Two of Maatua Hou’s co-owners, James Booker, left, and Brendan Kelly aren’t afraid to break the mould when it comes to seeking innovations for their Burnham calf rearing operation. Photo / Tim Cronshaw
James Booker looks on approvingly at a brown calf with ear tag number 223.
The youngster rubs shoulders with a small mob of bobby calves introduced to pasture barely 10 days ago. The dairy-beef cross calves fly their heritage on their coats - mainly a mixture of black and brown - showing their Angus and Simmental bloodlines and their maternal Friesian-cross and Jersey-cross dairying lineage.
He observes the calf has adjusted to grass quicker than some of the others from the initial feeding transition of milk to milk powder and then grain and meal feed mixed with straw to eventually a pasture and meal diet.
After talking with Maatua Hou co-owner Brendan Kelly, they’re pleased with the mob’s progress and agree to step up the grass content for feeding the young animals.
Booker reaches over and stretches the break fence into new grass territory.
Before long the calves are lined up in a row parallel to the electric fenceline, contentedly munching on the fresh smorgasbord of ryegrass and clover.
Maatua Hou sits on an irrigated 34-ha block at Burnham, near Christchurch, and is owned by four young couples.
The partnership of Booker and wife Rhea, Kelly and wife Ella with Ben and Jo Jagger, and David Williams and his partner Phoebe Davies, bought the land from a retiring couple which had set up the calving operation.
A major plus for them was that they didn’t need to put in the hefty capital outlay to build the infrastructure of an existing office, many sheds and feeding stations and the shelterbelts surrounding small paddocks.
But it was their next moves that pricked the interest of both the dairy and beef industries.
The owners have their own day jobs and work on Maatua Hou outside of their main working hours.
Kelly said the couples were connected through different groups, but they initially didn’t all know each other.
For example, he and Booker went to Lincoln university together and he knew Ben Jagger through another mate.
The glue between them was Williams, who has had a career in the acquisitions space for corporate farming. It was he who saw the property was for sale and began to contact each party suggesting a business model that could make the small landholding work.
Each couple took an equal stake and in September 2020 - the end of the first Covid-19 lockdown - the land was theirs. Initially, Williams was hands-on with the business as a stay-at-home Dad before moving back into full-time work.
The innovative profit-sharing arrangement between Maatua Hou and the suppliers of calves from dairy farms was his suggestion.
This works with the suppliers retaining ownership of calves throughout their stay at Maatua Hou - unlike traditional calf-rearing operations where the owner buys the calves outright. The suppliers also provide a share of the rearing costs.
“We wanted to find a win-win with the supplying dairy farmers that also to some degree got our business model across the line,” recalled Booker, a dairy farm manager.
“The starting 12 months is always the hardest 12 months, especially from a calf-rearing perspective because you have a lot of working capital outlay.”
For him, their main innovation had been integrating everyone involved in the calves’ life cycle and working out their needs.
A profit-sharing arrangement was attractive because they didn’t have to buy calves, it reduced their risk and it reduced the burden of overall costs, including staffing, milk powder, feed, insurance and rates.
The four couples had also agreed from the start that they didn’t want to borrow any more money beyond buying the land, Kelly, a contract milker, said.
“So we had to build a new way to do this and that’s when the negotiations essentially started with our third parties to figure out if it was still viable to do calves or whether we just rethink and don’t do calves.
“So we had to figure out what the owners of those animals needed before they arrived here and the day they left.”
Part of the attraction for dairy farmers with this arrangement is that they are part of an alternative route for bobby calves that deviates from them going direct to the freezing works after day four of their lives.
In many cases, the rearing facilities are tapped out on dairy farms with little capacity to take on extra numbers than they already do.
Many of their clients are corporate farmers leading this charge who want to reduce bobby numbers and see more of them go through beef farming, where there is market demand for the right animals.
For the dairy farmers, the calf-rearing business works as an extension of their dairy farms. Maatua Hou acts as a middle ground for the growing stage of the calves’ lives until they go back to the suppliers to be finished or sold.
Another attraction for the suppliers is that there are many finishing farmers keen to get their hands on 100kg animals with beef prices at high levels.
Similarly, the profit-sharing model works well for Maatua Hou.
Calf rearing is a fickle business with operators coming and going because of the juggle between balancing costs and returns. The temptation is to reduce costs when things get tight and it’s often feed, but that can lead to disease pressures and Maatua Hou’s owners wanted no part of this risk.
By sharing some of the costs and eliminating calf buying, they can run a stable business that suppliers can count on being there next season.
Booker said managing calves wasn’t a simple business and the support of suppliers helped them do a good job.
“The philosophy has evolved to now where we work with the dairy farm supplier ahead of the season to know what practices they are completing on their side of the fence and what they are doing with the management of their cows coming into calving and the management of the calves within the pens. So we almost know the two-week history of these animals before we receive them. Knowing their history and the quality of the animals at 10 days old is so important for their early growth.”
He can see the day when this level of traceability and quality assurance is rewarded by the market with extra financial returns.
This can be seen already in the industry with programmes such as Silver Fern Farms’ zero carbon beef, and several premium wagyu rearing pathways and can only be expected to increase.
In the future, feed additives in the rearing process might provide greenhouse gas benefits, he said.
For example, colostrum checks are already being carried out in blood tests to make sure wagyu animals get a good start and Maatua Hou’s owners have begun talks with suppliers to introduce this among their calves as well as other health checks.
LIC introduced a “beef print” tag this year with these animals able to have lifetime traceability with an ID number, including its sire parentage.
They’re hopeful that dairy-beef cross calves will eventually become available with proven sire attributes of feed conversion efficiency - an asset for any rearing and finishing business putting good weight gains on calves.
They continue to be open to more innovation and are watching with interest the progress of walk-over weight scales. The scales are dropped off in paddocks next to a salt lick or water so mobs are constantly weighing themselves for faster feedback on weight gains.
Encouragingly, scientists have indicated they want to work with them in the calf-feeding field, perhaps impressed by their appetite for innovation. Helping this cause has been Maatua Hou winning the Innovative Farming silverware at the Beef + Lamb New Zealand Awards this month.
They rear between 200 to 600 calves. In the first two years, it was at the upper end, but they’ve reduced it this season.
“This year we’re doing 200, by design and management of labour. The model we’ve created this year is: do less numbers and do them better,” Booker said.
He said the plan was to perfect this so they could replicate it next year with more calves and supporting staff.
So far this season they haven’t lost a single calf.
Kelly said the land area could handle a lot more calves - as many as 1000 - and they bought the land with the intention of doing that.
“We’ve got great team members in Kim and Ali who live on-site and manage the property on our behalf. Ali travels to Ashburton for work, while Kim balances the calves and a young family. That works really, really well so this season we’ve built that 200 around her capabilities. We’ve got the options of doing it lots of different ways, but that suited this season.”
Their calves come from heifers in their first mating and early calving mixed-age cows that dairy farmers don’t need replacement calves from. The calves arrive on average at seven to eight days old. This means they can remain on whole milk for longer after the initial colostrum feed.
Maatua Hou’s owners go to the farms to check out their health and with the agreement of the suppliers might arrange to delay the pick-up of smaller animals so they can continue on milk for a few days.
They pick them up on trailers, 30 to 40 at a time, themselves to ensure their travel times are reduced and drop them directly into their pens to minimise stress.
“So there’s two unconventional things working here,” Kelly said.
“Conventionally, dairy farmers want them gone at four days and not five days or three days so the logistics of that is challenging and the difference between that calf and its vigour at four days and eight days is quite remarkable. So that has a big benefit for the next two to three weeks - it’s up and away so much better.”
Secondly, they ensure the calves come from salmonella and rotavirus-vaccinated herds. This builds immunity and helps provide a layer of protection for both the calves and rearers.
He said the resulting weight gains put on by calves made this the best way for both suppliers and the rearer.
Fed once a day, the weight target is for the calves to gain 600g a day with this increasing as they get older.
They are weighed on entry, averaging 35kg, and at the one-month stage on September 1 had reached an average of 51kg and at seven to eight weeks old were 68kg. By the time they leave after 60 days of grass-only feeding in January they’re at 120kg.
In the past they’ve gone back to suppliers, finishing farmers or the open market, but this year they’ve all been contracted back to suppliers at an agreed date and rate. Knowing that they’re already sold takes the heat off them.
With only 200 calves there’s no shortage of pasture at Maatua Hou and they’re well-fed.
When the calves exit, the grass continues to provide an income. Last year silage was grown and winter cows were grazed which helped to keep the pasture in check so it was ready for calves to make their transition.
The business owners don’t pretend to have perfected their model and expect it will be tweaked for some time to come.
They want to gain confidence by locking in the right staff-to-calf number ratio and cash flow per calf.
Kelly said the group believed it was better to learn in a group and equity dynamic on a small landholding than wait until they had enough equity to buy a 200-ha business.
They all come from rural backgrounds and are enjoying the satisfaction of owning a business at a young age.
Booker said they’d learned that by far the most profitable way they could run this property was by duplicating this year’s model with smaller numbers and increasing that to 600 calves.
Running a calf-rearing operation with valued employees was a much different proposition than owner-operators or a “Mum and Dad” team running the block, who might not put a dollar value on all of their hours, he said.
“We will get there - we will figure it out eventually, what the magic number is,” he said.
For the moment the focus was on making Maatua Hou the best it could be, but there had been talk of extending the operation even beyond its site and perhaps one day franchising the model.
“The key goal here is if we can cement ourselves in something that works on a small scale then maybe it’s got future growth, whether that’s here or we can duplicate any success or partnership we have. We could ramp up this business and look at staying together with this group by buying into a bigger business.”
Todd McClay, Wayne Langford, Hamish Marr, Dr Jacqueline Rowarth, and Chris Russell.