Investors keep families in sustainable farming
The family farm is still the best model for agriculture, says global businessman and passionate New Zealand farmer Forbes Elworthy, recently awarded the Bledisloe Medal by Lincoln University for his outstanding contribution to farming. He talked to Tony Benny for NZFarmer.co.nz
Growing up on Craigmore Station in South Canterbury, which has been in the Elworthy family 150 years, Forbes Elworthy seemed destined for a career on the land.
He worked as a shepherd and studied agricultural economics at Lincoln University but instead of returning to the farm he won a Rhodes Scholarship. This took him to Oxford University where he did a second degree, this time in politics, philosophy and economics.
He joined Goldman Sachs in London as an analyst and in 1992 he completed an MBA at Harvard Business School. Next he became a software entrepreneur, founding financial information publisher Credit Market Analysis.
The death of his father Sir Peter Elworthy in 2004, aged only 67, brought Forbes and his wife Bridget home to New Zealand.
“Dad would have loved one of his children to come back into farming and his early death ironically unlocked that,” says Elworthy.
“Bridget and I put a manager into my software company and we limped back to New Zealand a year after Dad died and took over the farm.”
Elworthy says he made a lot of mistakes, trying new ways of doing things and going away from his father’s belief that Craigmore was suited to one third beef, one third sheep and one third deer.
“We took it to 65 per cent sheep because they were profitable that year. But other farmers were making that same calculation and then the price of sheep went down.
“Deer was depressed so we sold all our capital stock and got out of deer. Everyone was doing that as well and the deer population went down in this country and we’ve just had 10 years of good profits in deer that we’ve missed out on.”
As he found his farming feet Elworthy started to catch up on the reading he hadn’t had time for in his previous career and began to think about the issues agriculture faces.
“I was there on a farm in South Canterbury and in the long evenings I started doing a lot more reading. My mother was an environmentalist. Dad had been on the Sustainability Council and Mum’s still the patron.
“We went to a slightly hippyish-type seminar in Oamaru and I finally understood, climate change is a massive issue, so is the environment generally. I’d been ignorant of these issues, focusing on my career.”
By this time he’d sold his software company to Chicago Mercantile Exchange and was thinking about starting a second career, perhaps in politics. His first foray was as a leader of the Meat Industry Action Group, pushing for meat co-ops Silver Fern Farms and Alliance Meat to merge.
“We tried to create something like a Fonterra for the red meat industry and failed.”
He thought he might be able to emulate his father who went into politics for the second stage of his career after farming.
“I met friends who’d been MPs both in UK and New Zealand and in each case they said, ‘Forbes you’re too old’.
“If I worked my way through and I was in cabinet in my early 60s I wouldn’t really be telegenic enough to take the leadership positions. You can be in the support teams but you may not be able to make the difference you want to make.”
With politics ruled out, Elworthy turned his thinking to business opportunities.
“I enjoy building businesses and I have a track record in building businesses. So I said, ‘Why don’t we build, and it’s going to be quite difficult, a sustainably branded agricultural investment business so we have a clear remit and brand to be making money for our investors but at the same time taking a lot of environmental care.”
Craigmore Sustainables was formed as a vehicle to put together investors with New Zealand family-farming equity partners.
“We now have more than 120 mostly European investors. We’ve had to find the subset of all investors that were prepared to back an organisation that’s going to give them a financial return but had a clear agenda.
“There’s certain things we will not do, for example, we won’t farm on the wrong kind of soils even if the land is cheap and appears to offer a higher return. We challenge ourselves to behave sustainably, trying to achieve appropriate land use.
“We’ve tried to find the suitable investors and bring them into the farming system and then we’ve tried to marry these farms up with the right type of New Zealander as farmer and equity partner.
“We see Craigmore as an intermediary and enabler. We’re bringing capital to farming systems that we believe should be run by New Zealand family farmers. We won’t buy a farm unless we’re well on the way to identifying the right type of couple to be the farming partner.”
Another venture, Craigmore Forestry, dedicated to carbon forestry, was formed too and seven forestry blocks of 6.5 million trees were established in the North Island.
“Craigmore Forestry was backed by a very courageous group of investors that believed they needed to invest in something that would have a timber return but also get a return from this very new market called the carbon market and I take my hat off to them.”
Formed with his brother-in-law, Mark Cox, Craigmore Sustainables’ interests now include dairy farms in Canterbury, kiwifruit production in Te Puke, apples in Hawke’s Bay and export squash in Gisborne.
The company has built new systems to manage financial, health and safety and real time on-farm production data. They are also converting the majority of the kiwifruit orchards to organics and investigating organic dairy farming.
Cox and Che Charteris now run Craigmore Sustainables’ New Zealand farming operations and Forbes and Bridget Elworthy have moved back to UK with their three children. Elworthy chairs the committee for investment decisions in New Zealand and heads an arm of Craigmore which has built a farm information management business called Map of Agriculture that employs 75 staff and has offices in UK, New Zealand and Argentina.
“It enables a farm to capture lots of data and then share it with key professionals, including bankers, accountants, veterinarians and local government officials.
“There’s been a lot of double-handling in terms of agricultural data so we said why not capture it all in what’s called a document store? These days information science is transforming many industries and it will transform farming.”
Forbes Elworthy followed in his late father Sir Peter’s footsteps in being awarded the Bledisloe Medal, presented at the recent Lincoln University graduation ceremony.
“In my speech at Lincoln, I said I had erred from the true way by going into finance but that I’m pleased to be back in farming, it’s a noble profession.”