20 FARMERS WEEKLY – farmersweekly.co.nz – December 14, 2020
Land Champions
LOOKING AHEAD: Southern Pastures executive chair Prem Maan says he would love to see how the 20 farms his company runs will fare in 20-100 years’ time.
Dairy company in for the long haul Gerald Piddock gerald.piddock@globalhq.co.nz PREM Maan is playing the longterm game when it comes to sustainable dairy farming. The Southern Pastures executive chair and company co-founder wants not only to sustain the 20 farms the company owns in south Waikato and Canterbury, he wants them to improve them too. “I would love to come back and visit these farms in 20-100 years’ time as I am convinced they will become more and more stunning – but I may need to do time travel for that,” Maan said. Auckland-based Maan says his key ethos is that when he is gone, the company would have left behind a positive footprint on the whenua for future generations. His connection to the dairy industry goes back before he, wife Lynette and a dozen others set up investment company Foundation Capital in 2004. Prior to Fonterra’s creation, he helped raise capital from European investors for the NZ Dairy Group while working for Deutsche Bank. “I was selling the NZ dairy industry story to European investors in 1997, I was already exposed back then in terms of trying to sell the NZ dairy industry story to overseas investors,” he said. “So, I already had experience
in my investment banking days of successfully selling the New Zealand dairy story.” When the GFC hit in 2008, he says he saw a unique opportunity to establish Southern Pastures. “We had always looked at the farming industry, but we were looking at buying a farm where we could show a cash return, and until the GFC came along you couldn’t show a cash return out of dairy farming because at that stage, dairy farming values relative to milk prices was too high,” he said. “When the GFC came, farm values fell and simultaneously, milk prices started to go up, so that made it the right climate to set up the fund.” Nineteen of Southern Pastures’ farms are dairy farms and there is one dairy support farm. Maan says they chose those areas based on long-term climate change modelling. “We’re long-term investors and we looked at long-term forecasts for climate change and we feel those areas are reasonably safe. Those areas are able to potentially withstand climate volatility,” he said. This was 10 years ago, and long before climate change was mainstream, popular thinking. “We look at 50 years when we analyse things,” he said. Buying the farms allowed the company to begin with a blank piece of paper because it allowed them to set up Southern Pastures
with the right principles from the beginning. Every farmer who has subsequently joined Southern Pastures has to buy into that philosophy, he says. “If they don’t agree with what we are doing, then they won’t join us. People who do join us, buy into our ethos and that makes it easy for us to walk the talk,” he said. When they first bought their farms, Maan says they were horrified at the high staff turnover on them. Staff were not even staying for the full season. “Now, we have people who have stayed with us for 10 years and the average turnover at the staff level is about three years. We’re quite proud of the fact that we’ve created a culture that people want to stay with us,” he said. The farms in south Waikato that were bought were all forestry conversion farms. He knew the soils could all be improved. Earthworms were introduced to the farms because the farms’ acidic soils contained none of these insects. “We knew there was a lot we could do to those farms to improve them and improve the value,” he said. He wants others in the industry to follow their farming philosophy. Farming is the country’s future and he is happy to share the company’s knowledge with others. Maan is very optimistic about
the industry’s future. There are few places in the world where cows can be fed outside and fed largely on grass and as a result, had superior milk quality to other dairy exporters who largely farmed their cows indoors. “The NZ milk pool is never going to expand again. It is now a finite milk pool in the world,” he said.
We’re long-term investors and we looked at long-term forecasts for climate change and we feel those areas are reasonably safe. Those areas are able to potentially withstand climate volatility. Prem Maan Southern Pastures “The world’s demand for milk was increasing, so we’ve now got this finite pool of milk and it’s going to become a rarer and rarer commodity, so the challenge for Fonterra and the other milk processors is to start demanding a premium for it.” If these processors are smart and could leverage NZ’s grass-fed story and its nutritional qualities compared to other exporters from
other countries and they could turn milk into a value-added product not a commodity. He says it will also help buffer the industry from any potential threats from lab-grown or plantbased milks. “Provided we stick to our free-range farming systems, we shouldn’t see that as a threat. But the intensive barn systems will see that as a threat,” he said. Southern Pastures has taken this approach with its 10-star certified values rating, turning its products into ultra-premium products. Pushing others in the industry down a more sustainable route came down to using a carrot rather than a stick. Maan suggests a solution is to pay farmers more for their product or give them carbon credits if they used fewer inputs and increased their soil carbon. Rather than expand, the plan for Southern Pastures is to keep developing the existing farms and extract even more value from the milk by growing their export market. Its recent purchase of Lewis Road Creamery will help it do that, he says. “In Lewis Road, we saw a muchloved Kiwi brand that we felt we could take overseas,” Maan said. “Lewis Road brand was a good fit because both of us want to take NZ dairy up the value chain – not chase the commodity race to the bottom.”
