This is not story of how I converted to any religion of sorts, sorry to disappoint you, but rather a drama story of our last few years of farming. It’s been a journey of dark clouds with silver linings, heartache and satisfaction. It’s been two and a half years spent in a dark tunnel with a bright light at the end of it that never seems to eat any closer. We have been through it all over the last few years, and what a great learning experience it has been.
We are now on the up and digging ourselves slowly out of a very deep hole. It’s a hole that we largely dug for ourselves and it’s been real lesson in planning for worst case scenarios. However if you plan for everything to go wrong, then you will go nowhere. In our case we gambled and got burned. We got burned by market forces and mother nature at the same time, but we are still in business and the prospects look better every day. Progress is never a smoothe ride and the last few years were particularly tough. I am not writing this for sympathy, merely as a record of what happened. One day Olli will appreciate reading how we got to where he is and this is just documenting the journey.
Two years ago we were going great guns! 700 cows milking well and in our first season of completely seasonal spring calving. Seasonal calving had been a long term goal of mine. It has the advantage of calving all your cows down at the time of year when you have the most, and best quality feed available. You then stop milking the cows for 2 months in the winter when you are short of feed. You are basically matching your milk production and feed demand with what mother nature has given you. I was finally where I wanted to be in my farming system. The only challenge was the large debt load we were carrying. We had embarked on an ambitious project to build a milk powder factory on the farm. The debt was manageable and the farm looked like it should be able to make the necessary repayments fairly comfortably. Over the next year and a half, what could go wrong, did go wrong. When you do your plans for what-if scenarios and worst-case scenarios, we didn’t even dream that it could go so badly all at once.
It started off five years ago with us planning to build a milk powder factory. We tried for a whole year to persuade the banks to lend us the money to build this factory, but they wouldn’t budge. Banks as you may know are ultra conservative and there must be close to zero risk in it for them. What eventually tipped the scales in our favour was that the international milk powder price increased and the domestic fresh milk price decreased. The bank (FNB) now saw this as a sure thing and finally lent us the money. At the time the bank lent us the us the money, the powder prices were so high that we could have almost paid for the factory in one year. We also persuaded some local dairy farmers to put money in as share holders, and the project was on the go.
What goes up, must come down. After a year of building the new factory, we were ready at last to make the first powder. As with most projects of this size, we were way behind schedule, and way over budget. Over the preceding year the international boom in dairy prices resulted in a massive and very predictable over-supply of milk in almost every country in the world. Our local milk price did the complete opposite. It went up at a time of year when it normally drops. This was happy days for the farmer, but not so for our new factory. The main driver of profit in the milk powder business is the relationship between the fresh milk price, and the imported powder price. We are net importers of powder in South Africa so the Rand / Dollar exchange rate and international powder prices are what we look at. We were now sitting with a powder plant that we couldn’t afford to run. We had known that this situation occurs from time to time in the local powder market, and unfortunately our timing was terrible. For the first year the farm managed to fund the mountain of debt as well as the mounting expenses of my father and his continuing modifications of the factory. The international Powder price stayed stubbornly low for longer and lower than ever before. The situation was manageable, but barely. We had an amaasi (traditional African yoghurt) factory and a farm to help pay the bills.
In the spring of 2015 when my entire herd calved down, the local milk price crashed. We had seen it coming and had desperately been trying to find a home for our milk for the previous 3 months but with the market flooded with milk we had no option but to turn our milk into very very cheap powder. A year before we had optimistically secured milk from several other farmers and so everyone’s milk had to be turned into powder. Our milk price dropped from about R4.20, to R2.20 per litre which is way below the cost of production for even the most efficient farmers.
Then disaster struck! In the spring of 2015 we picked up Brucellosis or otherwise known as Contagious Abortion (CA) in our dairy herd. This terrible disease takes many many agonizing years of blood testing and culling cows to get rid of. Most of the main milk companies will give you a few months notice as a supplier if your milk tests positive although it poses no risk to humans once it’s been pasteurized. We processed our own milk so that was not a worry, but the last thing we could afford was for things on the farm not to go perfectly. There were hefty monthly repayments to be made and it meant that we needed lots of milk produced at a low cost.
The CA was a bit like dying a slow death. Every month you blood test your cows and every month you find new animals infected. On the outside they are healthy cows that are producing normal levels of milk, but they have to be culled out immediately. In the short term the cash flow looks good from the extra income from the slaughtered animals, all be at a about half of their book value. After 5 months of heavy culling, we were down in cow numbers by around 30%, and there seemed to be no decrease in the number of animals testing positive each month. You would have thought that eventually you will cull them out and you will be left with the clean cows. Well it didn’t work out that way. It can take a long time for a recently infected cow to start showing up positive on the blood tests. For farmers who continue with the culling program, it can take 2 to 4 years to get rid of the disease.
The first step in getting rid of the disease is to cull all your young stock who are carriers but don’t test positive on a blood test. This was the first thing we did, and probably the most heart breaking. I will never forget the day we loaded 200 pregnant heifers and 200 weaned calves. They were the best group of calves and heifers I have every reared. They were tame from being handled well and in perfect condition. Every one went to slaughter. When we loaded those heifers on the truck, the tears flowed. Everyone in their lives will have some enormous disappointment and you have just got to build a bridge and get over it. However the worst for us was yet to come.
Early in January 2016 we decided to cull the entire herd and start over. What pushed us into such a drastic decision you might ask? Well several factors, extreme drought, a disease with no end in sight, a desperate cash flow problem, and our old borehole which we thought had a huge amount of water that could keep us going, actually had none. The day the borehole ran dry with an already almost empty dam, was probably the final straw. So we sold the cows and paid back some money to people who we leased cows from. The money we were left with was mainly used to pay unpaid bills with enough left over to pay the bills for a few months and that was about it. A few months earlier we had purchased 165 cows from neighbouring farmer. These cows had been vaccinated before arrival and then revaccinated upon arrival. They had been testing clean at every test so far, and so we hoped that they would remain clean. Tragically a few months down the line we picked up CA in these cows too. We didn’t waste too much time with these cows before culling them too. We were now left staring down the barrel! A healthy bank balance, but with massive repayments that would make short work of the money we had on hand. According to the experts we had to keep our farm clean of any cows for at least three months. The timing of this 3 month period couldn’t have been worse. We had numerous offers from many farmers who were culling cows due to the drought, but unfortunately we couldn’t take any. They wanted to sell them to us at slaughter price, or lease them to us. Many even offered to give us cattle. By the time we were ready to restock the farm, most farmers had culled heavily due to the drought and were now also short of animals. Our only alternative was to get in beef animals on a share basis to eat all our feed. When the rains eventually came in March and April, we planted most of the farm to turnips and oats which would be grazed a few months later in the winter. I’m pretty sure we were the only farmers in Natal with a surplus of feed last winter. It was a sad surplus, not a happy surplus.
Somehow we had to try and farm our way out of this mess. We chatted to all our creditors explained our situation. Thankfully my father has a good reputation in town and everyone except the big corporate companies were lenient on our repayment terms. We then took a chance and planted 13 ha of cabbages. These cabbages were a huge success and we would not be in business today we’re it not for those Cabbages. The story of my first cabbage crop was a blog post on it’s own. You can open the post by clicking on the following link: “Faith Like a Cabbage“.
After planting and harvesting my cabbages it was time to try and restock the farm. This was the second time the tears flowed. This time the tears were not tears of sorrow, but tears of gratitude. Upon my return from visiting Jenny’s father and step-mum in New Zealand we were greeted with several cattle trucks loaded with cows and pregnant heifers. Farmers from the community had just come through a terrible drought but they got together and sent us some cows to help us restock the farm. I’m total we received about 50 cows and 150 heifers and calves. One particular farmer sent me 120 recently weaned heifers calves. How do you even start to thank people for this generosity. They know who they are and they know that its appreciated more than words can describe. It’s undoubtedly the most humbling experience of my life. Since the winter we have managed to claw our way back to profitability. By profit, I merely mean that each month we are slowly catching up on unpaid bills. Things were so tight for us a few months back that we didn’t even have enough money to pay the interest to the bank! I didn’t know this before but it’s like going into the red, and then into the purple. Thankfully our creditors were patient with us and the bank decided wisely that we would do a better job of running the farm than they would. Since then it’s been slow but steady progress catching up on our accounts. It’s been hand to mouth farming for the last two years and it’s certainly been a good lesson in no-frills farming.
Since I wrote the post, “Faith Like a Cabbage”, I have planted many more cabbages and have thoroughly enjoyed growing them. I also planted a 5 ha block of potatoes who have made cabbages look very unprofitable in comparison. Both crops have been a huge challenge but extremely rewarding. I have discovered that we have a unique farm in our area where we can almost grow cabbages all year round with our warmer temperatures. This means that I can sell cabbages for about 6 weeks at either end of the season with my competition being farmers that are a few hours drive further for the buyers. It also happens to be in the time of year when demand is high, disease pressure is low and hail risk is relatively low. This is an advantage that I definitely intend to capitalize even though we plan to get back into dairy farming again in a bigger way. I will never forget the lowly Cabbage and the lowly Potato and how they have helped pull us out of the dwang. My father got on his feet with cabbages and potatoes. It’s funny how the wheel turns. After what I have learned this last year, I think I will be in for an annual crop of cabbage and potatoes. It would be silly to not use our climatic advantage in the future.
We are certainly far from home and dry but the light and the end of the tunnel is shining bright! My father has put a huge amount of work into the powder factory and that seems to be coming right at the same time as the farm. For the last few years he has been living by the mantra: “aanhou wen” (persistence pays off), and lately: “I haven’t come this far to only get this far”. Despite what we have been through over the last few years, it’s nothing compared to people who go through personal problems. The last few years have bought the two best things into my life, Jenny and little Oliver. I can say that without a doubt that the last two years have been the best and the most rewarding of my life. I’ve learned many hard lessons, but in this time I’ve found a soul mate to share the rest of my life with. We all dream of finding that person who’s the perfect match, your best friend and lover. This is undoubtedly the best thing that’s happened in my life. I’ve gone from dairy farmer, to almost no farmer, to beef, cabbage, potato, turnip, spinach and butternut farmer, and back to dairy farmer again. A Born-Again farmer with a partner for life.