Thursday 13 April 2017

The Finance of Farm Environmental Improvement

There has long been the perception that good environmental management comes to the detriment of the overall farming business.  I’d like to think we’ve got beyond that, but with nutrient regulations coming into play, I suspect that this perception if running rife again!  But, it doesn’t have to be that way, and in fact, it can be positive financially for the farm.  In this post I’m going to show you examples of where environmental and financial gains can be made for farms, and that the two objectives don’t have to be at logger heads.

Resource consents held by a farm is the obvious place to start.  Quite often, consents were obtained, shoved in a draw and never looked at again.  But consents are a valuable asset to a farm, and having the right consents is critical.  The three questions that need to be asked is:
  1. Are they correct?  For example, is my rate of take correct, is my effluent discharge area actually right, are my cow numbers to be milked right?
  2. Could they be better?  For example, does my effluent consent cover my whole farm to give me flexibility?  
  3. Are they even needed?   With Canterbury having changed its plan twice in the last 10 years, there are now consents that were needed under the old plan that are not needed under the new plan, for example consents to store dairy effluent.  
As an example, a consent audit was undertaken on a farm which had six consents to take and use water, and a dairy effluent consent.  This means:
  • Seven lots of monitoring charges.
  • Old take consents that no longer reflected what was happening on farm, including that none of the consents specified whole of farm for irrigation or effluent, and had horrible 14 day volumes that didn’t fit with newly installed pivot irrigation.  
The six take consents were merged into one consent, 14 day volumes removed and replaced with one annual volume for the farm, and the whole farm was also be irrigated with any source.  This means:
  • Better use of the water – the farm was no longer restricted by horrible 14 day volumes, so is able to irrigate when needed.
  • Easier to comply with – One consent versus six…..
  • Flexibility – The water can be used anywhere it’s needed, rather than from a certain point on a certain area.  
The paperwork is now sorted, so next it’s time to look on farm.

Is your infrastructure up to scratch?  This can encompass all types of things, but common examples include having effluent storage that’s big enough, or your control box says that the pivot is putting on 10mm, but how do you know that’s what actually coming out the sprinklers?  Right the way through to the question “is your pump and mainline adequate and not costing you more to run than they need to be?”  Has it been looked after?  Things like sprinklers broken or not turning, or missing altogether!  Remember that an irrigator has moving parts – how often are these checked and serviced?
And finally, how do you make the decision to start irrigating or when to discharge effluent?  The neighbor is not generally the most reliable tool to use, and if it’s too early, then its water wasted, effluent and therefore nutrient wasted, and production lost.

Now let’s take a look at lost production due to infrastructure.  We’ve got a farm with an intake that required frequent rehabilitation, and cleaning and clearing of weed despite it having a screen which resulted in reductions in flow.  It also had a mainline configuration resulting in substantial system losses, and pumps not performing at their optimum efficiency.  The farm needed 4.5 mm per hectare per day for optimal growth.  Because of the intake and mainline issues, it was constantly only getting 2.5 mm per hectare per day.  This resulted in a shortfall for the farm of 2650 cubic metres per hectare.  The impact on production from this shortfall is 10% or 1.5 tonnes of dry matter per hectare of average annual growth loss.  If this additional growth is worth 28 cents per kg of dry matter, this this is $420 per hectare.  And all this because the infrastructure was not doing what is supposed to be doing!

Now let’s compare a farm with soil moisture monitoring to one without it, both located within 1km of each other, of similar area, lay of the land, and irrigation systems.  For the 2013/14 irrigation season, the farm with soil moisture monitoring used 3213 cubic metres per hectare.  The farm without soil moisture monitoring used 5389 cubic metres per hectare.
  • Energy Cost to farm with soil moisture monitoring = $321.30 per hectare
  • Energy Cost to farm without soil moisture monitoring = $538.90 per hectare
And let’s not forget that less water applied = less nutrient loss.

So why look at all of this stuff I hear you ask?  The reality is that the use of resources on farm cost money:  Water, energy, fertiliser and/or effluent…. Increased production tends to not only cost money, but it is also considered to have environmental impacts.    In my view, it is really important that farmers don’t view the two as being incompatible.  A Farm Environment Plan and the process involved in preparing one, is a place to assess the risk of your farming business to the environment.  But you should take it as an opportunity to look at your business as a whole, and use it as a way to not only achieve good environmental management, but good “full stop”.    Don’t view the process as a hindrance, and just another regulation box to tick. Take the positive approach.

So, my final comments!

This has been a snapshot of the opportunities that exist on farm where being environmentally responsible can also be financially beneficial. So, use what’s coming from a regulation point of view to take a look at your whole business.  You might be just pleasantly surprised at what you find, and be able to make positive changes to your business all round.

Keri Johnston, Irricon Resource Solutions Limited.
Phone: (027) 2202425

Keri’s expertise is in the field of natural resources engineering and resource management, primarily in water resources, irrigation and nutrient management. As well as doing this, she farms with her husband and two girls at Geraldine.