“I just knew that this one was going to be the right one for us,” Jeremy says.
“The landowner wanted a fair market price and was prepared to give a young couple a go, which was great.”
Jeremy prepared his budgets for the bank. He did his figures conservatively, based on what amounts he would be able to buy and sell stock for.
“I naively thought, ‘I’ve got all the numbers here, I know this will work – surely they’ll lend me the money’ but it was harder than that because I didn’t have any track record.”
The farm was a good fit for them and the budgets stacked up but without any financial security Jeremy and Gina did not fit the credit criteria. So Jeremy’s family signed on as guarantors, putting their security behind the loan.
The couple borrowed as much as they could to buy stock and plant and started trading sheep and cattle, a policy which suited the summer dry area. The goal during their first year of lease farming was to break-even. Despite the 2007 drought, followed promptly by a flood, they achieved it.
The flood wiped out and damaged fences. This was a good test of the relationship between the land owner and the lessees, which Jeremy says was passed with flying colours. They worked together to get the repairs done but without a good relationship this type of event could cause problems.
During their second year of leasing Jeremy started doing some part-time consultancy work, which added to their income. In 2010 they bought 2.5ha off the lease farm and built a house, ensuring a secure base for their young family no matter how their farm business evolved.
“Leasing is here today, gone tomorrow.” Jeremy says. “There is no assumption that it will carry on.”
They took on their second lease – 35 minutes’ drive away on the Tukituki River behind Havelock North – in 2010. This 400ha block was a chance for the Sunckells to grow their business and increase scale.
The landowner was happy to provide some labour on the farm. He remained living on the farm and saved Jeremy from having to travel each day or be there every time a stock truck arrived.
“I had someone I could work with and he was fair.”
The Sunckells had looked at a lease block in 2012, suitable for sheep breeding but at the time ewes were worth $250 a head. That made it too expensive to take on that particular lease.
In 2013, when breeding ewes were more affordable Jeremy was able to stock the second lease block with 2500 ewes (mated to a terminal sire) for $90 a head.
The couple took on their third lease in December 2013 – 300ha behind Tutira in northern Hawke’s Bay. The breeding block is a two-hour drive from their home but adds diversity to their business.
“In the perfect world I’d love our 10,000 stock units to be in one chunk but we haven’t had that opportunity so we’ve had to make the best of the opportunities that have come along,” Jeremy says.
An agreeable business
Bulls summer graze the back boundary at Maraekakaho, working like cows to clean up the paddocks.
Any stock still at Havelock North by December will be transferred to the Maraekakaho home block.
With two lease blocks in summer dry areas, Jeremy tries to gain an advantage by buying and selling at opposite times to the majority of farmers.
“We get dryer earlier than most so we’re selling earlier than many others and buying stock further into winter than most.”
Jeremy says risk management plays a large role in his business.
“If I’m taking a punt on the weather I need a greater reward but I’ve never put us in the situation where if we had a drought it’s going to sink us.”
Weighing the market
Jeremy Sunckell considers every opportunity on its potential profit, not production.
“We have to make a profit because we have no underlying capital gain.”
Jeremy uses Farmax for all his feed budgeting and Cashmanager for financial budgeting. He always carries a calculator and spends a lot of time planning.
Jeremy asks lots of questions and uses all the market information he can access, even using his own spreadsheets to analyse the markets and what his next move will be.
“It’s just about trying to read markets. In trading that’s the difference between making money and not making money.”
Measuring and monitoring is also an important part of the trading business for Jeremy.
He weighs trading stock regularly, tracking how much weight they have gained since the last weighing and what their predictive weight gain should be. He compares that information with what is happening in the market and onfarm, to analyse the best time to sell the livestock.
It is not a perfect science but it works pretty well and Jeremy enjoys the mental challenge involved.
“If I think the market is going to drop more than the weight I’m going to put on them, I’ll sell them earlier.”
Jeremy said it was important to be disciplined in the spending on the lease farms. He and Gina do try to exceed the expectation for the lessee maintain the asset but they can’t afford to invest too much money into a farm they don’t own.
