s a definite way
you’re gonna see a physical difference on the farm look another way might be
that you change the breed of livestock you were dealing with so I don’t mean
radically changing it from from dairy cows to something else but I mean the
breed of cow you’re utilizing you may change in order to have a more or better
adapted animal for an organic system so one that’s quite robust producers are
fodder resilient cars easily and all those sort of good qualities that you
want in an organic system and and in terms of their yeah no no I we call them
what is the Botox cows or whatever you you give them yeah they’re they probably
won’t survive very well in a in a few more trees and fuller and some some
horrible plans they wouldn’t know what to do with that um and in terms of the
other end on the sales part I mean I read here you’re mean the two main
companies one corporate event or not you can sell – is there any direct market is
there any margins apart from the organic premium you’re taking your you’re
thinking about at some point is there going to be a more farm to fork to come
back to you to your business previous days and moreover
direct link is there something you can play within in New Zealand or because
it’s export you have to go through these big players because I don’t as you can’t
yeah it’s I mean it’s a great idea and one I always loved in the in the UK but
the reality is we just don’t have the population here I think if you’re very
close to a a significant town and particularly feel close to a a tourist
type town in New Zealand then then that can work I think and if you’re a you
know relatively small smaller Arthur’s any type type thing but the scale of
farms we’re talking about here a quite you know he’s a pretty big families are
800 K our type doing farms so the locals have got to drink a lot of that milk and
to make it stick up and also to pay a pretty good as well so reality is the
nature of New Zealand is such that it’s always going to be focused on on the
export and you know I think that’s important the price a curd and a price
giver because yeah yes I mean to an extent with the processor we are talking
and this is more of an out on North Island conversation than South Island
and our focus tends to be South Island but there are some organizations in the
North Island who are looking to capture much more of that value through higher
value products and to get that back to the farmer so we we have talked to the
process in the South Island about that and I think there is a degree of
appetite around creating a better share in the value that there is available to
because if you’re creating great absolutely great milk with different
protein levels different nutrient levels and much happier cows that hopefully
give much better milk it’s almost a shame if that value is taken either by
the processor or then by the marketing company but if that’s the case and
that’s the case I mean there’s no not too much you can do about it but you see
a lot of other agenda farmers that at some point maybe
into grain they start a meal or at some point they they try to capture or they
with a few others they start a process for themselves but I haven’t seen
anything honestly in the area on that thing and obviously you have a very
particular logistical situation as you export most of it so there’s a
difference there but if you can see that movement in a lot of places but maybe
it’s it’s too difficult for you do you think there’s the opportunity to do
there and I think we’ll probably start to see that increase because I know that
there is capital that is interested in much more their vertical integration of
that extending through the venue chain and not just owning the say the farming
asset and producing the milk but in in sort of processing it and then putting
it into supermarkets in Asia or into North America or wherever it might be
and the I mean it’s a it’s a good thing for us to look to do or to at least
capture that because the value available through an organic product is you know
really really very very significant and there’s a lot of margin and there to be
be captured and for farmers to be rewarded and so that it’s a compelling
prospect for us to sort of you know work to just sort of capture more of it and
in terms of structure this is very very different from the Kiwi structure we
discussed previously this is much bigger opportunity your plan is to buy many
farms and to really build a portfolio which also makes sense for a potential
institutional investors right that’s their what I read at least through these
lines yeah the opportunity because of the market conditions at the moment
because of size of individual farms because of the size of the market is
such that you can deploy a lot of capital and in quite good time into into
dairying in New Zealand I think it’s it’s pretty much exclusively into this
kind of transformational regenerative approach I think if your offshore
capital you will struggle to deploy capital into conventional ways
at the Overseas Investment Office they have to basically agree on every
investment and they’re much more likely to go for this time yeah about four
hectares and there aren’t too many dairy farms in New Zealand smaller than four
or eight years so yeah you know and just to give you an idea look we’re talking
about as I say an 800 cow type type farms you know fifteen and a half
million dollars to buy the farm the cows and everything else you need so you know
these are not small s its but it’s it’s quite a compelling sort of setup the
nature of the market because because of availability and because of valuations
because of the nature of the organic market because of some of these
pressures coming on through regulation the aging farmer population the high
levels of debt at the farm gate you know there are a lot of reasons which which
make it very interesting to to look at at the moment and as I say from their
regenerative if that’s your strategy if that’s not your strategy then I think
you really need to sort of move on to look at other things or other places but
if you’re adopting a regenerative approach and it’s it’s measurable and
articulate and I would take you late an end one that is genuinely inclusive with
stakeholders in those catchments and then I think it becomes far more
plausible or it becomes it becomes an executable sort of strategy as opposed
to one that is had its time yeah I think it’s interesting as it’s
such a specific case it’s mostly export and it seems to be mostly potential
investments coming from overseas so it’s a very particular case when you look at
the the global agriculture market and fix it but you’re always had that
interaction it’s always been for export and yeah lots of the money think we had
a discussion previously as well and the local impact investing sector which
doesn’t really exist yet or starting to emerge but it’s mostly Australia are
mostly further away and it’s actually how we got connected as well and so
that’s very interesting yes that’s using little small you know this
there’s four million people four and a half million people and so that means
there’s a small number of large and vistas I mean very small and the capital
isn’t that big so to rely on domestic capital alone to drive impact type
outcomes it’s it’s starting at a small level to happen that’s for sure but
relative to offshore capital then or there’s no comparison so yeah as I stop
the sharing and I would like to end with a final question as he did actually time
is flow okay if you could wave your magic wand and tomorrow morning we wake
up or in a few hours because in your case it’s already evening what would you
like to change in the AG or regenerative AG and the impact investing space what
would be your your point to you to that what would you wake up you’ve changed
something yeah I would like to see a lot more capital being deployed into the
regenerative eggs here and into making change happen because there is a lot of
discussion about this there’s a lot of ESG reports produced and there’s a lot
of even media coverage but in terms of the the actual activity on the ground I
mean I think I literally know all the regenerative egg investment guys in the
Western world and I could probably have them over for a dinner party you know
there might be one on this thing out or two but you know two or three of those
four of those guys and that’s about all there is you know I know them extremely
well they’re all great gods but yeah or girls of course yeah the ones I know all
actually Eric wise but they might because there’s an issue on my shelf
people I want much more gender diversity because in the impact investing space
it’s much more balanced but somehow when you get to it it loses that in the
balance completely which is really annoying so anybody listening or
watching and knows any great people to interview please think about gender
balance because I need that much better if you scroll down on the SoundCloud
list it it’s quite embarrassing actually but so
you would change that but how would you do that what would be the merry yeah
because look this say this we went camping going into traditional
conventional agriculture that is as part of the problem not part of the solution
and where there are some very capable people doing great things in the
regenerative space and it would be good to see those guys being rewarded for
their their vision and their their passion and their ability to to make you
know change happen and what do you think is there how could we do that I mean the
magic want is is probably not going to work I’m sorry to burst that bubble but
how would be what would be one thing to you to wake up investors for soil or to
even maybe the other part to to see the risks they’re putting to work now while
while they’re investing in conventional chemical agriculture what do you think
is the main leverage point we have days I think all you can do is is talk to two
facts to what you know to describe the sort of the situation and then you need
to find that the right people so you need to find the people who will be
willing to support their and to whom it is important to support and I think
that’s increasing I think so particularly out of Northern Europe or
say out of family to who are getting that generational change these types of
things are becoming important and so they’ve become less of a nice-to-have
and more of an essential to have and I think that’s I’m hoping that’s where
we’ll start to see some sort of change being driven through through that
process but but otherwise it’s it’s you know it is challenging it becomes a case
of you know articulating the story over and over again finding people who
understand it you know and who have ever desire to to pursue it whether their
desire is based on motivation around wanting to drive more middle chain
or whether it’s just recognition that hey this is a really good idea and
there’s this big trend sort of moving this way in the world anyway so we might
as well get on board because we could make some money you know my view is if
people wonder for sure because they just want to make money well that’s great
because it’s still doing the right thing and I hope that they’ve been likely all
the other sort of stuff as well but yeah I just you know those are the kinds of
things that I think are driving the change but that’s what we need to see
more of yeah and I completely agree it’s it really goes against many things that
we’ve learned and seen in agriculture and and to question that or saying we
can go much further than that is really difficult for people to get into their
head now I’ve seen an organic farm and the farmers really struggling
so I know that the organic farmers are struggling and we’re never gonna feed
the world with that yeah but I’ve seen others and and so that’s a that’s it’s a
very very difficult narrative to get through but the narrative is very strong
and very good and I think with with the regulations at night I think that’s a
very interesting point in New Zealand that the outside pressure is gonna be
stronger and there is a huge pool factor because the export market is is so
interested in this stuff so that that hopefully it’s like an inflection point
so I want to thank you so much for your time it was great to learn more on New
Zealand more and kiwifruits that I never knew before
more on dairy and and of course to see like quite a particular but very
interesting agriculture situation and impact investing situation both the
export is is the key driver but also the import or the investment coming from
overseas so you have those two pooling points basically working together so
it’s a was great spending your evening thank you so much for taking the time
this Monday evening and I hope to check in with you soon again and learn very
much more a lot of projects you’re working on great what’s been a pleasure
talking to you and so nice to catch up and hope speaking in soon and thank you
for being part of this experiment so so he great loved it enjoyed it a lot

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