Taking risk out of return

JON MORGAN/The Dominion Post

SPREAD THE LOAD: Ian and Jason Easton. 'We've spread the risk across a wide range of produce so we're not reliant on one seasonal income.'

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Ian and Gayle Easton have learnt the hard way to be belt-and-braces farmers. At the time of the 1987 sharemarket crash, they were the biggest cropping farmers in New Zealand, with 400 hectares of wheat, barley, maize and potatoes on two freehold farms and other leased land. Then their world fell apart.

The company that held all their debt changed hands in the aftermath of the crash, and the new owners called in their money. When the Eastons couldn't pay, the company seized all the assets it could find.

Devastated financially and emotionally, they accepted this as a harsh lesson that they had to farm more conservatively.

They gradually built up their farming operation again, only to see all their crops, worth $1.4 million, wiped out by the 2004 Manawatu floods.

Four years later, now farming with son Jason, they are even more cautious. Their 323ha of river-silt land beside the Manawatu River at Shannon is perfect for cropping, but they have nine different uses for it.

In the past year, they have run cattle and sheep, made grass silage and planted onions, broccoli, potatoes, wheat and maize for feed and silage.

"We won't get caught again," Mr Easton vows. "We've spread the risk across a wide range of produce. It means we're harvesting only small amounts, but it gives us good cashflow all year round and we're not reliant on one seasonal income."

He worries that the business and farm failures of the late 1980s economic downturn will be repeated. "The same hype has taken over. People who have been encouraged to borrow too much are now in vulnerable positions. I hope I'm wrong, but there could be heartache and grief to come."

Now 59 and recovering from hip surgery, Mr Easton clearly has a youthful energy. His words spill out in a rush and he cannot sit still for long. The main outlet for this appears to be a passion for motor-racing. He has been racing all manner of cars for 40 years and has no intention of stopping. Jason, an international motorbike racer, is following in his tyre tracks.

Mr Easton speaks his mind fearlessly, a trait that, he admits, may have at times rubbed people up the wrong way. But he does not apologise for that.

A winner and then a judge in the farm-environment awards, he thinks that award judges are not hard enough.

"Constructive criticism never goes amiss," he says. "I might come across as being quite rude, even offensive, but it is meant for the best."

Mr Easton grew up on the family farm at Shannon and, after time as a freezing worker, shearer and haybaler, saved enough to lease a 125ha farm to graze his own cattle and ram lambs for a Cheviot breeder. Then he began to grow grain crops, and built big silos to store them.

His big break came when, in his early 20s and newly married, he took on a contract to break in 2000ha of flax land for the Lands and Survey Department. The land, once a man-made swamp inside a big, curving bend of the Manawatu River at Moutoa, was safely behind stopbanks, but the hardy flax, a lot of half-buried driftwood and even some lost railway irons remained.

He used cattle to break down and chew up the flax, and built a big stumping machine to grind up the wood. He sowed the new land with a crop, the only payment he received under the contract. It took him 16 years to clear the land, which was then converted to dairying by the government farmer, today renamed as Landcorp.

In the meantime, he also grew wheat on reclaimed Lands and Survey land in the Chatham Islands and, closer to home, at Tangimoana and Raumati.

By the mid-'80s, he and Gayle owned two freehold cropping farms and had built up a multimillion-dollar growing and trucking operation.

But then they ran into trouble. A neighbour's mistake caused a flood that cost them a $580,000 in crop losses. They thought they were fully insured with the United Wheat Growers' government-backed compulsory insurance scheme. But the company found an escape clause they had overlooked. Their debt was to seed company Hodder and Tolley which, embarrassed by the insurance mix-up, allowed it to ride until the Eastons could harvest another crop.

Then came the sharemarket crash. In the shake-out that followed, Hodder and Tolley was bought by Australian- owned Elders Group. It demanded payment, giving the couple just two hours to pay a debt that had, with interest rates of up to 36 per cent, blown out to $2 million. When the deadline was up, Elders seized everything that was not nailed down.

Not satisfied, it also wanted the farms, but the Eastons had tied them up in leases to other farmers. A bitter and messy dispute ensued, until it was finally resolved two years later.

Perhaps surprisingly, Mr Easton does not blame anyone but himself. "It may have started as someone else's mistake, but I let it slide. I should have found the money to pay that debt as soon as it came up, but I didn't."

He says he learnt a valuable lesson. "Don't put your problems off to another day. They will come back to haunt you."

The consequences were life-changing for the couple, who by then had two young children. They had to start again to rebuild their business, but with shattered confidence in their abilities and feeling that they had lost their good name.

A truck and digger away on the East Coast helping in the Cyclone Bola cleanup had escaped Elders' clutches, and Mr Easton sold the digger and brought the truck back to be the foundation of a new grain-carting business.

But they were not the same farmers. Their entrepreneurial spirit had been broken. "We became very gun shy and much more conservative," he says.

"We stayed close to home and put our heads down."

However, another cruel lesson still had to be learnt. By 2004, they were back in the black, reliant on just a few crops and only one buyer for potatoes, the McCain Foods plant at Feilding.

Then a 100-year flood swept down the river, a spillway stopbank broke and the 2000ha Landcorp farmland that Mr Easton and the cattle had created was swamped. Caught up, in a tucked-away corner of the flooded land, was the Eastons' farm and their $1.4 million potato, onion and squash crops.

The crops were ruined. Mr Easton and others sued the regional council, responsible for the stopbank's upkeep, in an effort to force it to pay for his losses. The case is still in the courts.

Mr Easton says the council is following its insurance company's advice that liability can only be determined by a court. "That's disgraceful," he says.

"If the boot was on the other foot and we had damaged their property, or breached a consent or a regulation, Horizons would have pursued us rigorously because they would say they had a duty to their ratepayers. Well, we are ratepayers too."

The loss was a serious setback and they were forced to go deeper into debt to farm their way out of it. A further blow came when McCain closed its factory. But by then, they had spread their risk and diversified into other crops and stock. Fattening sheep and cattle has proved to be a lucrative earner.

This spring, they have 160ha shut up for grass silage, they have planted onions, winter and spring wheat crops and summer maize, and have 40ha ready for planting broccoli and more for potatoes and squash. They have reduced their cattle herd to 21 and will probably add more cattle and sheep in February, depending on the market. They grow only on contract.

The biggest challenge now for the family – Jason is now a shareholder in the business – is to lift production from their land in the face of increasing costs. "We have to work harder and plan smarter – play the weather and the markets," Mr Easton says.

Changing to dairying is not an option. "It would be putting our eggs into one basket, and we won't do that again." And he doesn't want to be part of an industry that has a "deserved" bad reputation for pollution.

"They have given all farmers a bad name, which is unfair on environmentally safe croppers like us."

Mr Easton says that even in their darkest days, they never considered turning their backs on farming. "We come from a long line of farmers and we want to be here for ever," he says.

"You can't just chuck the towel in. You have a responsibility to the generations still to come. And anyway, we didn't know what else to do. We're farmers and we can't change that."