Whakamahi Rautaki - Our purpose in action

This section of the Annual Report is strategically focused and future oriented. It highlights the value the Āti Hau Group places on the taiao, our people, and how our tikanga and the way we work can help us farm better. It focuses on how we create value through relationships with others, extending beyond merely preserving or preventing the erosion of the values on which we base our business.

This section provides an organisational overview, setting the context in which Ātihau operates, including external factors such as economic conditions, the global pandemic and climate change.

It reports on how governance is supporting Ātihau to create value and details our strategy and resources before, finally, examining the risks and opportunities of the year ahead.

TOITŪ TE WHENUA

“Ko te pae tāwhiti, whāia kia tata, ko te pae tata, whakamaua kia tina." Draw the distant horizons closer and utilise well those resources already at your disposal. Nā Whakaari Rangitākuku Mete-Kingi

Key Strategic Projects

Hyperspectral mapping

In the winter and spring of 2022, hyperspectral imaging was completed at Waipuna, Te Paenga and Papahaua Stations in conjunction with Ravensdown and Hyperceptions. The agricultural mapping model has been researched, tested and developed at Ohorea and other farms over the past 10 years.

The technology is used for precise farm analysis. Using a plane with a hyperspectral imaging camera to capture data, the technology produces a profile of the whenua providing information such as soil fertility, ground cover (mānuka, pasture, or other native bush) and potential productivity.

This type of analysis will be significant for the future good management of our farms and their performance. For example, measuring and locating all stands of mānuka will enable Ātihau to stock hives appropriately for the area and manage mānuka into the future. In addition, having more accurate farm areas will help ensure we are feeding stock correctly.

Initial analysis has been undertaken on all the farms to measure and map pasture, mānuka, scrub, bush and the effective area of each farm, supporting us to grow ahu whenua performance. Further analysis will happen as funds allow to better understand soil fertility and other data.

Creating a sustainable honey business mapping

We received Ministry for Primary Industries funding under the Sustainable Food and Fibres (SFF) Futures programme. This funding was to investigate how our mānuka resource can best be managed in the long-term. Mānuka is a primary plant which colonises an area, allowing for other plants to establish. This secondary growth eventually overtakes and eliminates the mānuka. To maintain an intergenerational mānuka business, our resource will need to be managed as a crop, if left alone, the mānuka will disappear.

The SFF Futures programme will also consider how to minimise the reliance on sugar which is used as feed in winter and spring by using the nectar of other flowering species. However, it may be challenging to eliminate sugar feed altogether in our climate. During the last year, the research monitored flowering at Papahaua to understand the nectar profile of the area. The next step is to model this and identify what other plantings are required to reduce reliance on sugar feed and lower apiary business costs.

The research opens the way for potentially planting specific species in specific places for flowering and nectar, and for targeted management of pests such as possums and deer.

TOITŪ TE WHENUA

“Ko te pae tāwhiti, whāia kia tata, ko te pae tata, whakamaua kia tina." Draw the distant horizons closer and utilise well those resources already at your disposal. Nā Whakaari Rangitākuku Mete-Kingi

Key Strategic Projects

Exploring diversified investment opportunities

Wind power

An initial exploration of the potential for wind farming on our whenua was made at Tawanui Station, using a LiDAR system for measuring air speeds. Analysis based on current pricing for power showed the wind speed was not sufficient to justify further exploration of wind power at Tawanui Station at this stage. Investigations into wind farming potential have therefore been put on hold for now. Other sites with stronger wind may be explored in the future, and discussions about Tawanui could re-open if the right partners are identified.

Forestry

Work on planting new forest at Waipuna Station has begun, with preparation completed and planting scheduled. The new forest is being grown for carbon and rotational timber as part of our land use change programme, this is in line with our Statement of Investment Policy and Objectives (SIPO). The Waipuna Forest is the first tract of 1400 hectares of new forestry set to be planted across the breeding farms during the next five years as we look to make wise use of our resources, and to support future diversification towards income assets. The pines are being planted in areas that can be harvested.

Some of the carbon generated from the new forestry will be sold over the next 10 to 20 years, creating a source of funds that will be invested off-farm into cash-generating assets – an important part of rebalancing our asset base and delivering greater cash returns.

At this stage, no perpetual forest is being planted but this could be considered in the future, depending on how far the carbon market develops over the next three years following the central government consultation in 2023.

Release of carbon

The Government’s Fixed Price Option (FPO) announced two years ago created an early emissions return opportunity. To capitalise on this opportunity, an internal forestry trust was established and we removed some of the 400 hectares of Papahaua Forest from the emissions trading scheme.

The above exercise resulted in a surplus of 77,000 obligation-free carbon credits. Some were sold and the surplus reinvested into the whenua to continue priority work required to lift the farms’ performance. About 30,000 credits remain to be released at a later stage.

Tourism

There has been further investigation into the opportunity for tourism. We have developed a business case and we know that a farm walk and hunting operation across our whenua would be profitable and help to create opportunities for uri. Work will be done over the coming years to define the business case further and identify investment partners. Applications for funding support to establish a tourism venture are in progress.

TOITŪ TE TANGATA

“Huriwhenua: Te mōrehu whenua, te mōrehu tangata." The remnants of the land must care for the survivors of our race. Nā Taitoko Te Rangihiwinui (Major Kemp)

Key Strategic Projects

Awhiwhenua Apprenticeship Programme

A review of the Awhiwhenua Cadet Programme has resulted in a decision by the Board not to continue the scheme in its current form for the 2024 calendar year. Some of the challenges identified included higher costs relative to the number of cadets transitioning into fulltime employment.

The programme will be paused while decisions are made about how it can be redeveloped to deliver on-the-job training programme and better value for money. The aim is to find a solution that continues to develop kaimahi for the farms and opportunities for rangatahi and uri on the whenua.

Responding to the survey: He aha ōu whakaaro mō te koporeihana o Ātihau-Whanganui?

The staff engagement survey, carried out in the previous year, focused our efforts on responding to the feedback from our kaimahi as we look to ensure staff are fully engaged and thriving.

The staff engagement survey, carried out in the previous year, focused our efforts on responding to the feedback from our kaimahi as we look to ensure staff are fully engaged and thriving.

As a result, salaries have this year have been benchmarked externally to ensure we are paying fairly. We have also concentrated on increasing connection between the various teams across the Group. This has included meeting socially to create more connections within and between teams, and spending more time aligning our team goals and how we measure success.

The leaders of all teams, including the senior leadership team, have undertaken extensive leadership training. The training has included leaders completing personality tests and working through an externally facilitated programme of leadership development.

Kaimahi housing

An audit of kaimahi housing was completed as part of the Taiao programme requirement to bring all of our houses up to standard.

We have more than 40 houses, and while these were all insulated more than a decade ago some now require re-insulation.

The first stage has involved an audit against the Healthy Homes New Zealand standard and any weathertightness issues.

The focus for the year ahead is to bring insulation, ventilation and heating up to Healthy Homes standard.

TOITŪ TE MANA

“Toitū te kupu, toitū te mana, toitū te whenua e." The permanence of our culture is reliant on the permanence of our authority and land. Nā Ārama Tinirau

Key Strategic Projects

Honey supply agreement

We have been working this year to develop long-term supply agreements with industry partners for our honey. The year has focussed on exploring new relationships with potential buyers, building on existing relationships, and securing potential sales through some long-term suppliers.

The development of a long-term supply agreement with our main honey buyer, Manukora, will see us committed to selling honey to Manukora every year at a fair price, and a corresponding commitment from Manukora to purchase honey. This is an exciting, high-value partnership in development. It is focussed not only on a commercial relationship but a partnership

approach which includes an interest in how the bees are cared for, and working together for the betterment of both parties, Manukora and Ātihau.

An immediate benefit of the developing partnership was the purchase by Manukora of all our stockpiled 2019, 2020 and 2021 honey at book value. This leaves honey stores in a good position, with stocks from this year and last year only – none older than 18 months.

This year's discussions have identified other potential strategic partners, and growing these relationships may eventuate in further long term supply agreements.

Winding down direct-to-market sales channels

Direct-to-market sales of Ātihau meat and honey products are being wound down this year. The decision to withdraw Ruapehu Angus and Awhi Honey from direct sales reflects escalating cost-of-living pressures on consumers and ongoing cost pressure on the business.

Domestic sales of Ruapehu Angus, supplied to New Zealand’s hospitality industry through our partner Foodchain, could not compete with the prices our processing partners were able to generate in international markets. In contrast, the cost of securing sales through online advertising made the sale of Awhi Honey through Amazon unprofitable.

Taiao Workplan

A significant workstream this year has centred on the Mauri Compass framework, an environmental assessment tool for measuring the quality of our waterways. The Mauri Compass incorporates both mātauranga Māori and western science.

Mauri Compass co-designer Ian Ruru has been training our staff to apply the cultural monitoring tool to waterways at Waipuna and Te Pā Stations. The initial focus is learning how to use the Mauri Compass effectively before eventually rolling the programme out across other catchments.

At the same time, the team has started to use the Mauri Compass to gather baseline data that will present a picture of the current

state of the waterways. The measurements include a range of indicators such as water quality, tuna and kōura populations, other life in the stream and an assessment of cultural indicators. Capturing baseline data is expected to be a three-year project.

The work is being led by our Taiao Manager Courtney Haywood with designated staff at Waipuna and Te Pā Stations responsible for water quality monitoring at their properties, including counting and weighing tuna and kōura. Engaging our farm staff in this way is already leading to new thinking about how changes in practice could improve water quality and habitat.

The next 12 months will refine the use of the Mauri Compass on the Waipuna and Te Pā Stations. The tool is expected to be rolled out to other catchments over four years.

Efforts ramp up to reduce greenhouse gas emissions

We have been successful in our efforts over the past 12 months to accelerate the rate of cattle finishing to avoid wintering cattle for their third year. A concerted effort by our finishing farms means we will end the year in review with only 200 cattle wintering over for a third year compared to 800 the previous year. Getting this age group off our finishing farms earlier will reduce our methane gas emissions by a very significant 5%.

This approach will also make parts of our finishing farms available for alternative uses. With funding from the Ministry of Primary Industries, a consultancy group was engaged to consider alternative land use. After an extensive search, two options recommended were wheat and barley cropping.

A small trial of barley will be planted next year. Although it provides lower return than wheat, barley grows faster and therefore carries less risk. Wheat may be trialed the following year. The cropping trial will focus on feed grain, potentially saving on the cost of grain we buy in for feeding on the dairy farm.