Two multi–million dollar dairy conversions at Kikiwa and Dovedale are expected to be completed in time for the new milking season.

The larger of the two is a partnership between the Todd family, of Opouri Valley, and the Nicolls family trust, which owns the Birchlea property at Kikiwa, where the 260-hectare development is well advanced.

The former sheep and beef farm, which recently has been used for dairy grazing, is being converted to initially milk 600 cows twice a day.

Paul Todd said his family had leased the land and was providing the stock, labour and the dairy expertise, while the Nicolls were paying for converting the property which included building a 54-bale rotary cowshed, feed pad, an effluent-disposal system and laneways. His son Sam, who lived nearby, would manage the venture.

Mr Todd, a former Fonterra Shareholders Council representative for Tasman and Marlborough, who has run a dairy farm in the Rai Valley for 30 years, said he had been looking around for a suitable property in the top of the south for several years.

"What we are really about is trying to provide a pathway into farming for our children, so you have just got to find a way they can build some equity and it's an opportunity scale up."

Finding a big enough parcel of land had been difficult, but the rolling Birchlea property appealed because it had been used as dairy grazing for the last five years, and much of it had been regrassed by the farmer who had previously leased it, he said.

"It had up to 1200 cows in winter on crops.

"That's why we got excited about converting it, and there were a number in the Nicolls family who had wanted it in dairy for a long time but never had the capital or the expertise.

"So leasing was a good option and we were quite happy to go into partnership. There's a lot of investment going in from both sides."

Mr Todd acknowledged that Kikiwa, at 600 metres above sea level, was not the easiest place to run cows, particularly without irrigation.

To get round the 120-day winters where it snowed three or four times a year, they had leased a runoff block next door where they could also grow crops.

The feed pad would allow them to take the cows off to protect pasture and they would be fed a supplement-rich diet including meal and molasses.

They would use a similar intensive feeding system to what had proved successful at their home farm in Opouri Valley, where their 375 cows had this season averaged 500 kilograms of milksolids each, with supplements providing a third of their diet.

Although there was no natural underground water source to use for irrigation, about 80 hectares would be able to be covered from a large pond using a gravity-feed effluent system, Mr Todd said. They would start off with 600 cows but hoped to expand that to 700.

Mike Nicolls said the family, which had owned the property for more than 90 years, had always looked for fresh opportunities to make it pay and were excited by the move into dairying.

"Over the years we have tried various things. Initially, it was firewood, then sheep and beef, goats and tree crops."

Dairy grazing had convinced them that the farm could milk cows profitably, he said.

The venture would hopefully help them maintain the other half of the property, which include 200ha of regenerating native bush "which we would like to keep because the environmental side of things is pretty important to us".

The project had gone smoothly so far, although installing an effluent system to meet new environmental standards had cost them an additional $150,000, he said.

It included having a pond big enough to store three months rather than one month of effluent, and a feed pad with a concrete base-and-wash system.

"It has really pushed the price up."

The other conversion at Dovedale being carried out by Brent and Michelle Riley is also not on land traditionally seen as suitable for dairying.

Although the 160ha former beef farm has recently been used as dairy support and for winter grazing, half of it hill country and subject to drying out in summer.

But the Rileys, who have owned the property for 10 years, plan to overcome a water shortage by greatly expanding an existing dam so they can irrigate.

Mr Riley said they had resource consent to increase the dam's capacity from 80,000 cubic metres to 300,000 cu m.

The wet summer had prevented them from making a start but they hoped to begin later in the year, he said. Once finished it would take anywhere from three months to a year to fill.

It would mean it took longer to get up to full production, but they were on track to start milking 480 cows in July, Mr Riley said.

A 54-bale rotary shed had been completed, and fencing was under way.

Effluent would be stored using a two-pond containment system and then pumped out through the irrigation system, he said.

"We haven't had too many hiccups and have had good co-operation from our contractors."

While the development was "not for the fainthearted" and had been "very expensive", they had saved money by using cows from their two other farms in Golden Bay, where they milked 900 stock.

Despite the recent drop in the milk payout and forecast, he believed the industry had a very bright future provided it was managed well.

"At $6 (the forecast) it will be tight but it is on the cautionary side and I think there is some upside."

Mr Riley said managing the property – half of which was too steep to use a tractor – through summer would be the biggest challenge and require adopting different management techniques.

- © Fairfax NZ News