What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
Northland dairy farmers have benefited from the Northland Dairy Development Trust (NDDT), a joint project by Fonterra and the Northland Agricultural Research Farm (NARF). The findings are said to have relevance for other regions.
The independent study, by agribusiness analyst Nimmo-Bell and Company, estimates the NDDT and the Northland Agricultural Research Farm have contributed at least $300 million to the Northland economy.
It assessed six projects, including a split calving trial in the late 1990s, endophyte, mastitis, nitrogen and stand-off pad trials and a recently completed kikuyu trial.
The total net benefit from increased productivity after allowing for the costs of the research is said to be $315.1 million; this represents a net benefit ratio of $76 per $1 spent -- an average return of $162/ha/year for Northland dairy farms.
NDDT was formed in 2006 to help Northland farmers get funding for research. The farm can run trials on up to three farmlets with up to 80 cows each. This gives enough scale for robust comparisons, the analyst says.
Founding NDDT trustee Kim Robinson says the trust knew the work was "immensely valuable to the industry, so it's nice to get that validated independently".
"[Importantly], the research projects we take on are all farmer driven; they are in response to real onfarm challenges that farmers face."
Nimmo Bell principal Brian Bell says the study was intended to show Northland farmers how much the research has added to their incomes, using specific examples.
The benefits were assessed only north of Auckland; the impact of the split calving and kikuyu work in particular, further south, has also been significant but is not included in these figures.
"There are wider benefits to farmers nationwide. Certainly, with the steady march of kikuyu south, managing that is going to be an increasing task for farmers," Bell says.
Robinson says the four largest projects on the research farm – split calving, endophytes, kikuyu management and farming without inputs in variable climates -- have addressed issues originating in Northland, "but these are spreading down the country as climate change occurs".
Fonterra's head of cooperative affairs for Northland, Eric Morrison, says dairy farming in Northland brings unique challenges. "So, having research specific to Northland supports our local farmers to make better informed decisions on their own farms," he says.
Bell says the NARF farm closely resembles a commercial farm so farmers can see how it could apply to their farm.
"When putting science-based research together you're trying to look at the challenges facing farmers generally and to undertake research which will give farmers the greatest dollar return at the lowest cost," says Bell.
"These benefits have been distributed over time and that gives confidence that the NARF farm is still relevant to farmers in Northland."
NDDT relies on sponsors and funders. Its new website allows farmers and industry professionals nationwide to stay up-to-date with historic and the latest onfarm trial results.
