Southern Pastures is New Zealand’s largest institutional dairy farmland fund with clusters of farms in South Waikato and Canterbury.

Kate Robinson reports on their firm conviction about the potential for premium dairy products from New Zealand’s free-range grass-fed dairy farming systems and how sustainability is the key to creating value and ensuring long term economic performance.

Southern Pastures has teamed up with some big names in recent months, earning them a significant amount of ‘air time’ in media across the country. Until now, the company has kept a pretty low profile. Driven by aspirations to change the way dairy products are produced in New Zealand, Southern Pastures wants to share its vision and sustainable farming philosophy in the hope others will follow.

Southern Pastures LP is NZ’s largest institutional dairy farmland fund. While it sources most of its capital funding from European pension (superannuation) fund investors, the operation is entirely Kiwi controlled and managed.

Southern Pastures was started in 2008 by the company’s executive chairman Prem Maan and his long-standing colleague, Phillip Wight.

It was officially established in 2009 when former All Black captain Graham Mourie and Taari Nicholas joined Maan and Wright as co-founders and executive directors. In 2012, Mourie’s business

partner Mark Bridges also joined the team.

In addition, the Southern Pastures farm investment committee boasts well-known names in dairying and agribusiness John Dawson, John Storey and Stuart Ford.

Between them, they bring international skills and experience from economics, accountancy and soil science, to farming, investment and asset management.

What they all have in common are their values and ambitions to deliver the finest quality milk using sustainable farming methods.

“From day one, Southern Pastures has had a firm conviction about the potential of premium dairy products from New Zealand’s free-range, grass-fed dairy farming systems,” Prem Maan says.

“While our commitment to protect, nurture and improve our environment is at the core of what we do, we don’t see any conflict between promoting sustainability and maximising economic returns. In fact, we’re convinced that sustainability is actually the key to creating value and long term economic performance.”

Southern Pastures has invested in and operates 19 dairy operations in NZ, with 10 in the South Waikato and nine in Canterbury. It is here they have embedded sustainable farming and business practices they hope others will follow.

‘While our commitment to protect, nurture and improve our environment is at the core of what we do, we don’t see any conflict between promoting sustainability and maximising economic returns.’

Palm kernel policy

Southern Pastures was created on the health virtues of grass-fed milk and it’s a scientific fact that palm kernel changes the chemical composition of milk, Prem says.

However, because Southern Pastures farms had sharemilkers who ran their own businesses, it was difficult for the company to impose its rules from day one.

“So we laid out a clear message to our farmer partners that we saw a future in which we would use no palm kernel.

“To enable this to happen, we invested heavily in onfarm infrastructure, such as feed pads, so they could use alternative feeds like silage, efficiently. This has been particularly important during the recent dry weather. How to feed cows during a drought without palm kernel will become a major issue for many dairy farmers.

“We also requested proposals from suppliers to provide us with palm kernel from certified sustainable sources, which I am pleased to say we were able to achieve.”

Southern Pastures’ use of palm kernel is reducing. One of its farms in the South Waikato is being converted to organic and palm kernel will not be used. It is also being completely removed from all the company’s Canterbury farms from the 2018/19 season.

Climate change

Southern Pastures sees its farms as a tool for reducing climate change.

“We incorporate smart soil management to enhance carbon retention as we build more productive soils,” Prem says.

“Our techniques include low tillage, riparian planting along all waterways and on steeper, non-productive land, improving soil biology and optimising our carbon and nutrient management practices in step with leading edge science.

“In addition, we are also commissioning an onfarm measurement of our carbon status to try to understand how to better measure and improve this in the future.”

Southern Pastures has adopted water management practices designed to lessen and, as far as possible, eliminate the environmental impact of dairying on waterways.

“On farms where we have irrigation, we use modern spray irrigation, in-soil moisture sensors and variable-rate irrigators to minimise water usage.

“Using tools like these, we have found we can increase pasture production by 17% without utilising any more water – significantly reducing the water footprint of the milk we produce.”

Southern Pastures stipulates waterways are to be 100% fenced off.

“We invest heavily in riparian plantings and boundaries, effluent storage and, where they are needed, stand-off areas for livestock to preserve pasture and soil in wet conditions.

“We have an active programme in place to retire steep hills to native regeneration and to create wetlands and permanent reserves.

“We are continuously looking for new ways of testing promising research and in this regard are trialling miscanthus grass in conjunction with Lincoln University and dung beetles together with Landcare Research and Dr. Shaun Forgie of Dung Beetle Innovations.”

Southern Pastures has also introduced three synergistic species of earthworms on to all its South Waikato farms to promote good soil health. The farms, which were all converted from forestry, had high soil acidity with no earthworms.

“It seems to be a forgotten fact that earthworms aren’t naturally occurring. They were introduced by European settlers,” Prem says.

Bees are one of Prem’s passions and he says another part of Southern Pastures’ sustainability drive.

“Bee colonies around the world are dying from disease, overwork and pesticide. It’s important to save them because they’re helpful for pastoral and critical for other types of farming. There is a view that humanity could not survive without bees,” he says.

“We house beehives on our farms and use a patented honey harvesting system that Southern Pastures itself invested in called Revolutionary Beekeeping. Unlike traditional beekeeping, our hives are never moved, which allows us to have permanent bee populations which lowers the risk of spreading disease. The honey is harvested on-site making it completely traceable so consumers know exactly what farm it came from.”

Animal welfare

Like most NZ dairy farmers, Southern Pastures loves its cows, and its team aims to sustain the highest animal welfare practices.

“We recognise that cows are sentient beings and they deserve humane treatment. In order to get high-quality production you need well-fed, healthy animals. Our success is built on well-fed cows that are well cared for in a natural free-range environment.”

From its inception, before it was the norm, Southern Pastures has had a policy of no tail dockings and no inductions and has built calf-loading facilities on all its properties that allow for gentle handling of calves.

“As far as we are aware, we are also the only significant entity in NZ that has a specific policy of not participating in the live animal export trade.”

Southern Pastures is also hot on the non-therapeutic use of antibiotics.

“We recognise that the routine, nontherapeutic use of antibiotics in livestock production is a major risk to public health,” Prem says.

“We are trialling innovative systems to reduce antibiotic use, such as spraying cows’ teats with peppermint to prevent mastitis, with the intention of eradicating non-therapeutic use in the longer term.

“Southern Pastures is the only NZ organisation to have signalled its conviction by signing the comprehensive Global Investor Statement on Antibiotic Stewardship.”

On the topic of Mycoplasma bovis, Prem says Southern Pastures’ only real risk of infection would be through grazing.

“We’re putting measures in place to reduce the risk of M Bovis infecting our herds, such as investing in 135km of double fencing on our South Island farms.

Our farmer partners will also be attending the Fonterra/MPI meetings to collect milktesting kits and learn about what other steps we can take to reduce the risk.”

Growing future farmers 

Sustainability includes the people who do the farming.

“The survival of the NZ dairy industry is entirely dependent on ensuring the next  generation of farmers comes through,” Prem says.

“It is becoming more and more difficult for young people to own a farm, but it’s still important for them to have some skin in the game.

“Providing staff with a path to ownership gives them opportunities for career progression within Southern Pastures and builds a sense of pride in what they do.”

Prem believes all Southern Pastures’ farmer partners deserve a fair crack at owning farms, which he says also helps deepen Kiwi participation in the primary sector.

“We operate a minority equity scheme, supporting our farmers into ownership stakes in the land they farm and/or the herds they milk.

“We also provide support to our sharemilking staff to enable them to continue on their farms in difficult times, like we’ve experienced in recent low payout years.

“We have also created opportunities for some of our sharemilkers to transfer to equity partners, like Brian and Sheryl on our Manako Farm near Tokoroa.

“While dairy farming is these days more of a business-based model, people are still our most important asset. Looking after our people and reinforcing our reputation as a preferred employer and partner of choice is paramount if we want to attract the right talent to our business and keep them.”

Removing the boundaries

Southern Pastures invests in opening walking access for the public.

“In NZ it is not mandatory or commonplace to allow access to private property. However, we see the provision of access as another opportunity to deliver enduring benefits to our local communities.

“It’s also a great way to educate the public and demonstrate to them the good work we’re doing to look after the environment and be socially responsible.”

After consulting with the Walking Access Commission, Southern Pastures has created walking access rights to the public across many of its properties for recreational purposes.

“For example, we have opened up public passage beside the Rakaia and Ashburton Rivers by creating an esplanade reserve along with an entry pathway, and facilitated the granting of access rights to the Mokaihaha Ecological Area in the South Waikato.”

Ethics and responsibility 

Southern Pastures is a signatory to the UN Principles of Responsible Investment as well as to the Farmland Principles to which a sub-group of the institutional investor signatories also adheres. Southern Pastures was recognised by the Responsible Investment Association of Australasia [RIAA] in 2016 and again in 2017 as one of only three managers in NZ – and the only one involved in farmland and agriculture – to be at the leading edge of environmental, social and governance [ESG] policies and practices. Southern Pastures has no plans at this stage to expand its farming operation into other regions.

“We are happy with the farms we have in the South Waikato and Canterbury,” Prem says.

“Our focus over the next 10 years will be on consolidating the business. This means working with Fonterra in South Waikato, and with Lewis Road and Westland in Canterbury to sell fully traceable dairy products from our sustainable farms.

“Hopefully we’ll have the pleasure of welcoming other like-minded farmers on our journey.”