From small beginnings

Last updated 13:09 26/02/2013
Thomas Clinton
BARRY HARCOURT/Fairfax NZ
Premiere Dairy owner Thomas Clinton.

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Irish farmer Thomas Clinton is taking a back seat from steering his Southland-based business Premier Dairies. As he prepares to hand over the reins, he discusses the business of dairying in three countries and the competitiveness of dairying in Southland with reporter Collette Devlin.

Early in 2000, Irish farmer Thomas Clinton came to Southland to help a friend buy land and despite warnings from wife Helen not to buy any himself, he did.

Mr Clinton purchased two farms at Makarewa and is now one of the largest overseas investors in Southland.

At 15 years old, Mr Clinton knew he wanted to be a dairy farmer and left school early because it was not speeding up the process.

Spurred on by his mother's encouragement, he started to expand his business and his 38 acres (15 hectares) of land.

In 1961, he was milking six cows by hand and by 1983 he was milking 140 cows in a mechanised milking shed, producing 700,000 litres.

Any chance of further growth was removed with the introduction of the European Union's Common Agricultural Policy milk quota.

The policy held milk production at 1983 levels, which meant he was unable to milk an extra cow for 12 years.

That policy had a huge impact on dairy farmers of his generation, he says.

In the early 1980s he entered farming politics, cutting his teeth negotiating settlements with banks on behalf of farmers who were in too much debt.

He was elected president of the Irish Farmers' Association in 1987 and held the position for two years before he resigned.

"I leased a milk quota which was declared illegal at the time. The EU changed the rules six months later and allowed it," he says.

A savvy businessman, Mr Clinton made a significant investment in 80 acres of land in Ireland in 1992, which he says changed his life.

"I paid [PndStlg]145,000 for the land. I then sold 16 acres in 1998 for [PndStlg]640,000. I paid off my debts and made a profit," he says.

Mr Clinton's Southland property portfolio has grown significantly since his first investment in the region.

This was made possible by the purchase and sale of the Harvey Norman Centre in Christchurch, the profits of which he invested in his Woodlands property.

"There is very little doubt in my mind that our Woodlands property with 800 cows is easier to run than our operation in Ireland," he says.

His investments in Southland were some of the best and most enjoyable decisions in his life, he says.

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It took 39 years to grow his business from six cows to 170 cows to 1173 cows.

"It has taken 39 years to grow from 38 acres to 365 acres, in nine locations . .. suddenly owning another 956 acres in one property and knowing that we had the ability to increase that."

He believes the success of Premier Dairies in Southland is largely down to his daughter, Sarah, who ran it for the first three years, and John and Colleen Neustroski, who took over from her and helped him to manage it.

His son, Peter Clinton, who has been in Southland for two years, has progressively been taking over the management.

Mr Clinton would like to see more of the Southland community appreciate the contribution that dairying is making to the region.

He believes there are benefits to dairying in Southland compared with his business in Ireland but says there are also flaws.

"Southland has some of the best dairy grassland in the world, and the properties have scale and other beneficial factors including dairy infrastructure, farm input supply pipeline, staff available to work on farms, an excellent co-op that has a market for your produce and, dare I say it, you have a proper banking system."

Taxation is also at a reasonable level and there is no stamp duty and no capital gains tax, he says.

However, he believes problems do exist.

These include dairy farming no longer being competitive, the cost of urea is 25 per cent higher than in Ireland, machinery is on average about 50 per cent more expensive, while hire and ground work is also more expensive.

"The system of paying 150 per cent of a daily wage on a holiday and giving a day off as well is long gone in most other countries," he says.

He also believes medicines are controlled by vets in a "sham system" with costs attached.

He would like to see changes in New Zealand dairying. "I would like to see the cost of becoming a supplier to Fonterra dropping by half and I think Fonterra should pay for milk in the season that it is produced and have the dividend as the balancer."

He also believes Fonterra should produce a baby powder brand, and must enter the sports drink and ingredients business.

Mr Clinton does not like to predict the future of dairying but says some things are certain: "When the world population grows to 9 billion by 2050, the farmers of the world will feed them". Farming in Ireland

Average dairy herd: 62 cows.

Total milk production: 7b litres.

There has been almost no increase in the amount of milk allowed to be produced in the past 30 years. However, milk production is now expected to increase by 50 per cent by 2020.

Ireland, like New Zealand, exports almost 90 per cent of its dairy produce: butter to Germany, cheese to England, skim milk and whole milk powder to many countries in Africa, Caribbean, Central and South America, Middle East, Russia and Eastern Europe, with some premium cheeses going to the United States.

Baileys Irish Cream liqueur uses the cream of at least 100,000 cows, taking milk all year round.

Farms are scattered in several locations.

Too many old farmers and not enough successors identified.

A big switch to New Zealand grazing systems.

Average butter fat and protein is about 7.2 per cent cow yield of 5500 litres. Consequently, there has been a big swing away from the holstein cow.

A typical Irish dairy farm:

Summer milk - the same as Southland but with winter varying from two months in the extreme south to 5 1/2 months in the north. All cows are housed over the winter.

Premier Dairies' Irish farms:

514 acres owned

250 acres rented

14 locations

Milk quota 2.8 million litres

410 cows - almost all heifers

50 unit rotary

Grow 70 to 110 acres of maize under polythene.

120 to 170 acres of wheat or barley which is fed on the farm.

Meal feeding of 1.5 tonnes per cow per year.

Cow life expectancy is four lactations and improving.

Calving interval over 400 days, but improving.

Cows housed for about four months. Cows sometimes housed in very wet conditions.

Bull calves sold at one to two weeks for NZ$160 to $200.

Land, good productive, but heavy.

Starting to use jersey bulls as milk paid on A + B - C system.

Three fulltime employees plus son John who owns 60 per cent of the farm business and manages the entire operation.

Produces milk 365 days of the year, about 6000 litres per day over winter months and 11,000 litres per day at peak production.

Do most of own tillage work.

Do not cut own silage.

Spread own fertiliser.

Do all fencing and most repair work, including milking machine repair.

Farming in the United States:

Mr Clinton owned a one quarter share in two Irish owned dairy farms in the United States for four years, which he sold at a good profit.

They consisted of farms of 1400-1600 cows, which were indoors all year.

All calves and heifers reared off farm.

Milk yield 24,000 pounds, about 11,000 litres at under 7 per cent fat and protein.

Cow life expectancy three lactations - big problem getting cows back in calf.

A dry cold in winter and high humidity in summer.

Milking system - two eleven- hour shifts in 24 hours, cows milked three times per day.

Sheds have air cooling system in summer and water heating system in winter.

Could not use scrapers because of severe frost.

Diet based on corn silage with a huge range of grain and byproduct supplements.

The most exceptional is alfalfa, which is fed at the rate of up to one kilo per day.

Cost of investment in each country:

USA

Farms are sold on a single stall basis.

This includes: milking shed, silage yard, cubicle and meal shed, some calf sheds, machinery shed and large lagoon often up to two acres.

Most farms have some land but it is not essential.

Farms are changing hands at $4600 or NZ$5500 per cow space.

Ireland

There are very few complete dairy farms sold each year.

Farms are traditionally sold at one cow an acre.

Land sales are often as low as 0.5 per cent a year.

A complete dairy farm will range from 60 to 400 acres, with most in the 60 to 120 acre range.

They are almost all sold with a house and yard.

Price for a complete farm will range from [Euro]10,000 (NZ$20,078) to [Euro]15,000 an acre, depending on location, land type, condition of house, type of yard, milking facilities and size of milk quota.

About an average of [Euro]13,000 or NZ$26,101 a cow.

New Zealand

If New Zealand used the same criteria as Ireland and included the silage and wintering ground, it would need almost a hectare for two cows and rising heifers.

This amounts to NZ$18,000 to $20,000 a cow.

- The Southland Times

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