Milking our cows in China

Large fans provide relief from the heat at Fonterra's Yutian 2 farm in China. Photos from the NZ...
Large fans provide relief from the heat at Fonterra's Yutian 2 farm in China. Photos from the NZ Listener.
Workers on Fonterra's Yutian 2 dairy farm pose for the camera.
Workers on Fonterra's Yutian 2 dairy farm pose for the camera.
Fonterra China Farms general manager Nicola Morris is relishing the challenge of her job.
Fonterra China Farms general manager Nicola Morris is relishing the challenge of her job.

Dairy giant Fonterra has the ambitious target of producing up to one billion litres of milk from 30 farms in China by 2020, to cater for the massive burgeoning demand by Chinese for dairy products. Agribusiness reporter Sally Rae tours one of the Fonterra farms, near Beijing.

Visit Yutian 2 farm, a 90-minute drive east of Beijing, and, not surprisingly, you discover a slick, high-tech farming operation.

As Fonterra China Farms general manager Nicola Morris sums up, it is about taking the best of Kiwi ingenuity and farming systems, melding it with the best of American and European confinement systems - and doing it in China.

There are 3200 milking cows and 2700 young stock on the property, which is a housed operation involving high-tech, intensive dairy farming systems and three-times-a-day milking.

But, at the same time, every single ounce of vast quantities of locally produced corn silage, which is being fed to the cattle, has been cut by hand.

And that, as Ms Morris succinctly says, is ''the disconnect that's China''.

''China's just a different world, it's not New Zealand. Great people, really, really good people . . . great place to live, but they do business in different ways to us.

''That's not saying it's wrong, that's just saying it's different. We just have to get our heads around what's important and what we just have to understand is China, basically,'' she said.

Ms Morris (48) comes across as a down-to-earth, no-nonsense, straight-talker - sporting a broken kneecap for good measure, as she hobbles around the dairy operation.

She has been in China for the past 20 months and, having spent the previous four years in Tasmania, she admits it is ''a little bit different''.

From New Zealand - her father was a research scientist in Wellington - she was a ''townie'', but from the age of 11, she decided she wanted a career in agriculture.

She spent 16 years running Taratahi Agricultural Training Centre in the Wairarapa before becoming chief executive of Van Diemen's Land Company, Australia's largest milk supplier, with 21,000 cows producing 6 million kg of milk.

She moved from Stanley in Tasmania, with a population of about 400, to an apartment in central Beijing which houses about 1000.

She also moved from running a pasture-based dairy farming system to a housed operation.

But she was adamant that confinement farming was no different from any other farming system.

''It's getting a good animal and treating it properly, which is animal health; it's how comfortable it is and it's feeding it.

''It's all those key things which are the same whether you're in a paddock in Hamilton or a barn in Yutian.''

The confinement operation is a far cry from what most New Zealanders are familiar with - pastoral farming.

It might take a bit for a Kiwi, used to seeing dairy cattle grazing on lush green irrigated pasture on the lower Waitaki plains or Waikato, to acclimatise to the sight of such a large-scale housed operation.

From the cows in the massive barn, where large fans provide effective relief from the heat, to the calves in their own enclosures, it is a vastly different scenario.

But while it might all seem a bit clinical, the reality is that all the stock are well fed and watered, have shelter - the temperatures are extreme, ranging from up to -25degC in winter to 45degC in summer - and appear very content.

And it is difficult to argue with the production figures being achieved at the farm.

Take a heifer in New Zealand, producing 17 litres of milk a day, send it on a boat trip to China, put it into a housed farming situation and that milk production increased to between 30 and 32 litres a day, Ms Morris said.

And the reason for that dramatic increase? It's all about feed.

''It's a perfect life. You wake up in the morning, you get out of your comfy bed, your feed has been put in front of you, you eat it, you go and get milked.

''You come back and, gosh, someone's put more feed there for you. You eat it, you lie down and have a snooze and produce milk and you do that three times a day.

''And so, basically, all they have to do is move to the milking parlour and back, eat food and make milk,'' she said.

Alfalfa (lucerne) was imported from the United States, as Fonterra had not been able to find high quality alfalfa in China, and it was used as a high protein ''rocket fuel'' for the cows, while all other feed was sourced from within China.

Ms Morris had no qualms in saying she believed there was a place for confinement farming throughout the world, including in New Zealand.

''It's got its place,'' she said.

''I'm passionate about animals and treating them properly. You won't see a more comfortable, healthy, happy animal than you see today, I'll guarantee that.

''So why wouldn't you want to replicate that farming system? Obviously economics, can you look after the environment, all those things come into it, but I believe you can.''

She realised that visitors to the farm probably had a perception in their head of what a housed farming situation looked like ''and they'll . . . think the cows aren't going to be happy and they're not going to be well fed and they're not going to look comfortable''.

But once they looked around, they realised the animals were ''as happy as you'll ever see, as good as you'll ever see''.

Asked why there was not more housed farming in New Zealand, Ms Morris believed a lot of it came down to economics and also to ''where you want to put them''.

It was about running the numbers and then understanding all of the environmental issues around how to manage a housed system.

On the China farms, it was a contained system - ''everything that comes in has to go out some way'' - effluent was treated and resulted in compost which was then used by local vegetable growers and farmers, while water was recycled.

When it came to animal welfare, the key factor was animal comfort.

''If you get it wrong, obviously any disease can spread like rapid fire because they're in a contained system. Comfort and being absolutely at the top of your game in terms of animal health protocols is key,'' Ms Morris said.

Yutian 2 is Fonterra's newest farm, commissioned in October-November last year.

All the livestock on Fonterra's China farms either came off a boat from New Zealand or from stock bred internally. Fonterra was aiming to breed as many animals of the right type on its China farms as possible - the most cost-effective way of increasing livestock.

Fonterra's first China farm opened in 2007 at Hangu, east of Beijing, in 2007. There were ''huge learnings'' as it went from there to Yutian 1 and then incremental learnings as Yutian 2 was opened, she said.

Yutian 3, a double farm, is under construction now and will be completed by the end of this year.

After a steep learning curve, the process was now much more refined.

''We're pretty close now to having ...we don't like the word cookie-cutter, but a model you can pull out and say 'this is what we want a double farm to look like, this is what we want a single farm to look like','' Ms Morris said.

The aim of Fonterra's farming operation in China was to have a hub of farms.

Yutian was its first hub and, when completed, would be made up of five farms, with between 15,500 and 16,000 milking cows, a similar number of young stock - ''that's way more than we need in a pure farming model but we can take all that surplus stock and put them on the next farm'' - with 550 staff and producing 150 million litres of milk.

The idea was to roll out a hub of farms every year from next year on, which involved building the farms, finding the people and sourcing the livestock.

It cost about $NZ52.5 million to set up each farm, including livestock. Fonterra realised if it wanted to be successful in China, it had to have Chinese staff.

Skills of employees could range from being a peasant farmer or a factory worker ''through to having done a degree in goodness knows what''. Having no skills for putting cups on a cow was ''just great'', Ms Morris said.

''That way, if you get your SOPs [standard operating procedures] right . . . you will have a workforce who will do exactly what you ask them to do every single time.''

About 60% to 70% of staff lived on-farm, with the balance living in local villages, and Mandarin was the language of instruction.

''We're in China. To be successful, we have to understand that those of us that can't speak Mandarin, that's our problem, not their problem.

''We've got to understand how to accommodate us, not to expect them to try and figure out how to work with us,'' she said.

Milk was stored in insulated silos on-farm before being loaded into tankers for delivery to local Chinese customers.

Fonterra has a range of processing contracts in China and the milk was sold unbranded at the gate.

Ms Morris said she had no idea what the purchaser did with Fonterra's milk and the co-operative was ''literally like any other farmer selling our milk at the gate''.

''Over time, something more will happen with our milk that we will then have brand milk but I don't know what time frame that will be.

''Our risk is they take our milk, they put it into say a high-end yoghurt but they've mixed someone else's milk in as well and then we don't know what the quality is of that other product.

''What we've got is very clear contracts, they can't attribute their milk to us, their product to our milk, and very clear penalties around what would happen.''

She said Fonterra chief executive Theo Spierings had been very clear about an integrated milk strategy.

''We're not building farms in China just to have a farm in China. It's got to be part of a bigger play, and over the next couple of years I think we'll see some real clear moves in that line.

''I don't know if it'll be a Fonterra tanker per se, but it will be a tanker taking milk from our gate to be processed into something that we will attribute.''

The dairy industry in China was ''huge'' and ranged from ''Mum and Dad with a cow which they walk down the road to the communal milking facility'' to farmers with up to 1000 cows, and then the corporate dairy farmers like giants Mengniu and Modern Dairy, and also Fonterra.

But assuming that China kept on growing, Fonterra would still only be ''a really small percentage'', Ms Morris said.

''A billion litres is a tidy piece of milk but in China and where China's growth is going, we are not a big player.

''The challenge that usually gets thrown at us is 'So why are you building farms in China' and 'Hey, have you noticed people are getting farms in New Zealand, so does that equate?'

''My answer back is always if you look at the growth in China, it's so huge, New Zealand ain't got enough milk to supply China; it's never going to have enough milk to supply China.

''So what we're doing here most certainly isn't in competition with what's happening in New Zealand. And this is just another avenue to actually increase our market share in China because we just can't do it all from New Zealand or Australia.''

Asked if she was daunted by the challenge of producing a billion litres of milk by 2020, Ms Morris said, ''You'd have to be incredibly naive not to think, `Gosh, that's a big number'.''

However, she was confident it could be achieved.

''Everybody'' was building dairy farms in China and big corporates like Mengniu and Modern Dairy had been around a lot longer than Fonterra and were a lot larger.

But she believed Fonterra had been ''really smart'' about what it had done to establish farms in China.

''Got the first one, we learnt a lot. Built the second one, learnt a bit more. Built the third one, learnt a bit more. Built the fourth, and fifth one at the moment. We've pretty much got it nailed in terms of how to run a farming business successfully in China.

''I look at some of the other organisations where they just hooked in and built five or 10 or 15 in year one and they've got every problem you can imagine. I'm very comfortable with the measured way we've gone about it.''

Asked about the single biggest challenge, Ms Morris said China was just such a ''fast country''.

''It's just being able to keep up with it. This is probably from a personal point of view . . . it is just such a fast pace. There's only one speed and you need to stop and take a breath every now and then.

''You get home, just shut the door and go 'Phew'. It's not a calm place during the day.''

Ms Morris, who returned to New Zealand about four times a year, said it was ''a really good adventure'' for a few years.

''It's a country you need to be able to leave it every now and then just to refresh . . . doing business in a different language gets challenging at times.

''I can actually survive. I can count, I can tell the time, I can order food and wine. I can get by now, whereas when I arrived I could do nothing. I needed someone to help me get my driver to pick me up . . . I can survive now.''

Sally Rae travelled to China as a guest of the NZ China Friendship Society.

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