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Last updated: August 2014
Applicant Group: North Otago Irrigation Company Limited (NOIC)
Contact person: Robyn Wells
Address: C/o NIOC, PO Box 216, Oamaru 9444
Telephone: 03 434 2681
CIF funding: $241,000
Total project funding: $681,500
Proposed start date: 2009-07
Proposed finish date: 2013-06
This project is to assist in the development of Stage 2 of the North Otago Irrigation Scheme. Stage 2 plans to expand the irrigation scheme from 10,000 to 20,000 hectares with the use of the additional 4 cumec of consented water.
To achieve the greatest possible uptake by the farmers it is important to convince them and the community of the benefits.
The funding of the irrigation scheme is very difficult and alternative means of finance have to be carefully examined.
North Otago has very dry climate and irrigation is crucial for profitable farming. The Waitaki River is a 100 percent reliable source of water. The resource consent to take 8 cumec of water will irrigate in excess of 20,000 ha. The profitable use of this water will be a tremendous benefit to the local community.
The key deliverable in the last period was a financial model which was peer reviewed and is now ready to use as part of the Stage 2 business case.
As of 31 October 2013 NOIC has either issued or has commitments for 60% of scheme shares and is irrigating over 13,000 hectares.
Two initiatives related to working with the community have been launched; North Otago Sustainable Land Management Group, and a LandCare Trust project, in which NOIC is a key stakeholder. This period NOIC donated $2500 to the establishment of NOSLaM in addition to substantial in-kind contributions.
A significant amount of technical work continues on the progressive project plan to ultimately complete the Company's vision of 26,000 hectares of land irrigated by NOIC infrastructure. The latest portion of which is an extension line to be commissioned in December for a further 400 hectares
The focus this last period has been on working with local regional water quality group NOSLaM to bring a positive and proactive perspective to the introduction of Plan Change 6A, Water Quality in North Otago. This work culminated in the running of a forum in Oamaru on 30th May entitled "Untangling Plan Change 6A".
Annual strategic planning occurred in early April and the focus of the two day session was to re-examine our expansion strategy in light of changes in our environment and a critical assessment on progress from last year. As a result the emphasis for joining NOIC has moved from delivering opportunities for the land, to becoming a part of a community cooperative which supplies water.
Much work has been completed on the funding model reflecting this new emphasis and the model will be peer reviewed next month before being rolled out to existing and prospective shareholders later in the year.
A significant amount of technical work is underway including final design on another extension project, design of an upgrade of the intake at pump station 1, AEE work for expanding our command area and moving our discharge structure, and an optimisation study for the Kakanui extension project.
NOIC and one of its shareholders were the subject of a Rural Delivery segment on TV One – Series 9, episode 20.
NOIC reached the milestone of commissioning the Tilverstowe Extension project in January. Approval has been given by the directors to proceed with the preliminary design of a 295 share extension in the Five Forks area. The issuance of the TE shares resulted in a $822k loan payment being made to the Waitaki District Council which was received generally positively by the community. A funding model has been completed and is being used to help make critical decisions in the development plan.
In November the Otago Regional Council released a report on the state of water quality in the Kakanui catchment. Having already held community meetings and being part of an application to the Community Environmental Fund along with Landcare, our focus was on the need to be collaborative in response to their findings and this is what we promoted in our media interviews.
Since then we have been instrumental in bringing back the North Otago Sustainable Land Management Group (NOSLaM) to represent a cross-section of farmers in the area of our current and target command areas, both dry-land and irrigated.
The charter of the new group has been agreed to be:
The inaugural recipient of the NOIC Scholarship was announced in November at our AGM and we were selected to host a visit from the Governor General in February as part of his five-yearly regional tour programme.
NOIC reached the milestone of breaking ground on the Tilverstowe Extension project in August. Uptake for this pipeline is now at 565 shares or 71%. The construction is proceeding well and we anticipate commissioning to be complete by the end of the year so that the land will have water by Christmas. We are now working through the development process on a further 275 share extension in the Five Forks area that would immediately follow completion of the current work.
Web hits have continued to increase and support from the local media remains very positive. A scheme tour was organised for the local ratepayers association with the output being a joint press release endorsing what NOIC has achieved, and hopes to achieve in the future. A workshop was held with the district council who also support the aims of the scheme and recognise the positive economic impact irrigation is bringing to the region.
One-on-one interviews were held with 46 landowners in what we have identified as our expanded command area to build a database of information pertinent to understanding their position regarding irrigation up-take. They were left with a packet of information to digest including case studies, a decision-making booklet and affordability templates.
The notified regional plan (Plan Change 6A) is creating some uncertainty in the market however and we believe it will continue to take significant time and resources in the coming months to get to a mediated or appealed outcome.
NOIC wrapped up the year with a number of positive articles in the press around community projects recently implemented. This included the announcement of an inaugural scholarship for local high school students and the announcement of a joint project with the Rural Fire Service to provide better access to fire fighting water. In the last four months NOIC has had 17 articles appearing of a positive nature and one negative letter to the editor related to our district council loan. Web hits have picked up with a spike occurring after our INZ Innovation Award win in April.
In early March we sponsored a public workshop with LandCare Trust with a goal of creating a collaborative vision for Waiareka Creek and we will continue to progress this work in the coming months. We are also assessing possible options to utilise the money we received for the innovation award in a biodiversity or water quality enhancement project.
We successfully reached the milestone of entering into the contract to construct the 800 hectare expansion along the Tilverstowe Road. Uptake has been better than first projected with 520 of 800 shares sold. Water will be available this spring with pipe-laying scheduled to start 30th July. The economic benefits of the expansion of irrigation into the wider Kakanui Valley have been substantiated through a peer review study and the district could expect significant jobs growth and increased economic activity with an impact of between 4-6 percent for output, employment and household income.
The 2012/13 media strategy has been approved by the board after we completed a comprehensive strategic planning process in April/May. Our first activity for 2012/13 will be the announcement of the inaugural winners of our Environmental Excellence Awards, to be given to those properties achieving a high rating in all management areas audited (4 of 28 audited).
NOIC is well into the implementation of their 2011/12 media strategy having had 17 articles appearing of a positive nature in the first 8 months of the year. Web site hits have increased 10 fold since launch and two advocates for the scheme have appeared in press.
We have been focussing on letting people get to know who we are and what we do and in this last four months completed presentations to 15 separate entities from the local surrounds / community. We also sponsored or co-sponsored three field days along with Ag Research, Beef & Lamb and the ORC.
The extension project to add 500 hectares of irrigation into the stage one command area has been expanded to 800 hectares and has progressed to the design to tender stage. The next gate is award of contract which we expect could occur in April.
We have completed an Economic Benefits study related to an expansion of our scheme and this work is currently being peer reviewed before release. We have also drafted an Irrigation Workbook – Making the Decision to be launched later this year.
The board and CEO have recently held a strategic planning day focussed on how to generate uptake for the expansion of the scheme. This is the first of two sessions the next being planned for 5th April and will feed into the development of the media strategy for 2013. A special shareholders meeting is also being held to approve some constitutional changes as a result of the governance review. A skills review of the board has been completed and we are currently considering the recommendations from this review.
A workshop entitled "The Individual Benefits of Irrigation" was held on 8th July in Oamaru. The workshop was very well attended and garnered considerable media attention both pre and post-event. Of most impact was a panel composed of farmers who had taken the plunge to add irrigation on stage one of the NOIC scheme and the case studies that had been prepared around their journey. Affordability of NOIC Stage Two Water – Model Farm Budgets under Different Land-Use Scenarios was also presented at the workshop.
NOIC commissioned a strategic governance review to make sure that the organisation was suitably structured and governed. A number of recommendations were made and the board is now working their way systematically through these. NOIC also added a full-time Operations Manager and a full-time Environmental Manager to the staff.
Two field days were held in association with the Otago Regional Council (the first) and INZ (the latter). On 14 November a field day called "Taking the Plunge with Irrigation" is being held by Beef & Lamb NZ in association with NOIC and Waitaki Development Board. The field day is designed to follow on from the workshop held in July by letting prospective irrigators see 'how' irrigation can work on a North Otago sheep / beef property.
The Company is progressively working through a project that would add approximately 500 hectares of irrigation into the stage one command area. It is hoped that this project will be approved to progress at the December board meeting and move through the gate to design stage. In the last period a reconnaissance survey was completed, options were cost estimated and a preferred option was taken back to the farmers.
NOIC continues to focus on expanding its communication and connection to both internal and external stakeholders through a number of means including formal presentations, co-promotions, the web site, brochures, FAQ sheets, community meetings, field days, reciprocal site visits, press releases, paid editorials and the development of media relationships.
In this period NOIC embarked on a series of public meetings and workshops designed to bring some visibility and transparency around who we are, and what our plans are for irrigation expansion in the North Otago area. Consultation meetings were also held with the Waitaki District Council, Te Rūnanga o Moeraki and local AgriBusiness leaders. NOIC commissioned a series of case studies through Aoraki Polytechnic describing the experiences of five of our stage one farmers through the journey they took in deciding to take up irrigation (one dairy, one dairy support, two crop and beef and one beef stud); and, developed farm model budgets to answer the question "how much can I afford to pay for irrigation?" At the end of the period NOIC received the final draft of an options and costing report from Downer / SKM for the upgrading of the primary infrastructure to enable delivery of the full 8 cumecs of consented water to our distribution network.
The next step is to take the case studies and affordability models to a workshop to be held on 8th July in Oamaru describing the individual benefits of irrigation. It is hoped that these documents will give farmers some of the tools needed to make a decision to go into stage two.
NOIC has approved a Policy on Run-Off Control and Mitigation and also an Environmental Policy during this period in an effort to drive improved environmental performance. NOIC also completed their annual farm plan audits. Next is to get an Erosion Management Policy approved and implemented on the scheme.
In mid-May, the staff and board of NOIC attended a two-day planning workshop from which an approved strategic business plan emerged to guide the company in the coming critical months as we develop our stage two plans. One action recommended out of the plan was to complete a governance review, and to this end a consultant has been contracted to complete this action by the end of July. NOIC has also engaged a PR consultant to provide advice and guidance in the implementation of the approved Media Strategy.
The board approved a PR and Communications Plan as the cornerstone of the Media Strategy in February. Leading up to the plan development, NOIC commissioned a survey of potential shareholders to understand the key barriers to entry in the market. The results of this survey have provided a road map for the PR and Communications Plan; that is, highlighting the target audience and the current situation as well as identifying measurable goals and objectives of the plan. NOIC has rebranded themselves with a new logo and a new by-line and is in the process of building a web site and creating hand-outs and presentation materials.
Expansion options for Stage 2 have been reduced down to three major areas plus an incremental opportunity in an existing line and this is where the focus is now concentrated. One of these areas, the Kakanui Valley, has been the target of extensive consultation with impacted land owners and a public meeting is further planned for the end of March to discuss the challenges and opportunities of expanding irrigation into this area.
The number of hectares covered by the scheme has risen to 10,742 with the addition of a further 68 shares related to a transfer of natural water rights from Waiareka Creek land owners to NOIC in exchange for shares.
NOIC participated in a project review by MAF for the SSF application submitted by Irrigation New Zealand entitled Hill Country Irrigation - Knowledge into Practice as a part of their run-off impact mitigation strategy. In addition, NOIC have received support in the form of $2,000/year in support for this project from ORC.
The last three months has been a consolidation period for the North Otago Irrigation Scheme as a new CEO was brought on board and a planning report was tabled that consolidated, reviewed and updated existing information and options for Stage 2 development into a single Master Planning Report. A strategic analysis of structural options was completed and it was agreed that if required, a structural change to the company would be made in order to attract sufficient funding for stage 2.
Pod groups from stage 1 development were re-engaged and consulted in regard to stage 2 options and regular communication through a newly designed newsletter was initiated.
The addition of a “bolt-on” pipeline, drawing from our existing canal in the Duntroon area and adding 288 ha of irrigation, was approved and contracted with commissioning scheduled for November 2010.
A potential barrier to stage 2 uptake has arisen as irrigators of rolling downlands struggle to adhere to the zero surface run-off requirement of our resource consent and much effort is currently going into a dialogue / engage / educate programme for our existing and potential shareholders. In order to facilitate a constructive path forward for this issue we have scheduled a field day in November involving the Otago Regional Council compliance and land resources teams.
The next major step is to form new pod groups from the identified stage 2 command area and to take the Master Planning Report findings out to those potential investors for feedback and consultation.
A financial model has been developed but the NOIC Board has decided not to proceed with it as they believe that it is unacceptable to the shareholders. NOIC continue to speak to possible interested parties to look at ways of financing the development of stage 2. This is a major problem for all irrigation companies but we believe that we are in a very good position to move our development forward if suitable long term financial model can be found.
NOIC personnel, Beca Consultants and Delta personnel have been developing the new pipeline plans for Stage 2. Meetings have been held with the Kakanui river users and the Tokarahi farmers to discuss the options in their areas. More meetings will be held once we have the designs for the various pipelines and the costs for the stage 2 development confirmed by the board of NOIC Economic pressures are likely to have an impact in this area.
Informal meetings with several groups have been undertaken .We are waiting for firmer indicative cost for each area before meetings early 2010.
Much time has been spent on trying to develop a capital model which will be acceptable to present shareholders. Greg Anderson, Northington Partners, and Craig Wyatt, Harvie Green & Wyatt, have been employed to develop the model. Work is continuing with Beca Engineering to design and cost stage 2.
Apart from the work of developing the financial model progress has been relatively slow as the directors tackle a number of areas. The financial climate and the stress that the farmer shareholders are under make it very important that NOIC gets everything right. The directors know our extra 4 cumecs of water is a valuable asset.