 Thank you very much and It's a pleasure to be here. It's a real honor to to be asked to speak at the this Augusta these old holes I'm involved in some practical farming we run a We milk about 15,000 cows and export about 20,000 tons of pumpkins a year out of New Zealand Through that business on the right through the business on the on the left. Sorry business on the right we We we planted about six and a half thousand hectares of carbon forestry We're the biggest dedicated carbon forester in New Zealand And we've done both of those businesses both with our own capital But with with substantial international money that we brought into New Zealand So we're responsible for a quarter of a billion New Zealand dollars worth of equity funds under management We borrow a bit of money from the bank and we we run about four hundred million dollars worth of farming assets in New Zealand and forestry The business in the middle is is is a database which we've spun off from map of agriculture When I first started going around the world raising money for New Zealand farming I used to look into the eyes of the potential limited partner and and I used to see this I used to see what he was thinking which was I like what that guy's saying But I bet there's some land in Kazakhstan where you can do it a lot cheaper and and you know Nowhere in the world could we find a database that could tell us whether that was the case So we just built it and so What we're gonna do is I'm gonna give you a wee Outsiders view of Irish farming From that database I'm gonna just give you a two-slide summary of what what is a farming group We think is our responsibilities with respect to climate change I'm gonna summarize some on-farm climate smart initiatives That we are trying to we call our fund manager cream or sustainable so we take this stuff pretty seriously And then I'm gonna skip over some quite technical slides that I've written Because we're just not gonna have time to get through them and enjoy our evening The most important thing is to get discussion going not for me to hit you over the head with a whole lot of mathematics so I put my business cards there and Anybody who wants the more mathematical stuff about What is the amount of hectares of trees you need to grow to fully defuse the carbon or Nitrous oxide or methane from some ruined at animals. That's that's in those that's section four and then we're gonna have a look at the at the price of coca-cola and milk in the high street here in Dublin and Then we're gonna talk about sheep so We actually have been researching so far we haven't brought any land other than in New Zealand but we've we've we've tried to buy land in Australia and they drove us away and We've tried to buy land in East Germany, and we couldn't get comfortable with it and we We we we brought our best analyst over a young guy who was an outstanding farm acquiring guy in New Zealand we said come on find opportunities in the Irish and and In English and Scottish agriculture. Where's where's the opportunities and Annoyingly we couldn't find any opportunities here in Ireland our conclusion was that It's a great place to farm It's good infrastructure, but we just didn't find a lot of Opportunities to bring say New Zealand farming techniques to this country because frankly you're already farming very well here There's a very good a very good advisory community could spread a best practice So for an investor it was just harder to find opportunities We we are becoming aware here in in Scotland and in Ireland and a couple of other European countries There's a lot of talk about Government sort of support of the farming sector to to get out of beef and into dairy and all this sort of thing That concerns us in New Zealand. We've had experience of governments picking men as it when as it seldom works out well and There's some environmental constraints simply because of the lack of cheap land So let's have a quick look at this database Missouri and Let's have a look at the profitability of that over time and what we'll see is that Operational returns have been pretty disappointing and this is the characteristic of beef farming all around the world including as I understand it here in Ireland Pretty low profitability per hectare EBIT and Production levels of But you know 100 150 kilograms per hectare, which is not atypical go to a European country And we'll see that beef And say Germany is also generating pretty disappointing with very low returns even lower for the owner operator who's making a loss and The landlord is making about 1% so So there's a very ordinary farming sector that hasn't performed very well I happen to think it's about to have its it's good times again for a few years because all of these agricultural commodities go in cycles But it isn't an easy one There's one this is a very valuable database the European Commission put together and we're about to have a look at all the Irish data Which is why I wanted to look at some American and some German data before we did but There's one thing you have to understand about this database and that is the wages of management are Imputed so a small farm where the small farmer is prepared to Work long hours just because he loves the lifestyle His salary will be imputed at a full salary and so he'll often appear to make a loss although. He doesn't think he is Let's have a look at Ireland now, okay, here we are beef Well, let's have a look at dairy first. Let's have a look at some Grains just just for a change So we have grains here in Ireland so Operational returns per hectare of around about 400 euros Now since the European subsidies just over 200 euros a hectare that's those operational returns to the farmer a roughly half subsidy This is the average person. I'm sure there's a lot of people in this room. They're not that are not the average But this is the average from the European database and That means that that grain farmer is making about a 1% return on this capital here That's the total capital he has employed in that in that farm So that's how we we look at farming when we we bring up all that data and we try and look at its its economics Let's have a look at Dairy farming here in Ireland It is it is growing about five five hundred and fifty from four hundred and fifty kilograms of milk solids per hectare per year multiply that by 12 that's about six six and a half thousand litres of milk per Hectare per year This is your average farmer and again very similar profitability to your grain farming but Probably a bit more reliable and Operating it, you know one and a half percent return one of the things that we found very interesting when we looked at the data Was it your landlords returns have been going down rents have been going down from four hundred a hectare to 300 a hectare and the owner operator He's still capitalizing his this or the operator the tenant He's still capitalizing his labor at a cheap rate and giving away labor for free, but it's getting less bad and he's starting to get a better return So we just we could see some interesting trends. We think there's a lot of stability there Let's compare Irish dairy farming with say Australian Let's have a look at the let's have a look at I don't know Queensland and there we can see You know the average farmer in Queensland is growing 200 kilograms, you know Ireland's doing four or five hundred so a Much better place to farm Let's have a look at probably the most comparable farming sector To you lot and that is the west of the UK and there they are Generating very similar returns per hectare Very similar But they're getting a higher operational return because their total assets is Only about 60% of yours. So you're capitalizing and It is a great place to farm the UK and and these chaps have TV, which you've substantially got on top of but You know those are the comparative so we would you know as a sort of professional investor in farmland, we would say The west of England is a great place to farm Ireland's a great place to farm both of them are Fully priced but never the best fantastic farming industries. I Know this is what I do when I'm trying to raise money from investors. I now go to New Zealand and I Go to an ordinary place in New Zealand like the Waikato where they don't have irrigation and there they are doing Just under a thousand kilograms of milk solids per hectare per year instead of doing 400 euros. They're doing an average of about 1500 to 2000 of Cash flow and they're making operating returns on capital of about 5.4% even though capital is similar to your capital per hectare here. It's a large amount of money that we pay for farms in New Zealand We actually have all our farms in Canterbury. We're quite keen about irrigation. We're going to debate that later But we in Canterbury We're we're able to grow about a tonne and a half of milk solids per hectare per year and cash flow averages about $3,000 a hectare The capital value of those assets is pretty high But you're still able to throw off cash at around about a 7.3% rate. So that's that's a quick survey of of of Some good solid places to do dairy farming the west of England Island Some new world places America is very similar to New Zealand by the way So we have a quick look at that and then we'll get off this database dairy farming in a place like say Minnesota is Be very profitable the last ten years making around about a 5% return and But but much but on a much more extensive scale similar type of production per hectare to to here more grain fed of course right, so that's a quick survey of Sort of the context if you like of Irish beef and dairy farming Let's have a now have go back to my presentation And this is any questions We conclude it was you know dairy farming here is about the same as crop much better than beef Good production levels and reliability very good productivity gains I didn't point that out about three and a half percent per year per hectare that gets capitalized That's that's that's that's showing the the quality of the advisory and the technical work being done in this country Operator returns rising and landlord returns falling Quick quick summary of climate change just two slides so that the atmosphere wraps the earth in a 20 kilometer thick blanket Only zero point four percent of this it used to be zero point three percent Zero point is is CO2 We need to get that down to zero point three five percent That's a reduction in one meter's worth of CO2 That's about ten or fifteen gigatons per Per year that we need to somehow take out of the atmosphere and I'm going to argue Quite briefly because I'm going to run out of time quite soon that forestry is is one of mankind's most cost-effective tools In that fight and it could be interesting for you here in Ireland, although I know at them until 2020 You can't actually use forestry as a mitigate here in Irish agriculture so This stuff over here on the left is is the stuff that McKinsey when they did this big study said was I mean I'll eat on you this presentation said was was was a negative cost you know was it was it was a gain to society to make our cars hybrid and insulate our houses This is really where where agriculture plays its role reduce flesh and learn agriculture reduce possible and conversion grassland management To greater than restoration partial and therefore a station that gives us access from about ten to get up to about 25 It's very cost-effective between five and ten euros per ton. So According to McKinsey and I fully agree with them forestry and bitter land management has a massive role to play in combating climate change Let's have a look at what we can do on our farms. This is some research from the from the one of the crown research institutes in New Zealand It's an excellent paper and it's referenced. It's footnoted in here It's it's a Bible of how to get your dairy cows to make to produce less methane Their conclusion was if we can we can take our carbon intensity down from 12 kilograms of CO2 per kilogram and looks I was down to about nine simply by increasing production per cow Farm infrastructure management skill off farm grazing feed pad Barney in the winter pasture and animal genetics Soil sequestration also has potential There's some very well documented Material on taking going from arable systems, which when you're continuous cropping arable You'll be done at about 2% soil organic matter unless you have exceptional peat soils If you if you're if you're continuous cropping clay lands You'll you'll do what the eastern counties of the UK are rapidly heading towards which is 2% organic matter You will get your organic matter back up to 7% within 10 years But it's a one-off gain And although after that one-off gain you've got a lot you can still each year make a difference Pasture and feed management also helps a lot. We think Ireland's probably ahead of New Zealand in this respect You here in Ireland have had a nitrate legislation for a lot longer than we have 10 or 15 years We've had it in New Zealand for three years and it's radically changing New Zealand farming practices as you do here in Ireland we will soon be having a lot more feed pads more winter barns and protecting Soils in the winter, which is when we get the most loss of nitrates into the waterways and into the atmosphere Some interesting work being done on plantain and chicory in terms of pasture and feed management and It looks like they they both Significantly reduce the greenhouse gases coming out of out of the out of the room and Bioengineering of the cow has potential. It's actually not my area of expertise. I think it's gonna be very interesting. It might take a long time, but So what's what's what's what's the possible strategy that that? Develop country and developing country agricultural sectors might start to adopt Clearly feed pads and winter barns Clearly regulated and well-defined fertilizer use with with a high degree of extension and training around the time of application of fertilizer Managing to higher grazing residuals On each grazing round increasing soil carbon and nutrient fertilizer uptake through deeper roots. So building the soils And might these techniques all together contribute maybe 30% of headroom They'll never get us to to a carbon neutral cow, but we might we might create some significant headroom Then maybe we could offset some of the needed headroom with forestry and that's what I'm going to talk about next And and then see if we can come up with some technology So the numbers on cows and this is what I promised I'm not going to go through the numbers on cows when you really boil it down and do all the math cow carbon neutral you would need to spend about 3% of your revenues, which is probably about You know 15% of your profits of your profits on buying carbon credits and that's with carbon credits at a depressed price Really unattractive to the farmer But actually the farmer doesn't have to become carbon neutral You know, we're not we're not asking urban people to stop driving their cars The farmer doesn't have to become carbon neutral what the farmer has to do is is not increase his greenhouse gas emissions He has to offset growth So if he grows his farming industry, which I understand you're planning to do here in Ireland That only applies to the marginal growth in production So if we if we become cure to the compliant by which I mean and say we've got ourselves 20 20% ahead of where we should be Well, we have to pay that on The marginal headroom, but that's that may be only about you know 1% of revenues a lot more manageable So that's cows. What about trees? Carbon forestry is the f forestation of non forested land in temperate countries annual sequestering from softwoods will be between 5 and 40 tons per hectare per year and depending on whether you plant short-lived softwoods like Pinus radiata or long-lived species like Sequoia or Douglas fir You can you can get these gains for 20 30 40 or even 100 years But once you've had those gains a steady state will then ensue The forests carbon footprint will become steady state you get no further gains once you have a lovely forest. That's mature Sadly, so forestry is only a one a one-off gain to mankind the f forestation of wastelands It's not a perpetual game putting cows and trees together So imagine a regulatory or compliance Standard that required farmers or nations to limit net emissions That is roughly how the New Zealand emissions trading scheme has been designed to include agriculture Although for political reasons it has not yet been extended to agriculture. So it's been it's been approved by parliament But not yet implemented It's also how in effect the policy works here in Ireland the individual farmer unlike New Zealand doesn't have any Regulatory risk at this moment, but as a country as I understand it you you've made certain commitments to how much greenhouse gases Agriculture and a couple of other sectors can put off So what's the solution will the farmer or the farming nation can still grow production? however, they would need to build an offset mechanism they could plant trees and According to the mathematics on the previous slide you'll be giving up around about three to three to six percent of milk revenues on the Marginal investment in new capacity What ratios are those I'm going to skip this slide Roughly works out that you'll need a quarter of a hectare of carbon forestry for each hectare of new new new dairy England So if you can find some land and not a goal, it won't grow dairy cows that you can plant in trees You need about for every four hectares of expanded dairy farming. You'll need about one hectare of secondary land and Putting it in numeric terms if you were to buy that land And forest it and maybe the buying and the foresting cost you 10 10,000 euros a hectare That would add about 8% to the capital cost, which is which is a lot, but it's you know I think it's it's workable. This these are not impossible numbers for a society to attempt to achieve The same numbers in New Zealand work out to about 4% Slightly cheaper land slightly more productive daring the ratio is about one hectare of Farming land and half we need we need more forestry because this is quite an intensive daring system But we buy there we buy the forestry land a lot cheaper You don't need to grow your carbon at home It's actually possible to establish high yielding carbon forestry up to 50 or 60 tons in tropical regions These countries have significant Serato grazing lands that are underutilized There are major forestry afforestation programs going on in the Serato in the northeast of both Brazil and Columbia right now And you can establish that forestry a case share and other species at around about $2,000 per hectare In fact, we've done some forestry in New Zealand for about that amount So at a 10% cost of capital that would that would throw off your carbon credits at about $5 per tonne Which would lower that those numbers I gave you earlier about 60% So you give up three to six percent of your revenues here in Ireland if you Offsets your carbon with forestry here in Ireland if you go and do it in Latin America you could do it for one and a half to Three euros three percent of revenues. I've only got two slides to go and hopefully then I'll be almost on time Actually, I this is this is a complete non sequitur. It's just a classic farming thing I want to complain about something and it is I went down and I photographed in your spa on the high street down here in Dublin So you're allowing these characters to sell that sugar Shots here for a pound euro 80 and you know as long as we do that and to me As much as some of the other stuff we're discussing. That's the policy issue that we have got ourselves in a very weak position with a You know, I've got to believe that's a more valuable product on the left and my last slide really is that I Think another challenge that we have is the wrong type of government involvement Agriculture is an afterthought in most countries. It's not an afterthought in Ireland. It's not an afterthought in New Zealand, but There's quite a few countries. We are slightly embarrassed to say that you're a farmer when you go to dinner parties, you know It's it's sort of a forgotten industry and and we priced ourselves right down at the bottom of of You know the the the commodity chains and So because the stuff's so cheap if we produce more of it We don't get more demand people eat the same amount irrespective of the price So we supply more and it just pushes prices down Now scientists and agribusiness people and policy people of whom there'll be a number in this room are mostly urban folk They don't primarily care about farming come and they talk a lot about the desirability of producing more food to feed the starving thousands and for the most part they're very keen to roll out more technology and Then force us to sell cheap commodities and turn them into bad food So that that has been the story of 20 of the last hundred years of agriculture We've really got ourselves in a quite a weak position It caused a big glut in the 80s and 90s Government with massive farmer pressure came to understand this in the 90s and decoupled subsidy from production But my impression is we're starting to forget it again and the same well-meaning Establishments are encouraging us to get government support for producing more food, which I think it's going to be a mistake and This is a complete non-secretary if you think daring is hard try read me So we discovered in the mathematics earlier that the the greenhouse gas intensity of a kilogram of dry matter of milk is About 10 kilograms of co2 beef is around about 20 so it's a it's a harder product to Daring in my view can quite easily be made Environmentally acceptable through the numbers that we went through earlier. It's harder to make red meat environmentally acceptable It's harder to offset to buy enough forestry land to offset red meat Certainly because my family has been red meat farming for 150 years But and and when you go to the calorific content of the food It's even worse because a kilogram of red meat has half the calories in it than a kilogram of milk dry matter So we're talking about we need to for every calorie of food that we're delivering to the population us red meat farmers need to We're four times behind the dairy farmer That was a non sequitur. So thank you very much. That was some slight jumble But a few thoughts about you know the environment and dairy farming