Listen: Does kiwifruit conversion mean the end for dairy?

Conversion of grazing land into kiwifruit orchards is already under way at the Wiroa Rd farm. Photo / Peter de Graaf

Craigmore Sustainables has invested $38 million in Northland to convert a 137ha dairy farm near Kerikeri to a kiwifruit orchard. The deal will create one of New Zealand's biggest kiwifruit orchards, resulting in 29 full-time jobs, which is good news for the region ... but is it good news for dairy farmers?

The Country's Jamie Mackay spoke to Craigmore Sustainables chief executive Che Charteris to find out if this kind of conversion is the way of the future, and if dairy farmers should be worried.

Mackay: Che - is this the way of the future? Are we going to see lots of dairy farms converted to horticulture, especially in the north?

Charteris: I think firstly for Te Tai Tokerau you can't overstate how wonderful a growing environment it is ... and there probably isn't a region that's more deserving of a little bit of investment attention - there probably could be more, there has been a lot of activity outside of just what we've been doing - we're only really a minnow in the scheme of things.

The general question around land-use change is one that's always there. Our land use is always changing, and while horticulture has some pretty significant benefits - and again hits the headlines because it takes a lot of balance sheets to even undertake a small development - actually the overall scheme of things is the amount of land in horticulture compared to dairy is pretty minuscule.

Craigmore Sustainables chief executive Che Charteris. Photo / Supplied

So even if we doubled the total area of horticulture across the country, it wouldn't make that material impact on the national dairy platform, but it would've had some huge impacts on local communities, such as Kaikohe and Kerikeri and Gisborne.

So that's more the point. I think it's more a local dynamic and an incredibly powerful one too.

Mackay: Because this is happening in Kerikeri I've got to ask the question - you didn't get a big fat handout from Shane Jones to do this did you Che?

Charteris: Not even close.

Mackay: Not even close?

Charteris: No we partner with European capital largely and that seems to be because our values are naturally aligned. They tend to be longer-term family businesses and institutions that do have that long-term view and really like the sustainability story, but also are passive and that means that they align well with our values.

And that's where our capital comes from, but ... effectively all the investors hand over control to the Craigmore business and team which are Kiwis, and it is a Kiwi business.

We don't have much of a need to rely on the Government, but the local government has been very supportive up here with our project because we've avoided conversion of quite a significant amount of area in premium soils going into houses. So that was something that the local council was pretty keen on.

Listen to the full interview below:

Mackay: Yeah I think that's fantastic. Now, Craigmore Sustainables was set up by Forbes Elworthy and his brother-in-law I think his name is Mark Cox. Craigmore were big investors in the dairy scene. Does this mean that Craigmore's getting out of the dairy industry and going to horticulture?

Charteris: Not at all. No Craigmore was always established with a vision of being a significant operator and good operator in all of the major food and fibre sectors across the country. It just takes a very long time, as you can appreciate Jamie, to get there. Because there are some amazing operators in the country and it just takes a long time to build up that expertise.

And while having capital is one thing, it's only 10 per cent of the challenge. It's really having that strong operating team which is the secret sauce.

Without that you might as well stay at home. It takes a while to build that.

While dairy is out of favour, not just amongst urban New Zealand but even parts of rural New Zealand. It's got some huge kaitiaki challenges and manaaki challenges in how it deals with its environment and its people but actually we're not going to shy away from that.

We're ramping up our focus on how we transition, or help the dairy sector transition to something which better meets consumer expectations and that social licence to farm, such as getting rid of bobby calves, such as looking hard at palm kernel and of course greenhouse gas emissions and water quality.

Also in today's interview: Charteris discusses how Craigmore Sustainables lives up to its name through environmentally friendly projects such as riparian planting.