Ashley, you’re the CEO of FABAL (Food and Beverage Australia Limited), and FABAL is a commercial farming company that manages agricultural businesses across Australia. Can you tell me more about FABAL?
Ashley Keegan: We’re a large agribusiness management company based in Adelaide, South Australia. We operate a number of viticultural enterprises, but also other horticultural operations as well. It’s pretty much spread across the country, with a focus on viticulture in South Australia.
You manage agribusinesses. Do you manage them solely for clients or do you own some yourself?
AK: We own our own, and also manage for others. So, if you’re a company that owns an asset, or you might be an individual, but we also do that work as well. But, we ultimately own a large percentage of what we do ourselves. We also do some consulting work for the industry on an external basis as well.
How many hectares of vineyards do you manage at the moment?
AK: We have about sixteen hundred hectares under management at the moment.
Sixteen hundred hectares is nearly 4 thousand acres, so that’s quite a lot. What are your key performance indicators; what do you take into account when you’re managing and improving the vineyards?
AK: Interesting question. I’m an agronomist by training, and a viticulturalist, but my managers call me the accountant now, because we have to measure the bottom lines of anything that we do. And again, I guess I look at it a bit more broadly in terms of return on investment, whether it be purely from a financial point of view, or a return on investment of our time, or our technology – any of the inputs that we put into our operations. We do extensive internal and external benchmarking from a KPI perspective, but my philosophy is to try and be in the top five percent in anything that we do. Again, when you start to benchmark yourself across the sector, ultimately you go to financial metrics pretty quickly to be able to do that in an objective manner.
Financial success is of course important to you, but in terms of return on investment you take a broader view and include things like labour, time and technology. Our topic today is the costs, risks and benefits of using composted mulch on vineyards. Can you tell me what exactly you use on your vineyards?
AK: Effectively, we’ve done several different trial works with a lot of different products. The products that we’ve mainly settled on now are the composted green organic mulches. So it’s a green organic waste composted through the Australian Standard 4454. We can have them specifically to different aggregate sizes, and different fines profiles, depending on what we’re trying to do with the product.
Where do you source the product?
AK: Our compost comes from commercial compost suppliers, and in our city there’s two or three main suppliers that do that. The majority of the material that we use comes from a feedstock that is kerbside collected. So, I’m not sure of what happens in other countries, but in Australia you have a two hundred and forty litre green wheelie bin that the home gardener can put their lawn clippings in, their pruning in, and in some circumstances can also put food stuff into the stream. Those bins are collected, taking it off to a processing facility, where they’re composted. That process then will generally do a few things: create a blend and a particle size profile that is what I’ve ordered up. So, that’s where we get our product from.
Regarding the specifications you ask for – do you make specifications for each particular site, or is there just a general blend that you use for all vineyards?
AK: That’s a really good question, and it’s not specifically with our site. I do fiddle with the specifications when I’m trying to ask the product to do something a bit different. If I’m looking for more of a mulch versus a soil conditioner or a fertiliser, I will manipulate the percentage of fines in the product. If I’m looking for a more mulch, water-saving product, then there’s a coarser fragment in there. If I’m looking for, sort of a multi-vitamin for my vines, then I tend to get a blend with a high fraction of fines in it that break down very rapidly and give the vines almost a hit that’s equivalent to green organic fertiliser hit.
Can you give a bit of context to the operation: when did you start using composted mulch, and why?
AK: We started, I’d say, doing that in a substantial way back in 2003, and 2003 in Australia was the start of quite a dry period that spanned over seven years, particularly in the south-eastern areas of South Australia. We went into, you know, on our history it’s recorded as a one-in-one-thousand year drought. So, rather than necessarily just hurl more water at a vineyard, we started looking at the options for investing in some composted green organic mulch, and doing some trial work with that.
We were pretty fortunate that there’d been a fair bit of work done in Australia – Katie Webster, John Buckerfield had done a fair bit of work with the products that we had available to us, so that there was some good, objective, empirical data for us to make some of the decisions that we had to make at a practical, commercial level. So, we weren’t having to start at a zero-base there. I was able to make some of those decisions – reasonably big decisions – and in 2003 we undertook a significant exercise in mulch: over six hundred hectares of vineyard in one year, and thirty-three thousand cubic metres of composted green organic mulch. Probably one of the largest single exercises ever undertaken in the country. We dove in the deep end!
For our audience, that study is the CSIRO Report “Compost as Mulch for Vineyards” by John Buckerfield and Katie Webster, which found that in certain circumstances, using composted mulch can increase yield by up to 35% and mid-summer soil moisture by 30%. But even still with the research, there were of course costs and risks involved in starting a new practice in the vineyards. Can you maybe explain those a little bit? I’m sure you were very cautious even still?
AK: Yeah, we were, certainly, and from a point of view…we mitigated the risks, for want of a better term, based on research. There are a few risks associated with it from the point of view of the type of application, the density, the application ratio – you need to be a bit careful with that. The research was pretty strong on water saving, and that helped facilitate a commercial payback. At the same time, it was pretty simple to do a nutrient analysis of the product, calculate that into our normal fertiliser programmes, and take that out of the three-year breakdown period, and do some economic benefit of that. So, yeah there was a risk, but what I’d call the agri-risks of that were pretty low, pretty controllable from our perspective.
Apart from risks, there are definitely substantial costs with starting to use composted mulch – can you tell me what the costs were?
AK: Because of the volume that we embarked on that project, we had a purpose built spreader made to be able to spread that particular product, and that was a reasonable investment, but in the context of the overall spend it made sense for us to do that rather than use a contractor. But, the costs involved were commercial at the time, and it was relevant to the market at the time; the market was pretty buoyant, we were getting paid reasonable prices for our product, and the economics stacked up. But just to put it in context for you: the compost itself was around about, just in rough terminology – but around about two-thousand dollars a hectare in material, but it cost you around four-hundred and fifty to five-hundred dollars to actually apply it to the paddock. So you’re looking at around about a two-and-a-half thousand dollar expenditure.
And that’s in Australian dollars, which would be roughly 2300 US dollars, and 1700 euro.
AK: Yeah. And just to put some context around that’s in the background spend of about six-and-a-half thousand dollars per hectare of normal operating expense. So in a single year we loaded thirty percent on top of our annual operating expense to do the exercise; but again, the research was showing that you would get three years worth of benefit out of it – and again, like all good accountants, you just spread that over that period as well.
So in one year you added 30% extra to your annual operating expenses to do it, but like you said the research showed that it lasts 3 years, so spread over three years, it adds just 10% to the operating expenses annually. Those costs were predicted costs, but were there any costs, or risks, that popped up during the operations that you hadn’t accounted for?
AK: Yeah, I’ve spoken about our experience on a number of occasions in our industry level, but I had one of those crucible moments when I was interstate on one of our other properties and I received a phone call from one of the managers from one of the sites that were spraying this material to inform me they’d identified some contaminants in the product. And this kerbside collected material does have some contaminant background in it, whether it be glass or stone, or anything that goes into your green wheelie bin.
But imagine our surprise when we started identifying syringes in the product; and that ground our operation to a hold, as we had to embark on a whole series of risk assessments. And our understanding as to what happened with that is, a long story short, and a lot of effort short, was that obviously the food stream had been contaminated at some point in time with syringe containers, and had been through the composting process. And we ended up – on our six hundred hectares – having to rake the entire area, and after going through that process we identified over four hundred new syringes in the material that had to be extracted out of that material.
So, it’s probably a bit unusual that you see me sitting here still being a card-carrying supporter of compost after grinding our business to a halt and creating an amazing logistics and practical [impact] on our business that we still deal with today. But what we had to do was understand very clearly that those contaminants represented a negligible risk that we had to put in procedures to manage around that – including identifying those risks to visitors to our properties, and our customers. So, we got together as a business and we looked at those risks and fundamentally we decided as a group that the benefits we were targeting and the support that we had for the product still mandated that we were comfortable to move forward with that.
We worked with the industry pretty hard to make sure that didn’t happen to any other group, and the industry responded pretty well. But I think coming out of the back of that, and the message that I recount to people, looking at that kerbside collected feedstock, is that you need to be careful about the fact that…really, the syringes were acute and emotive, but what they represented to me was just risk, and that if syringes can find themselves in your feedstock stream, then there are probably no rules about that, and as a community – as a supply chain – we really need to work hard on making sure that the public who are putting material into their green wheelie bins, understand the implications and the ramifications of the decisions that they make on their front lawn.
Yes, and we’ve spoken a lot about education in the past, and the importance of connecting people with the process so that they understand where their organic materials go and what happens with them. For example, when speaking with Gerry Gillespie of City to Soil, he told us about their extremely low contamination rates, and he attributes that simply to making people understand what happens with their organic materials.
We go into detail about this in Lesson 4 of our online course on Compostory.org, and we go through the whole process of how to set up an education and communications strategy when you’re implementing a new kerbside system – so anyone who is interested can check that out.
But as a business like yourself, what can you do to help control the contamination rate?
AK: I think that if I was talking to – well I guess we are potentially talking to people considering using it – you really need to do your homework with your suppliers, you need to do the homework on the product. And I’m not sure of the standards in other countries, but there’s an Australian standard for composted green organic, and it’s a basic standard but it’s a good Australian, or international, standard as to what actual process it has to go through. That’s a really good first start. It’s not everything, and frankly it’s the base hurdle that the product should jump over, and that helps manage some of the agri-risks, but it also demonstrates that this is actually operating in a sustainable, professional manner.
And then you really need to go around and get your hands dirty and have a look at the product, look at the process; and understand that if you’re just buying a couple of bags, it’s a return on your time, really, but if you’re looking at embedding it into your production systems, then it’s imperative that you go and have a look at not only the process, but I’d argue [you need to] understand very clearly where the supply is coming from. And ten or eleven years down the track, we’re quite discerning about feedstocks going into our composted green organic mulches. We still use kerbside materials, but we also use very specific streams, and we also have a supply base that will create blends from specific streams for me as well.
My experience with the industry is that it’s pretty proactive in that context. Every day the technology improves for sifting and sorting and managing contamination in the kerbside products, but nothing beats stopping it getting in there. And I think that as a community, as an industry, there’s still a lot of work to be done to make the home gardener understand the sheer responsibility that they have. Because it dramatically adds to the cost; it dramatically impacts on the decision-making of blokes like me, and if we could remove those variables – if we had a magic wand that could remove those variables, then look out, because the product is a very powerful product.
Going back a bit, contamination was the biggest risk you encountered, but for costs – what were the biggest costs that you experienced, perhaps transportation of the product was the biggest cost?
AK: Definitely the distance to the producer is really important. It doesn’t weigh a lot, so the bulk density of the product generally, you know, you can only jam so much in a truck. So, there’s a large volume for weight that you’re transporting. So, I guess this is where some of the other products have gone to [muffled] structure and try to get a bulk density increase, but unfortunately you lose some of the benefit of that loose, open-aired structure that you’re looking for with the mulch.
So, certainly transport is a big factor. It’s probably dangerous for me to talk about percentages of that, because it’s so variable depending upon how far you are from… But it can range from ten percent of the product cost, to forty percent of the product cost.
Let’s talk about the strategy for using the composted green organic mulch on your vineyards: I know you’re keen to get the best value out of the product, so how do you apply the composted mulch to achieve this?
AK: We started with a very blanket approach, non sophisticated; start at one corner of the paddock and go to the other corner, and that was as sophisticated as our strategy got, because we were looking for that water-saving, fertiliser input benefit across the whole board. Then we found, almost by accident – we use remote sensor satellite imagery on our vineyards to look at biomass – and what we found by accident when looking at some of those images – after we’d done the mulching work where we’d put in some trial works – was we were having some profound impacts where we were taking low biomass, low vigour areas and really dramatically shifting those profiles.
And it got us thinking about how we can maximise the benefit of that, and it dovetailed into the fact that, as the product is reasonably expensive, you want to put it where it’s going to give you maximum value. And we started to do some trial work on that, where we looked at taking it into the weaker sections of our paddocks, applying it to those, and then looking for a response out of that. So, just to give you a bit of a background as to that in viticulture especially: vineyards are very linear. They’re built on trellises and they’re very linear, and no matter how accurate you were with your source surveys and your selection of the paddock, you end up having high vigour areas, or stronger areas, and some weaker patches on shallower soils.
And managing that vigour variance…that’s viticulture 101. And we do that generically be managing our fertiliser and trying to trim, or managing our irrigation as best as we can, but you end up trying to average that out against the whole block. And what we started to do was some experimental work where we just went into the weak sections and apply it, and then task the satellite again to have it look at another image to see if we could even out the vigour. It was really quite astounding, the responses that we were having on that – and I guess that satellite imagery allowed us to objectively validate that as well.
At this point you started to look at the cost benefit of the mulch – so what were your findings?
AK: What we found was, if I explain to you: you might have a ten hectare paddock that might be contracted to a certain customer and they might say you can deliver a hundred tonnes off that block. If that block is delivering you a hundred tonne, that’s great and everybody’s happy. But in reality, what happens in most paddocks is that half that paddock might be delivering you twelve tonne to the hectare, and the other half of the paddock might be giving you eight tonne to the hectare. That’s really crude, but you’ve got sections that are weak and harder than other sections. And if at the end of the day the equation equals what your customer wants, then everybody’s happy.
But if you’ve got a situation where you’re under performing because the vineyard is not delivering to its capacity, intrinsically what you try to do to meet that contractual opportunity is you try to drive the vineyard a bit harder. And that exacerbates this variability, if you’ve got a problem, it sort of becomes a spiralling cycle at that point. One of the great things we found with the mulch was – when we started to put GPS sensors on our harvesters, and we tracked and found this new variation that was happening in our paddocks, and we lined them up with our biomass images from the satellite’s on the canopy densities – that the correlations were pretty good.
So, we figured that if we can make the weaker sections of our paddocks work a bit harder, then we don’t have to drive the whole paddock up just to meet those obligations and meet those opportunities. And that’s where we really started to look at good, positive returns on investment. We did some work that we published a bit of, that showed the capacity to take areas, increase those in yield by twenty percent, or thereabouts. And depending on your price profiles – at that particular time it was a single year payback for us with a three-year delivery of that result. So, besides the commercial repo, it actually improved our product. It created a more even vineyard block, so our customers are happy; we’re happy because we’re meeting the targets, and we’ve actually minimised our requirement to spend money on the mulch as well. So we’re just putting it where we’re getting maximum return on it.
You experienced a single-year payback with a three-year result, that’s really excellent, though I suppose that’s particular to your experience?
AK: Yeah, the key point that I’d like to make, or I think is really important, is if I was to run that metric again today in a different price metric, different yield parameters…you have to be very careful, it’s going to be very specific to your site and the market you’re playing with. If you’re growing a very high quality product and where a tonne to the hectare makes a big difference because of the price point, then it amplifies the impacts. If you’re in a different quality spectrum then…you need to do the numbers yourself on that. But really, the key return on investment is if you’ve got latent potential, or under performing potential, and you can capitalise on that by returning that area to a better performing area. And therefore there’s a market for that fruit, there’s an opportunity to sell it at a certain price point.
The thing that jumps out to me is the 20% increase in yield. How was the quality of the grapes themselves? Because more does not mean better quality, necessarily.
AK: This is the other point: you’ve got to be really careful with that, because if you’ve got a vine that’s operating at a certain potential and you just make more vigorous to grow more tonnes, well there’s a threshold in viticulture where that could potentially detract from the quality of the grape. And that, again, to me is the advantage of targeting the weak areas that are under performing, and potentially haven’t got enough leaf over the top and have maybe too-exposed fruit: you can create a situation where you can grow a more healthy canopy on that vine and get better protection for the fruit, and at the very least, improve the quality of those under performing areas.
You mentioned water saving benefits and we talked about the study – but how much water did you save then in the end?
AK: We went into the whole exercise with a view that we were potentially going to save thirty percent of our water, but it was a particularly dry year – again, we were heading into the drought – so we almost abandoned the need for that. We almost ignored the water saving component of it; we wanted to maintain the biomass. So what we found was our ability, with the mulch on-board, to create a more healthy canopy than we otherwise would have at the same water level. The research that Katie Webster and John Buckingfield did – that’s really quite categorical in that they were looking at around a thirty percent water saving. And I’ve no concerns about that, that in the right applications you can deliver that. We personally now use the products in more of a remedial sense, and spatially remedially. So our whole aim is to take a block and be able to just apply a normal water level, rather than have to apply more water to compensate for the weak area of the block. So, we can fix the weak area and then just water the entire area normally.
Is there anything else that viticulturalists need to keep in mind in order to achieve success using composted mulch?
AK: I’m a huge fan, absolutely huge fan, of trialling everything. It costs virtually nothing to go and put mulch on a few rows and see what happens. And just record it; put a control in place, put a treatment in place, do that in three different varieties in three different soil types, and you’ll learn for yourself. And that’s ultimately how we started and ultimately what gave us the confidence to go really broad-acre on some of this strategy. But it started with two rows of vines and…You know, wiggle a finger and stick it in the air and see what happens! You know, there’s a bit more science behind it, because you can measure it and do the analytics that you need to do, but….
At the same time, I’d say it’s not for every site. If you’re on a high-vigour site or a wet site, you need to be very, very cautious about it, and you’d need to really have a look and a hard think about the applications for that. And my overriding comment with these products is just to know the source and know the quality of the product. And don’t be afraid to ask; don’t be afraid to have the analysis done, and look at the analysis and make sure you’ve done a little bit of background work on them.
I have one more question before we go. I wonder if you’ve ever considered using cover crops on your vineyards?
AK: It’s interesting, we did, and we compared cover crops. We looked at the biomass that we can generate with a cover crop, and the reality is we just can’t grow, internally, enough cover crop to make a material difference. A really interesting thing we did with cover crops on one of our properties was – almost using the same theory that we did with the satellite images – we’d grow cover crops in all of the vineyard block, and we use a forage harvester (which is a machine that cuts and collects the cover crop) to take it out of the paddock and compost it, and then bring it back in and spread it on the weaker parts of the block again. So, we’re actually using a cover crop to potentially de-vigour the high vigour areas, and at the same time taking the nutrients from there and transplanting them – with the compost process in between. We found that to be a really good way to draw down on a high vigour area by planting a hungry cover crop, and yet put that benefit back into the same paddock where it helps you even it out.
Fascinating, a really interesting way to use cover crops to control the vigour of the vineyard. And unfortunately Ashley, that’s all we have time for. Thanks for coming on the show today.