New Zealand agricultural history. No 18. Importing exotic sheep breeds

Marketing the  Sheepac sheep - the plan
Secondary quarantine units
Helping shareholders to market their sheep

Artificial insemination programme
Buying sheep from Hilson's unit
‘Bundled packages’ for sale
Sale by public auction 
Hopuhopu  management changes 

MAFTech Sheep and Beef Officers  as sales agents
Stock agents  

So how did Sheepac score in business terms? 

 

By Dr Clive Dalton

 Marketing the  Sheepac sheep - The plan

Robin Hilson

 
Hawke's Bay Perendale  breeder Robin Hilson  was asked by MAFTech Business Manager Bruce Koller to join the Sheepac board of directors to represent farmers' needs, and to help market the sheep. Robin was a excellent choice.
Robin remembers discussing with  geneticist Dr Andrew Parrat who had moved from Massey University to join the Ruakura genetics team,  how best to move the sheep out of Hopuhopu for sale, but still keep tight quarantine control over them. Robin said there were a lot of folk around who were very worried about Scrapie appearing and getting loose into their areas and flocks!


Secondary quarantine units  
As MAFTech was going to be heavily into  marketing  the exotic sheep genes, their plan was to use two main centres as their own secondary quarantine stations at (a) their  Flock House farm near Bulls, and (b) the Invermay Research Centre near Mosgiel.  Hopuhopu was the main unit from where the top purebreds were sold.  These secondary units were under the regular surveillance by  MAFQual animal health officers who charged for their services.  

In an article in MAFTech's 'AgriSearch' magazine No 4, 1987,  MAF journalist Matt Bird reports how the Invermay quarantine station was all completed from bare paddock in the middle of the Research Centre to fully-fenced and facilitated quarantine unit in three short weeks.  It also says in the article that prison farms were also in the planning for more quarantine stations if needed.

But the main secondary quarantine station was set up by Robin Hilson on a farm (Tangarakau) near his home property at Takapau in Hawkes Bay.  Tangarakau was protected on three sides by a river and near his home farm and he records that there was plenty of opposition from local farmers, politicians and breed organisations who were still all fearful of the risk of Scrapie.

Helping shareholders to market their sheep

Richard Bradley

MAFTech's Richard Bradley was Sheepac General Manager and Brian Cornish was Marketing Manager.  
 Diana Houtman was Richard's  PA but later by default she remembers becoming Company Secretary after MAFTech's Animal Business ended when MAF became AgResearch.  Angela Hamilton had a support role with Brian Cornish and she was followed by Jill Ansley.

The Sheepac business ran from 21 January 1988 to 17 May 1995.  The marketing team initially produced a  brochure (see below) to help each shareholder  promote and market what sheep they had to sell - purebreds and crossbreds.  There was a brochure for each breed and a space to put the vendor's contact details, so each shareholder had to organise their own marketing and promotion.
 
On the brochure are the addresses of four MAFTech marketing centres for contact.

• C/- Ruakura Ag Centre, Private Bag, Hamilton
• C/- Batchelar Ag Centre, POPBox 1654, Palmerston North
• C/- Canterbury Ag & Science Centre, PO Box 24, Lincoln
• C/. Invermay Ag Centre, Private Bag, Mosgiel

Below are the details copied from the Sheepac handout in December 1991.

TERMS AND CONDITIONS OF SALE

As at December 1991

• Terms of sale are strictly cash on delivery unless prior arrangements are made with Sheepac’s Ruakura office.
• Title in these goods is retained by Sheepac until full payment is received.
• Stock sold by Sheepac will be a certain mix of: breed, purity and age. Each type of sheep will differ in priced dependent on these factors. The right to select animals will be on a first come first serve basis.  
•  On the date of selection, the total sum owing will be invoiced.  Ownership does not pass to the purchaser until all monies are paid.
•  GST will be due on invoice date; that is the date of selection. It will be charged at the rte then ruling.
• And genetic material collected from the animal (ie semen or embryos) before selection remains the property of Sheepac, and Sheepac retains the right to dispose of sell such material as it thinks fit.
•  Contracts are personal to the purchase and can only be assigned or delegated with the written approval of Sheepac. Such approval may not be arbitrarily withheld.
• The sheep are sold guaranteed to be fit for mating at the time of sale ('guarantee').
• The guarantee will be valid until the end of the 1992 mating season.
• The 1992 mating season will be deemed to have finished on or before 31 May 1992.
•  No claim will be recognised by NZ Sheepac Limited if not notified to the NZ Sheepac Limited within one month of the end of the 1992 mating season. 
• NZ Sheepac Limited reserves the right to verify any claims by independent veterinary check and analysis.

Robin Hilson being the owner operator of the largest secondary quarantine unit had a major influence in making marketing 'farmer friendly', and said one of the first moves was to kill the complicated idea of all the different brochures, and centre all sheep orders through Bradley and Cornish at Ruakura.

Bradley and Cornish had spent great effort traveling around the country with their marketing team to promote the sheep which could be inspected at any of the three secondary quarantine stations as well as Hopuhopu.  The Ruakura office did all the paperwork and handled the records on each sheep and took the final orders and handled the money when they were sold.

Robin Hilson also reports that as a Sheepac director and farmer, he was not happy with the standard of sheep husbandry at the other MAFTech quarantine stations, especially Flock House with farmers deciding to buy sheep from another location - mainly his.  Robin stressed that it was not the lack of money spent by MAFTech which was the problem - as they spent plenty.  It was the lack of management skills.

Photo of Finn ram at Flock House.  Not the best looking specimen of a ram in the eyes of farmers if you were concerned about his 'phenotype' (structural soundness) and not his 'genotype' for exceptional high fertility and fecundity (lambs reared).

Photo: Jim Essen

 Oxford Down sheep at Flock House.

Photo: Jim Essen











Artificial insemination programme
The ewes on the Hilson quarantine unit were made up of 2500 Hilson Perendales, then 140 ewes from the breeding groups - Romney Development Group (RDG),  Perendale Genetic Development (PGD) and the Rangatiki Coopworth Breeding Group.

These ewes were used as recipients for the purebred semen which was collected from rams at Hopuhopu first thing in the morning, and then by 10am it was on a plane on its way to Napier airport where it was collected and taken to the station.

Robin said that technicians inseminated the ewes (intra uterine using a laparoscope) and achieved amazing results.  A total of 300 ewes/day were inseminated with 70% pregnancy rates, when at that time, doing half that number of ewes with 50% pregnancy rate was considered to be a good day's work.

Tokanui leftovers
Some of the sheep from Hopuhopu went to MAFTech's Tokanui Research Station, but nobody seems to remember much about this.  Neil Clarke thinks the idea was to keep a sample of the purebred for research which never seemed to get done.  The Finn was one of the breeds at Tokanui which John Dobbie remembers some  going to Daniel Wheeler in cooperation with Marton Coopworth breeder Roger Marshall.  There were also Oxford Downs at Tokanui but nobody can remember what happened to them.

Dr Geoff Nichol

Dr Geoff Nichol,  former geneticist with  Landcorp recalls buying packages of Texels from Tokanui which  was their main aim. 

 But Landcorp were also interested in the Oxford Down breed and  got some  from Tokanui hoping they would have some good meat genes for their 'Lamb Supreme' breed development programme. 

 But Geoff  says it was decided to keep all their sheep ‘white-faced’, so the Oxfords were culled.

‘Bundled packages’ for sale

From the beginning of Sheepac, anyone could buy sheep and not just shareholders.  Each shareholder had a package of females returned to them for their investment.
 
The surplus sheep of various mixtures left at the end were marketed in ‘bundled packages’ of a ram and a few females of different crosses of each breed.

Sale by public auction

The apparently there was also a public auction of the leftovers of the purebred rams and female crosses of various sorts.  Texels were the most popular with purebreds going from $5,000 - $16,000.

Hopuhopu  management changes
In the final stages of MAFTech's quarantine before the sheep left Hopuhopu to be multiplied and sold from the secondary quarantine units, it was seen by the Sheepac board chaired by David Wallace that there had to be some things that needed action.  So Hawke's Bay Perendale breeder the late Neil McHardy, and Coopworth breeder Peter Black spent a few days each week at Hopuhopu to sort things out so the sheep were in sale's trim.

One of the first things they did was to banish (physically remove) all aerosol raddles from the property, as they sheep for sale were ending up looking like rainbows! Very few people can use an aerosol raddle and end up with a tiny dot.  It's a problem of knowing how far away from the wool to fire. and how long to press the button!

MAFTech Sheep and Beef Officers  as sales agents

Selling sheep was a massive change for MAFTech’s Sheep and Beef Officers who previously had to be squeaky clean when it came to promoting an individual breeder’s stock. To be told to go out and sell Sheepac rams, and on a competitive basis, was a bit of a culture shock as they had spent most of their careers on farms criticizing sheep, and identifying sheep for culling, and now they had to switch modes and promote the good 'features' of sheep - and end up 'closing a sale'. No sale meant no 10% commission for them personally!

It was a whole new culture and some SBOs loved it and some like the older ones hated it, as they’d spent their entire public service careers being totally independent.  It was easy to sell the top good looking sheep, but when it came to the second draw, then things could get a bit sticky!

Robin Hilson said many of these MAFTech  staff needed a lot of support from Sheepac staff, and he spent many hours on the phone with them talking over the nuts and bolts of closing sales and finding new business.

Also goading them on from MAF head office was the newly-appointed National Business Manager Bruce Koller, with the Director General Malcolm Cameron on his back to make it look as if Sheepac was making money to help pay back the cost of the entire importation exercise.

Former Christchurch SBO Lindsay Galloway told me with great amusement that the competition to sell rams was really hot among the SBOs in his patch, as Sheepac offered a prize of a holiday for two on the Australian Gold Coast. 
 
 Lindsay won the prize hands down as he said Texels were selling like hot cakes in Canterbury, and to farmers on the Chatham Islands where he had long time association advising on all sheep farming issues.
Lindsay was honoured with the ONZM for services to farming on the Chatham Islands. 


 Stock agents

The Stock and Station agents also hated MAFTech staff selling rams as they were missing out on commission, which on stud rams could be over 12%. Lindsay said he was getting anything from $5,000 to $10,000 for Texel rams and even F1 crossbreds were selling for $1200 to $1500.  So the stock firms had every reason to feel sore.

Stock agents were being softened up in the early days by MAF when a group was taken to Soames Island in 1984 during their Stock and Station Agents' Training Conference in Wellington. It was clearly a big MAF PR exercise judging from a MAFTech publication which reported that 11 reps from all the NZ stock and station agencies met up with the MAF team at Petone wharf on a misty windless morning in March.  

The MAF team was led by Tony Keay (Veterinary Staff Officer, Imports from Animal Health Division), Paul Lysart (Chief Advisory Officer Animal Husbandry) , Geoff Bilbrough (Scientific Liaison Officer from Research Division), Chris Boland (Veterinary Staff Officer Training and Communication from Animal Health Division, and Norrey Simmons, MAF Public Relations Manager.  The stock agents were given a tour of the facilities and details of the future programme to get the sheep out into the industry from Hopuhopu, as well as a copy of MAF's goals.  Morning tea was provided by the wives of two of the MAF Livestock Officers at the station.

By the end of this you can judge how stock agents saw some good business coming from selling these sheep.

So how did Sheepac score in business terms?
Those closely involved in setting up the business and making sure it delivered results, and got the exotic genes out into the commercial sheep farming world, speak very enthusiastically about how successful the business was. It made money!  People like David Wallace, Bruce Koller and especially Robin Hilson are all certainly clear that things came out on the right side of the ledger.


But the only way it could be seen to have produced a 'profit' was by  'partial budgeting', as against the income side from sale of sheep - what would you put on the  expenditure side?  If you put the mega costs of the whole procurement of sheep from overseas, then all the costs of getting them through quarantine to end up for sale through Sheepac - there was no way the exercise could make money for the taxpayer - who after all carried the can.

So lets throw the question into the too hard basket, and remember the allusion that I was told, that 'taxpayers' money is not real money'!  

The silly thing is the sniping that some Sheepac members have done against LambXL, which was very open about the size of their financial loss. 

New Zealand agricultural history. No 22. Importing exotic sheep breeds

Animal Enterprises (AE) importations 1986

Finn, Texel, East Friesian, Gotland Pelt, German White Headed Marsh

 Stupid quarantine fencing regulations by MAF

Arguments with MAF over release dates from quarantine

 By Dr Clive Dalton

 Information obtained from paper presented by Dr Jock Allison to NZ Institute of Primary Industry Management, December 2006.

Fencing stupidity

MAF regulations said there was to be a 2m high deer fence on the outside and a conventional boundary fence on the inside both 2m apart.  So MAF wanted to heighten the sheep boundary to deer height, and then add another conventional boundary fence on the inside. 

The cheaper option for AE ($5/m) was to leave the existing boundary and build a new deer fence inside that. Jock asked the bureaucrats if they thought there was any difference to an escaping sheep or one breaking in, if it met a ‘high-low’ fence combination compared to a ‘low-high’ one?

The Palmerston North Regional Veterinary Officer (RVO) David Lorne said he couldn’t go against the decisions of his staff and the Chief Veterinary Officer (CVO) in Wellington Peter O’Hara, as it would be ‘bad for morale’, which clearly was more important than the several hundred thousand dollars extra it was costing AE in fencing.   

Jock took his case to Director General Malcolm Cameron, a man not know for snap decisions, and even the Minister of Agriculture, but to no avail. The importance of staff morale reigned supreme over biosecurity and client requirements.

AE went on to have almost 20,000 sheep in quarantine as their major multiplication programme kicked in for sheep sales in New Zealand and Australia.  Jock said that common sense prevailed in the last two years of the programme, thanks to MAF Head Office vet Jim Edwards assuming responsibility for protocols.

Arguments with MAF over release dates

·      The Lamb XL Board was of the view that the more exotic breed animals which were generated, then the more money they would make assuming that it would be as easy to sell 5000 Texels for the same price as it would be to sell 1000, i.e. straight-lining the price irrespective of the numbers for sale. It was Jock’s opinion that the generation of very large numbers for sale would depress prices, which may not result in more money being made. 

·      The multiplication programmes of the imported sheep continued unabated, and at the end of the quarantine period some 20,000 animals (including all of the recipient ewes) were held in secondary quarantines. The project lost in excess of $10 million (due to poor demand), but Jock declares that this was the largest 'public-good' research programme ever undertaken on behalf of the New Zealand farmers. The trouble was – nobody saw the loss in this light.

·      Jock is adamant that the financial loss would have most likely been far more, if the release date had been a year after the MAF exotic sheep programme, as was decreed in the initial importation technical conditions for both programmes (see below)

Release Dates  

·      The release date of animals derived from the MAF 1985 importation of embryos was initially decreed to be 5 years from the transplanting of the first imported embryos, i.e. March 1990. Lamb XL was programmed to release their animals in February 1991, i.e. one breeding season after the MAF importation. The long quarantine was required because of Scrapie. 

·      In 1986, MAFTech was born and all advice from then on was provided on a ‘user-pays’ basis, so significant revenue was expected from the sale of rams and ewes from their second importation under Sheepac (See other blogs). 

·      Funding of the quarantine expenses for MAFTech continued to come from the public purse as was all the importation costs involved, unlike LambXL which was funded totally commercially.

·      Significantly the Lamb XL importation early in 1986 included sheep from about 2/3rds of the flocks from which MAF had purchased ewes and rams for their embryo recovery programme late in 1984. So LambXL with their continuing quarantine would have large numbers of animals 6 to 9 years of age being observed for the unlikely appearance of scrapie, while MAF’s animals derived from the same flocks would be released. 

·      Jock asked what would happen if scrapie turned up in LambXL’s older sheep? Clearly this situation didn’t make sense as logically both populations were the same from an animal health point of view, and simultaneous release at a specified time should have been allowed. 

·      Obviously MAFTech was not interested in the release at the same time of the LambXL animals, as they saw their expected revenue from Sheepac being diminished. AE argued that a simultaneous release date was technically sound, and it was in the sheep industry’s interest to have this situation. 

·      The logic was inescapable, and Jock presented a comprehensive case to the MSQAC about the situation, and MAFTech at a meeting strenuously disputed that they had some basis to justify early release. Jock said they had no technical basis for this, and after months of deliberation the MSQAC came to an interesting decision. 

Dr Peter O'Hara.  Photo: Words and Pictures

·      Instead of bringing the LambXL release forward, Peter O’Hara and Bruce Koller instructed MAFTech to keep their sheep in quarantine for a further 8 months with release in November 2000, with the LambXL release allowed at the same time. This was a huge boost to Lamb XL and caused significant increased expenditure of taxpayers dollars by MAFTech to maintain their sheep in quarantine waiting another 12 months for their expected income, as they had to wait another breeding season for their release. 

·      The LambXL sheep were sold to a wide range of clients all over New Zealand and some to Australia but with the company ending up in the red big time.