News and Information for Lone Star Farms

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1 News and Information for Lone Star Farms October 2012 IN BRIEF By Tom Sturgess Welcome to our new and revitalised newsletter. It is good to have it up and running again. I am pleased to share a little perspective on our current situation and reflect for a second on the season past. After many years of development effort I am happy to report a most solid result for 2011/12 both financially and operationally for Lone Star Farms. Like most pastoralists we enjoyed strong economic returns, favourable growing conditions and welcoming markets. Within Lone Star Farms we also watched as valued team members progressed on to the next step of their careers and wish them all well. FY 2012/13 is shaping up to be more challenging on almost all fronts; whilst we certainly have great field moisture levels, it is likely over the remainder of the year we will be drier. The market place exuberance felt last year has been replaced with concern over excessive frozen meat inventories, poor strong wool prices and weakened processors. All of these are natural and anticipated happenings. The gratifying thing is that our organisation is taking them in stride, coping with them in a measured manner and getting even stronger in the execution of our business plans. We are budgeted for a strong financial result this year and see no reason to date why we won t achieve it. We have in place plans to further our monitoring and real-time predictive and reactive capabilities as well. With continuing development at key farms things are shaping up. Our future remains bright and promising. We look forward to enjoying a season of growth and enhanced capability, building for the long term. We are in good heart. Best Tom and Heather GM UPDATE By Boyd Macdonald Last season was a solid year for Lone Star Farms on all fronts. A very favourable growing season enabled us to lift our output by 14% on the previous year. While the medium term outlook is bright for our sector, we are seeing and predicting a softening in commodity prices for the short term. What does this mean for us? It reminds us to concentrate and focus on what we have control over and what is important to our business. Three key areas for us to focus on are: Stock: Lambing % is a key driver and we have room to make gains. Focus will be on condition scoring, achieving target tupping weights and genetics. While progress is always slower than we would like, it must be remembered it is cumulative. Pastures: Knowing the total amount of quality feed grown, utilised and converted to product is crucial for today s farm business. With a drier than normal summer predicted, our feed budgeting skills will be tested and ultimately determine our margins. We have recently employed a full-time technician to aid in the accurate collection of data to grow our knowledge and assist decision making in this area. Staff: Ensuring we are getting the best from our staff and they are all growing in their careers towards realising their full potential is important. At Lone Star Farms we are reliant on our people to realise the potential in our properties and Company. The fact that we have seen huge growth in our managers working together for the benefit of the company as a whole is reassuring and great to see. Thanks guys! We will farewell the McEwen family from Rainbow prior to the next edition. Dave, Kate and family have been with Lone Star Farms for 13 years the last 9 1/2 of these at Rainbow Station. Dave can take great satisfaction and pride in the transformation Rainbow has undergone during his tenure of management. Dave s dedication and passion for Rainbow is evident for everyone to see. We wish Dave, Kate and their family all the best for their future. Let us together, as a team, embrace the challenges in front of us and meet them head on. With that, it is good to be back and have new life in the Southern Star. In a new format and to be published bi-annually, the newsletter will now feature one of our properties with a brief update on each of the other properties. What better way to start this special bumper edition than to feature our first North Island property, Hadleigh!

2 FEATURE FARM: HADLEIGH FACT BOX: Hadleigh at a glance Purchased Autumn ha, near Masterton stock units Manager Dan James 6000 mixed age Romney ewes 2700 two-tooths 2700 hoggets 200 cows (Angus based) 160 yearling heifers/steers Northern addition brings breeding power Lone Star Farms has a new sheep and beef farm in its portfolio. Purchased in autumn, Hadleigh is a breeding power-house with well-subdivided rolling country and a productive Romney flock. The purchase of this 1500 hectare property marks new ground for the company, as it is the first venture into the North Island. All seven other farms are located in the South Island. The property is expected to fit well with the southern farms, providing store lambs to the finishing units at The Wandle and Caberfeidh, said Boyd Macdonald, General Manager.

3 FEATURE FARM: HADLEIGH Boyd also expects it to be profitable as a stand-alone investment. With a land purchase price ranging from $450 to $540 a stock unit, he said it should deliver a good return on investment. It is hard to find this value in the South Island. Hadleigh is in a prime location. Ten minutes north of Masterton, it is dissected by an infrequently-used public road which acts as a laneway. Neighbouring Mt Clyde was purchased at the same time as Hadleigh, adding balance with a more extensive cattle wintering area. Boyd doesn t go as far as saying it is a land of milk and honey (it has a history of winter wet and summer/autumn drought) but Hadleigh has real benefits. Wintering costs are low as soil temperatures are warm enough to produce feed right through winter. The 1100mm of rain falls mainly during this time. Almost 30% of the area can take a tractor and blocks are fenced down to eight hectares on average. Around 80% of the farm has good troughs, fed from three reliable dams. The dams can cross-feed water between them, making the set-up drought-proof. Weeds are rare, with the whole property able to be spot sprayed for gorse in half a day. Hadleigh has had a history of good fertiliser application (soil ph ranges from 5.5 to 6.2 and Olsen P from 12 to 25). Around 200 tonnes of super have gone on each year over recent years. When it dries out soil testing will be done to develop a fertiliser plan for the next season.

4 FEATURE FARM: HADLEIGH Hadleigh Farm Manager Dan James, appointed in autumn, could be said to be in the midst of a steep learning curve. He and Lone Star Farms are both new to Hadleigh so the first year is very much one of settling in. We plan just to farm for the first twelve months, said Dan. Dan is overseeing two Romney ewe flocks (11000su) and 450 cattle (2500su). Lone Star Farms is continuing with the ram supply arrangement made under previous ownership. The stud flock of 2200 ewes produces stud ram lambs which are sold to Wairere Romneys, for sale to their clients. The 6400-strong commercial ewe flock has used Wairere genetics for 43 years and the Romney flock will have a chance to prove themselves over the next few seasons, according to Boyd. Ewe weights were good at tupping (65 to 67 kilograms), with condition scores of 3 to 3.5. Pregnancy scanning was 178% (not counting triplets) and lambing started mid-august. Prior to set-stocking ewes were drafted into mobs of 1500 and were moved on daily or three day shifts. Typically Hadleigh s lambing percentage is 130% but Boyd believes 140% is achievable within two years. The longer term target of 150% depends heavily on improving lamb survival and achieving consistently good tupping weights.

5 FEATURE FARM: HADLEIGH The intention is to move away from finishing store lambs and cattle over summer, to a policy of selling store stock at weaning. The plan is to unload before the summer dry and to put any genuine surplus feed into trading cattle, Boyd said. This should help protect ewe body weight and reduce risk from summer/autumn feed shortages. Other goals for the property are to put all 2500 hoggets to the ram, instead of 50% of the mob. They are very good hoggets, weighing fortythree kilograms this autumn, so they should be able to do it, Dan said. Changes are underway with the shearing policy, with a shift to a staggered nine month shearing cycle. By shearing different mobs in March, June and December, rather than all at the same time, it will help take the pressure off paddocks close to the woolshed. And stagger the workload. The cow flavour has seen changes already. Any exotics have been sold and replaced with Angus cows from Puponga and Barewood. The mixed age cows calve at 92%. Plans are afoot to put the 75 yearling heifers to the bull.

6 FEATURE FARM: HADLEIGH The ratio is very one-sided towards sheep (currently 84% sheep to 16% cattle) and this looks set to change, mainly for parasite management reasons. Boyd believes a ratio of 75% sheep 25% cattle is probably best, with less weaned lambs through summer and more trading cattle. One of the first steps will be to undertake some Faecal Egg Count Reduction tests, to investigate parasite resistance status on the farm. On the development front, the stock handling facilities at Mt Clyde will be upgraded (the woolshed is 130 years old) and both Hadleigh and Mt Clyde woolsheds will be used. Also on the purchase list are scales and an EID reader system with an auto-drafter. Manager brings North Island experience Being a King Country lad means Dan James is fairly comfortable with North Island sheep and beef breeding farms. Dan has crossed the North Island during his 20 working years. He managed Foxley Station for four years and before that, worked as a manager and shepherd in the Gisborne and Taihape areas. Dan and his wife Andrea, together with boys Tom and Charlie, are enjoying living at Hadleigh. The attractive homestead has a tennis court and, being ten minutes to town, is ideal for pre-schoolers. The farming team includes two shepherds; Natalie Neilson (21) and Richard Southey (24). Natalie had already worked a year at Hadleigh when Lone Star Farms made the purchase.

7 BAREWOOD STATION Finishing all lambs to prime weights was the big highlight of last summer for Marty Deans. For the first time in Marty s 13 years at Barewood, all home-bred lambs plus 2500 trading lambs were able to be grown to an 18 kilogram carcass weight average. We are starting to see the real potential of the property. The property is also successfully raising younger cattle for other Lone Star Farms properties. The 165 two-year-old heifers from The Wandle and Mt Albert were taken through winter and 95% of them are now in calf. The previous year s calving heifers are back in calf and have returned to The Wandle and Mt Albert as rising three year cows weighing an impressive 550kg. With the surplus feed created by good autumn growing conditions, Marty was able to buy in 1000 trading cattle in early winter and these should be finished by February. Baleage and silage were also made to utilise surplus feed. The 1180 hectare area of lucerne/fescue (some of which is in its fourth year) now covers around one third of the property area. Another 250 ha of lucerne/fescue will be sown this spring. The fescue in the sward means sprays to control grass weeds can t be used. Marty says sward quality is controlled by rotational grazing. Despite fescue growing earlier in the spring than lucerne, the nitrogen fixed by the lucerne helps keep the fescue palatable. Grazing is dictated by when the lucerne is ready, meaning the fescue is typically longer and sometimes ranker than optimal. Lambing starts September 26th and feed covers are on target to be met. Pregnancy scanning was 170% over the 21,000 ewe flock, reflecting good ewe body weight at tupping. A percentage of the two tooths are the first ewes to enter the flock, to be influenced by the infusion of the Headwater genetics, we are watching their performance with interest. The majority of them raised a lamb as a hogget at The Wandle. Looking ahead plans are in place to investigate using water from Deep Stream and Deep Creek for a community irrigation project. Marty said the property development is basically complete so it is a matter of fine-tuning the farm and putting what he describes as the icing on the cake. There are currently seven staff plus Marty working at Barewood. This includes a full time tractor driver, part time tractor driver (shared with The Wandle), a stock manager, and four shepherds. Two shepherds have moved on in the past year, otherwise the team remains the same.

8 CABERFEIDH STATION Selling feed from the Hakataramea Valley is a rare event. Typically supplements are brought into the South Canterbury Valley. This summer marked a first for Caberfeidh Station as 140 tonnes of standing lucerne feed were sold to dairy farmers. The feed surplus was due to having a 600 hectare area of two-year-old lucerne come on stream and not enough stock mouths to use it in a cost-effective way. Andrew Harding, Farm Manager, said the arrangement worked well and selling standing feed is something they will look at again. He has already fielded inquiries to sell two million kilograms of dry matter next season. Andrew would have liked to buy store lambs to utilise the lucerne but it was a difficult trading season and he thought store lambs were too expensive. The lambs on hand struggled to grow during the dull days. Despite B12 supplements they didn t do that well, especially on ryegrass. By March all lambs were able to be grazed solely on lucerne and growth rates grew up to 300 grams/head/day. With the Kaituna lucerne starting to generate another good income this year, the spray programme has been rigorous. Winter sprays started when the ground was still frozen on July 1st. Feed covers were restricted in August (1100kg DM/ha) and with lambing around the corner, more sun will be needed to increase cover. Part of Andrew s role includes Hakataramea irrigation meetings and he is also busy taking calls from prospective employees. Caberfeidh has recently taken on two experienced shepherds and was also looking for another shepherd and tractor driver. Jason Templeton has moved on after five years and the station management has been split two ways: trading and breeding. Darrel Robertson is now trading Stock Manager and Darcy Hooper-Smith breeding Stock Manager. There are currently five staff running the farm where there will eventually be eight. Andrew has been interested in one of the key projects this year - how the Headwaters two-tooths from Barewood have compared to the home Perendale flock. So far he has been impressed with the fertility. Headwaters rams were put over some of the Perendales in the most recent tupping but Andrew will not pass judgement until a bit further down the track. The Headwaters two-tooths scanned 20% higher than the Perendale two-tooths despite being a shade lighter at tupping. The future is incredibly bright at Caberfeidh so watch this space. MT ALBERT STATION It is fair to say the Wanaka high country property Mt Albert, has experienced a season of good weather. Scott Paterson, Farm Manager, said last spring brought good growing conditions and the winter has been milder than usual. As a result, pasture covers were on target to be 1800 kilograms (kg) of dry matter per hectare by lambing in early October. A highlight for Scott this year was taking the first crop of Headwaters ram lambs through winter and spring. The mob of 600 arrived to the farm at 35kg in March 2011 and by February 2012 they weighed 85kg. They hit the weight targets on time which was pleasing. Ram lambs were wintered on brassica, kale and permanent pasture. The brassica produced an extra two tonnes of crop this winter and utilisation was better due to drier conditions. The 5000-strong Perendale ewe flock lifted their pregnancy scanning result to a pleasing 171% (including triplets). The in-calf rate for the 550 mixed age cows was 92%, a little down on average. However calves were five kilograms heavier at weaning due to better quality feed during lactation. The property has recently been listed for sale. It is still business as usual however, with fencing and cropping ongoing. The property is run with three permanent staff with one current vacancy for a shepherd. We are in the process of recruiting. Mt Albert carries older classes of stock with exception of Headwaters ram lambs. All Angus heifer calves are sent to Barewood Station in May and come back two years later as in-calf rising three year cows. Ewe lambs are sent to The Wandle in March where they are grown, lambed and weaned, returning as two-tooths. Scott said this simplifies management at Mt Albert and works well. Through natural replacement, the Perendale ewe flock is shifting to a 50% Headwaters influence. On the development front, a 70ha area of native pasture is to be sub-divided with a two wire permanent warratah electric fence. This will keep cattle grazing pressure on an area sprayed out five years previously. Scott expects to see a big improvement in feed quality and utilisation as a result.

9 PUPONGA This coastal Golden Bay property has been leased by Lone Star Farms for 12 years, and has just entered a further 10 year agreement with DoC. Darryl Heaps, Farm Manager, said plans are underway to establish 25 hectares (ha) of lucerne, with a crop rotation starting this Spring leading into lucerne sowing in Spring Lambing started August 10th and pasture covers were around 1500 kilograms of dry matter (kgdm/ha). Darryl is hoping for a repeat of last spring when there was fantastic growth right through into summer. Since it didn t dry off as usual, all 2768 Puponga-bred lambs were retained and fattened to prime weights. An extra 1200 lambs were brought in at 28kg liveweight (LW) to finish. Lamb kill carcass weights averaged 17kg (a kg higher than average) and 500 were retained to finish through the winter. For the first time rising two-year-old steers were wintered (70 were brought in from nearby LSF property Quartz Range). The heavy cattle cleaned up the surplus low-energy pasture left over from spring and were well suited to the sandy free-draining soils. Pugging was minimal and they added 30 kilograms of liveweight for the three months May to July. Spring should see cattle growth rates pick up further, hoping to average 1.75kg LW/day. Darryl is busy with calving underway, including 20 yearling heifers and 25 Angus cows. Hogget pregnancy scanning at 88% is something Darryl is focusing to lift next year. In staff news, Shepherd, Ben Cook, and his wife Rachel, have just welcomed the arrival of their first baby Hayley. The couple have been at Puponga for almost three years. RAINBOW STATION 2012 has been a year that ticked all the boxes for Dave McEwen, Farm Manager. Just under seven thousand lambs were finished to prime weights at Rainbow Station. On the Raglan block all lambs were by terminal sire to a Perendale ewe and producing an average weight of kilogram (kg) carcass weight. Rainbow Perendale ewes go to a Perendale ram. What was pleasing about the Raglan lambs, said Dave, was that close to 30% were prime weights by the first weaning draft. Raglan is known to be a challenging block but a lower stocking rate and earlier warm temperatures gives it other advantages. This is very different from ten years ago, when the lambing percentage was around 100% and the vast majority had to be sold as store. Dave said it reflects both improved pastures through the development programme and a kind summer. It was an incredible season. The improved pastures include ryegrass with white and red clovers, lucerne/cocksfoot mix and fescue-based pastures. The ryegrass/clover block produced heavier lambs by weaning than the lucerne/cocksfoot, although Dave admits the lucerne was only two years old and had more multiple-born lambs. Pasture development has been very costly at times, requiring rock shifting before scrub spraying even starts. It has been a massive task but Rainbow is now in a state where it can be fully farmed to its potential. By turning the flats from browntop blocks to sub-divided improved pasture for sheep, the cows numbers have halved, down to 320. However some of the steer progeny are now able to be retained and finished to heavier weights. The station has a true 18 to 20 month policy, with steers taken through only one winter. We really have to feed them to get them finished, said Dave. Any that don t make it are sold to Five Star Beef for finishing in the feedlot. It has been a busy year with three new staff starting. Trevor Lloyd, Senior Shepherd, started at the Raglan in November 2011 and Amy Silcock, Shepherd, and Richard Marshall, General Hand, started at Rainbow in April and May respectively. Dave, who is moving on in November, is pleased to be leaving the farm in such good hands.

10 QUARTZ RANGE Quartz Range had a good year for cattle, but not for sheep. Len Rapley, Farm Manager, said the cool and overcast summer wasn t ideal for clover growth on the 420 hectare (ha) grazing platform. As a result, lamb growth rates were much slower than usual. Typically around 70% of sale lambs are finished prime on the property before autumn. This season many more lambs were sold as store. Lambs that remained were given extra B12 but Len said that even that didn t really make a huge difference. We just needed some sun. Ewe tupping weights for the 2500 Perendales were also lower (60kg mixed-age and 59kg for the two-tooths). Scanning was down on last year at 151% for mixed-age ewes and 127% for the two-tooths. Historically the scanning record is 178%. Len targets a ewe tupping weight of 65kg. Quartz Range is the wettest of the Lone Star Farms properties typically receiving between 3.2 and 5.7 metres of rain a year. In contrast there were no issues with the young calves and the weather. Around 120 Angus calves are brought in each autumn from nearby Puponga. They are to graze for 11 months then sold before purchasing more young stock. They typically add 750 grams/head/ day over spring, said Len. They are good at converting ryegrass into meat. Len said the farm is suited to growing ryegrass with past attempts to grow chicory and pasja foiled by low fertility and wet soils. Stocking rates are nine sheep/ha-sheep and cattle are not mixed during grazing. Despite having 12 years on the property, Len is kept on his toes each year simply due to the fact that no one season is the same as the next. Lambing starts September 25th and it is hoped there is no rain as this has the biggest impact on survival rates. A highlight has been the positive benefits on pasture quality achieved from fencing. An area with 25% rush cover and a serious thatch problem was transformed into quality pasture by using an intensive rotational grazing programme. The farm has almost doubled the amount of fencing during Len s management. Len said repairs and maintenance were up-to-date which is important as the property was listed for sale in June. THE WANDLE Building, digging, pipes and posts have been the focus at this Otago breeding and finishing property. The Wandle has just completed a significant irrigation and fencing development phase. Two centre pivots By Len have Rapley doubled the feed production potential on a 500 hectare (ha) area. The benefits will flow on to dryland parts of the farm as well as providing a location for other Lone Star Farms properties to send store or capital stock if required. The 1500ha area of developed country has also had major investment with 200 water troughs and 50 kilometres of fencing installed. Jon McClean, Manager, said he is looking forward to just farming now that installation of the irrigation is almost done. He has just completed his first year at The Wandle. With the basic infrastructure in place focus will now switch to using the feed (mainly crops) under the irrigated area. Although cold in July, soil temperatures in August had already reached six degrees. A lack of permanent fences and difficulty sourcing affordable store stock meant keeping pasture quality last summer and autumn was a challenge. Jon budgeted for 11,000 store lambs to arrive in December but they were not available then at a suitable price. Instead, store lambs were bought in late January/February but the delayed kill dates (April/May) saw pressure come on staff in Autumn. We had a bottleneck of work with lambs going, plus putting 4000 ewe hoggets to the ram. Fortunately, a big crop area of rape was on-hand for the later lambs. Winter feed has been provided to 600 rising two-year trading steers and 1150 dairy cows on a pay per week basis. Winter crops were part of the ongoing pasture development phase. Good cashflow has been received from dairy grazers for these crops. Young sheep from Mt Albert and Barewood were also wintered at The Wandle. Mt Albert sends 1000 ewe lambs freeing up feed at Makarora to grow Headwaters ram lambs. Barewood sends 3000 ewe lambs to The Wandle, allowing them to winter more mixed-age ewes. Both mobs return to the properties as two-tooths. Jon calculates 650ha will be drilled this year as a one-off, with 200 to 250ha drilled each year in the future. Two drills are shared with Barewood Station and they will be fully utilised this coming spring. The lucerne area will increase from 200 to 500ha, with 60ha of this under irrigation. Land will go from a ryecorn crop into lucerne in Spring To achieve this, a strong team of staff is vital. Jon says his priority over the next six months is to recruit more staff and put systems in place to manage the new production calendar.

11 A TRIBUTE TO DAVE, KATE, AMY & PETE MCEWEN On behalf of Lone Star Farms we farewell you. Wow - 13 years! We ve watched your children grow up, we ve shared some memories. Your dedication to the job, your loyalty to us and the team, your passion for farming and the land, not to mention your support, indeed, you have left your mark! We appreciate you, and we will miss you. You may not remain in our employ, but you will remain our friends and in our hearts. Wishing you all the very best that the future can bring. Warmest and most sincere regards, Tom and Heather Sturgess