Representing 9500 shareholders, PKW owns 20,000ha of productive Taranaki dairy land (16,000ha of which is perpetually leased) and milks 7700 cows on 2500ha, employing a range of sharemilkers and managers. It also owns a range of other business interests in crayfish, forestry and commercial property and diverse investment opportunities.
The objective of PKW is to be a long-term kaitiaki of the land while maximising productivity and profitability for shareholder benefit. They also plan to buy back perpetual lease land as it comes up for sale to expand their agribusiness assets for the next several hundred years.
General manager Ahuwhenua (farming) Louise Cook said they had looked at the volatility of revenue within the business and found three main risks – the drop in revenue from the falling milk price, the massive climatic risk across their portfolio of 16 milking platforms and 10 drystock blocks, and cost inflation within the business.
“While we cannot mitigate some of the risks to our business, we can affect how we are positioned to cope with those risks,” Cook said.
Across the properties the business is shifting to low-input systems with minimal stocking rates allowing for five tonnes drymatter (DM) a cow each season with stocking rate set based on the measured average grass growth rate equating to production of 380kg milksolids/cow/year.
“We can add in more feed on a good payout year but in the low years the costs associated with the extra cows in higher stocking rate operations are extreme.”
“Low stocking rate and low input is more flexible in a low-payout environment, making our business more resilient,” Cook said.
Adopting this policy has seen a material shift with a $1 million lift in profitability by changing systems to fit with a low to mid $4 milk price.
“We are minimising outgoings and spending as little as possible while still covering basic farm costs without eroding future farm profitability.”
“We have to position ourselves to take advantage of opportunities while protecting our business in this season.”
Another threat is the undeniable evidence some of PKW’s farmers are enduring longer drier periods, Cook said.
A terrible spring across Taranaki province followed by a prolonged summer dry period reduced grass growth by 33% on some farms across the season, from 14.3t DM/year to 10.9t DM/year, causing a rethink of grass growth patterns and milk supply.
“Some of our farms might be more appropriate for winter milking because they grow more grass in the three months of winter than the three months of summer so we are looking for the ones that fit for winter milking supply.”
The other opportunity to look at is organics. Cook said with a group of multiple properties there was flexibility to convert a number to organics while keeping conventional properties to mitigate risks.
“With an integrated dairy business we can also grow organic feed and rear our own organic dairy young stock as we need it and use it within the group.”
The PKW vision is to deliver meaningful opportunities to shareholders, but employment opportunities within the group are limited.
PKW actively seeks to provide opportunities through supporting Taranaki Māori businesses alongside employment training opportunities for Taranaki Māori through joint ventures and scholarships to attain tertiary qualifications in a variety of fields relevant to the future of PKW.
