Craigmore Sustainables chairman Forbes Elworthy. Photo / Supplied
The growing influence of corporate farming in New Zealand is a fact of life, but Forbes Elworthy says don’t write off the family farm just yet.
Elworthy, whose Craigmore Sustainables controls a fair chunk of New Zealand’s primary sector, says the family model will be around for decades to come.
He should know.
His great great grandfather Edward Elworthy - from a family of Somerset woollen millers - set foot in New Zealand in 1864, having first chanced his arm in Australia.
He settled at Holme Station, south-west of Timaru in South Canterbury. He had purchased a share of the Pareora lease and steadily converted the property from leasehold to freehold.
Holme Station contained a limestone hill known by the Scottish shepherds as craigmore, which is Gaelic for “rocky outcrop”.
Over time, Edward sold sufficient land to free himself of all debt. He then allocated 10,000 acres (4050ha) to each of his three surviving sons. The core Holme Station block went to Arthur. Craigmore Station went to Herbert, and Gordon’s Valley went to Percy.
Forbes’ father Peter bought out his brothers in the late 1970s and also built up Papamoa, a pioneering deer farm at Morven-Glenavy, just north of the Waitaki River.
In the 1980s, Peter became president of Federated Farmers and chair of independent directors of the board of the Reserve Bank.
When Peter died in 2003, Forbes inherited Craigmore Station, later extending the farming assets to about 4200 ha.
Forbes now chairs Craigmore Sustainables, a company that works with global capital partners to build and manage farms, orchards and forestry in New Zealand.
Craigmore co-founder Mark Cox retired from Craigmore last December after nearly 14 years.
Elworthy also founded Map of Agriculture - a firm specialising in advanced data for farmers and supply chains.
Craigmore Sustainables manages assets worth about $1 billion and is one of the country’s biggest dairy farmers and producers for the food industry.
Dairy farms are consolidating into fewer, larger operational units.
New Zealand is also experiencing a long-term trend to larger dairy farm operations in terms of average area per farm at about 2 per cent a year, according to agri research firm Coriolis.
Elworthy, in an interview with the Herald while on holiday in the south of France, acknowledged aggregation of farm ownership is a trend, but says the family model will be around for a while yet.
“Farming will be family-owned for a long time to come, but there is a real role for financial capital to come into farming from here and there - for the larger projects like some of the land-use change projects that we have done around Hawke’s Bay, Gisborne, Keri Keri and North Otago.”
Many of those projects have involved transforming pastoral land into horticulture.
He says dairy remains important to Craigmore - it counts as being a top 10 producer in New Zealand - but the majority of its capital is now in horticulture: apples, kiwifruit and grapes.
Elworthy notes families here and around the world tend to hold on to farms for a long time.
“Even if there was a lot of land going out of family ownership, it would take a century for corporates to really get involved in farming.”
In Europe and the US, farms remain in the family for an average of 100 years.
In New Zealand and Australia, the duration is around 40 years.
Elworthy says there’s a good reason farms tend to stay in family ownership.
“Families are very efficient. They can tighten their belts in this quite tough industry.
“Ninety per cent of US farms are family-owned, and I suspect that it’s at least the same sort of number in New Zealand.”
For a self-described farm boy, Elworthy comes with a formidable CV,
He is an MBA graduate and was educated at Oxford and Harvard universities.
He’s worked in the finance sector, trading bonds in London and New York with Goldman Sachs and Merrill Lynch.
Elworthy also founded the financial software company Credit Market Analysis, which was later sold to the Chicago Mercantile Exchange. The price was not disclosed, but it made a seven-times return for his backers. The Elworthy family owned half the company when it was sold.
He, Bridget and their three children divide their time between Oxfordshire, in England, and Craigmore.
It’s been a while since Elworthy has set foot in a trading room in New York or London, but he says it was good fun at the time.
“For a young person just off the boat from New Zealand, those places offered - and still offer - a range of opportunities because they move a fair bit of capital around and act as a sort of clearing house for people’s savings.
“It’s a very scale-intensive industry, so a lot of capital just gets channelled between those centres, along with places like Hong Kong and Singapore.”
The untimely end of his father Peter meant a big transition from the sharp end of the world’s financial markets back to South Canterbury.
“Like a lot of farm boys who come off the farm and find their way in the city and into a profession, you don’t always go back.
“Dad dying quite early - which was really sad - in some ways just happened early enough that it unlocked a need to come back to the station.
“So I was drawn back into farming by family changes but of course as soon as I got back into it, I re-discovered how interesting agriculture and forestry is.
“If he had died 10 years later I would have been embedded in my career and I would not have found it as appropriate.”
Craigmore Sustainables is New Zealand-owned and operated while its assets are foreign-owned.
The company, which is focused on producing sustainable food and fibre, today has total assets of more than $1 billion and 60 properties.
All of Craigmore’s investors are limited partners.
“Although they supply us with their capital, they delegate to Craigmore as a New Zealand-controlled manager of forests, orchards and farms, the active management of land.
“They tend to be long-term, patient and passive, who trust a bunch of New Zealanders to manage their land for them.
“In that sense, we are unique compared to other offshore landowners in New Zealand, who try to manage New Zealand land from abroad.
“Most of our capital is from European family offices and institutions seeking long-term opportunities to invest in sustainable food and fibre companies.”
When Craigmore Sustainables became involved in horticulture in 2012, the company discovered New Zealand has a lot of microclimates suitable for grapes, kiwifruit and apples.
He says some parts of the country would fit the “appellation” tag in much the same way as the Champagne region of France does.
Large amounts of capital are required to convert property to different land uses.
The majority of Craigmore’s capital is sunk into horticulture, while farming and forestry level peg with each other.
In between derivative trading and farming, Elworthy spent six years as a data entrepreneur, setting up a firm called Credit Market Analysis, which was later sold to the Chicago Mercantile Exchange in 2007 for $US96.4m, according to US SEC filings. The Elworthy family owned about 50 per cent of the company.
He says there are similarities between CMA and Map of Agriculture.
“Like CMA, we sought to share the cost of a specialist data team across many users.”
Map of Ag now has 65 team members, half based in the Waikato Innovation Park, whose costs are shared by more than 100 food processors and grocers and food brands around the world.
It took CMA just a few years to support most credit market data flows. It has taken 10 years for Map of Ag to build a definitive platform for large numbers of different types of farms to be able to gather and share their data.
While farming faces difficulties today, Elworthy says the sector has come a long way over the past two decades.
“The world economy, as well as New Zealand’s, is having a bit of a reset at the moment.
“We are all having to cope with high interest rates at the moment, and I’m really hurting, but so are many other Kiwis - not just in agriculture,” he said.
“It’s been a challenging period,” he added.
“Dairy seems to be through the worst of it but sheep farming is really challenging at the moment.”
He says farming is rapidly evolving and becoming far more efficient.
And the “sustainables” part of Craigmore’s title is not just a buzz word.
“For us, it means thinking about tomorrow. It’s trying to think about the future and bringing it back to today.
“It’s how we talk about it in the orchard, on the farm, and in the forest, within Craigmore, because that’s a good way of putting it into ordinary language.
“Dairy is very interesting at the moment because is a very important source of protein and other nutrients.
“Dairy has an intensity and a system that is going to enable it to change its environmental footprint, particularly with respect to emissions, but also with respect to biodiversity and, crucially in New Zealand, nitrogen loss to water.
“It’s one industry that is really grappling with those footprints and Craigmore takes very seriously our role in those areas.”
He said there were “eight or nine” methane and nitrogen technology systems on its farms.
While his hand was determined by family circumstances, Elworthy says he hasn’t looked back since his return to farming.
“It’s not the most profitable industry, but it is endlessly fascinating.
“Everything I do now is around agriculture, forestry and horticulture.”
And the transition from the cut-throat financial markets to farming?
″It’s a real pleasure, because hardly anyone is in it just for the money.”
This article has been amended to clarify that the Elworthy family owned about 50 per cent of Credit Market Analysis, not 40 per cent.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
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