Business Insights

FOOD & BEVERAGE

HOP TO IT

It’s an old adage – you should never have all your eggs in one basket - and Nelson farmer Cam Ealam is the living embodiment of this.

The Ealam family, on Cam’s mother’s side, has farmed the same piece of land since 1856.

“We’d been looking for something different for a while, looking at options for the future, we want the farm to support another six generations,” Cam Ealam says.

For the past 80 years the family has been dairy farming, but Cam was keen to look at how the land could have multiple income streams.

“We saw the hop option pop up and thought that would definitely tick some of the boxes.”

So after a few long family discussions the decision was made to convert 35 ha of the 110 ha farm to grow hops.

The key ingredient in beer is going through a renaissance, largely due to the growing popularity of craft beer, and although globally New Zealand represents a tiny part of the market - around 1%* - the hops we grow here are in ever increasing demand both locally and globally.

But change hasn’t come without challenges.

“My family by nature is quite risk adverse so being able to convince my mother and grandparents that it was a good idea was one of the biggest challenges,” Cam says.

“Basically my mother wasn’t going to have a bar of it unless my grandad was on board.  Thankfully he was pretty excited about it right from the start so that made it easier to convince mum!”

The investment required was significant.  They needed all the machinery required to harvest and process on site – all up they say it’s around $80,000/ha, not including the land.  But there will be a significant crop in the first year of production, and with an estimated financial return of 15% to 20%** the Ealam family feel it’s a stronger prospect than traditional pastoral farming.

The family is in a good position – the intergenerational farming model had always been conservative when it came to taking on debt, and the land sits right in the sweet spot for growing hops.  Something not lost on previous generations.


Hop beds on the Ealam farm.


The Ealam Family - Bryce, Alan, Val, Debbie, Bruce and Cam.

“There had been hops grown on the farm by one of the earlier generations, so it’s come in a full cycle which is quite cool,” Cam says.  “We have all the family history with photos of old hop gardens and records of fertiliser trials and yield tests.”

The difference today is that a shift from what was once a high volume and low value crop has transformed the industry.

Even so, ANZ Commercial & Agri General Manager John Bennett says it takes courage to make bold decisions and it’s important to know what you’re getting into.

“Critical to considering different options for any business is having insights and good information about the industry dynamics and business models of the sectors that you’re looking at,” John says.

“Combine this with the industry networks that the Ealam family were able to tap into, the debt structuring expertise and access to specialists and it made the decision easier.”

John also points out that to respond to change in customer and market needs, farmers need to be flexible and not afraid to change business models that their parents or grandparents had.  Innovation is about technologies, crops and how they're financed.

For the Ealam family the land still needs to support Cam, his parents and his retired grandparents, who all still live on the farm.  So they’ll continue milking, but plan to reduce the herd size over time and possibly move to boutique milk supply.

There are also plans for red meat farming and cropping.

“One idea I’ve got floating around in my head is if we do stop milking cows I would love to convert our shed into a craft beer boutique bar or café,” Cam Ealam says.   “There is a cycle trail which goes right past the farm gate which gets pretty busy and it would be great to share the story of our family, the connection to the land, and how farming is evolving.”

You can read the ANZ Craft Beer Insights Paper here.

 

*NZ Plant and Food Research

**The Ealam family – from their own financial analysis

 

This material is for information purposes only.  You should seek professional advice relevant to your individual circumstances.  While ANZ has taken care to ensure that this information is from reliable sources, it cannot warrant its accuracy, completeness or suitability for your intended use.  To the extent permitted by law, ANZ does not accept any responsibility or liability arising from your use of this information.


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