Rural round-up

November 18, 2014

Aussies eye fairer fight with NZ dairying  – Matthew Cranston & Tim Binsted:

As an exporter of 40,000 litres of milk to China a year, Lemontree Dairy has had to wait 11 years for the same treatment in China as New Zealand dairies.

“We have been fighting with one hand behind our back for years now with New Zealand but with this free trade agreement being equal to New Zealand will make the fight fairer,” said director James McNamee.

“It’s about time they got it over the line.”

Australia’s free trade agreement with China is set to provide A$630 million in savings from 2016 to 2025 as the tariffs are wound back, according to Australian Dairy Industry Council. . .

Black market for messy mutton  – Tracey Chatterton:

Sheep carcasses are being dumped on Hastings streets as thieves continue to target livestock.

Meat continues to be sold on the black market despite suspects having already been arrested in recent months, Flaxmere community constable Greg Andrew said.

Ratepayers were footing the bill for the mess sheep rustlers were making.

Hastings District Council contractors collected and cleaned up the dumped carcasses and offal at a cost of between $100 and $300 per carcass. . .

Milk price variability – what it means for dairy farm businesses  – Grant Rowan:

It may not appear to be, but the milk price is trending upwards.

It is also becoming more and more volatile, with the past 18 months a good case in point. In May 2013 global Whole Milk Powder (WMP) prices peaked at US$5600/tonne. The average WMP price at Fonterra’s most recent Global Dairy Trade auction was US$2522/tonne.

The question for anyone interested in the health of NZ’s biggest export industry is how are dairy farmers faring?

This edition of Farm Investment Insight explores milk price variability and the tools farmers can use to generate operating profits in times of negative price shocks. . . .

Is Our Food Safety System as Strong as We Think. Private Sector vs Public Sector – Milking on the Moove:

Is our food safety system as robust as we think it is? And are we better served by the public or private sector?

Last week I blogged about my issues getting the mobile cowshed evaluated by inspectors.

The way the food safety system works, is the government agency via The Ministry of Primary Industries (MPI) set the food standards. When a company sets up a food business, the verification services are provided by the private sector.

In New Zealand we have AsureQuality, which is a state owned enterprise, but it operates as a for profit business. There seems to be only two other providers, Eurofins & SGS in NZ who can offer dairy evaluation services. . .

Cut fees for Ag degrees:

GETTING YOUNG people into agribusiness is critical for New Zealand’s future, says ANZ chief economist Cameron Bagrie.

 He told the recent Zespri conference that he is concerned to see the right people enter the agri sector in the numbers required. For example, the kiwifruit industry will soon be producing 30 million more trays of product and will need more people to cope with that trend.

Bagrie is convinced that most young people do not understand the long term future they could enjoy in some primary industries. . .

$18mln payday for Rural Women NZ in sale to Green Cross Health - Jonathan Underhill:

Green Cross Health has agreed to pay around $18 million for Access Homehealth, a not-for-profit home healthcare services company owned by a grass-roots charitable organisation, Rural Women New Zealand, which will gain representation on the Green Cross board as part of the deal.

The purchase will add to earnings immediately, said Green Cross, formerly known as PharmacyBrands and the owner of the Life Pharmacy and Unichem pharmacy chains. Access has annual sales of about $85 million and employs about 4,000 people, the Auckland-based company said.

The purchase price, which includes assumed debt, will be funded from existing cash and bank funding, Green Cross said. . .

 Grow your own with a hand from Ballance science:

With cashflows tight on dairy farms, pasture comes out on top as the cheapest feed source and getting the best grass for the least cost can be achieved with a hand from science.

Ballance Science Manager, Aaron Stafford says the “grow your own” approach of using nitrogen fertiliser to boost pasture growth provides the most cost-effective supplementary feed, but with cash-strapped farmers working within very tight budgets, they want to be confident of a good pasture response to money spent on nitrogen.

“There is nothing more frustrating than seeing a poor or variable pasture response nitrogen fertiliser to boost feed availability. We can help farmers get the best results by enabling them to tailor application rates to areas which are likely to produce the highest pasture response.” . . .


Delay for dairy at China ports

August 26, 2013

Another week, another problem with our food exports to China:

New Zealand dairy products ranging from milk powder to mozzarella cheese are being held on the wharves at Chinese ports as officials debate what form of additional testing should be applied following Fonterra Cooperative Group’s whey protein scare.

The Ministry of Primary Industries in Wellington confirmed to BusinessDesk late last week that exporters other than Fonterra are experiencing delays.

However, it appears the problem is not a blanket ban or evidence of anything more than the fact that authorities at each Chinese port are interpreting centrally issued orders to apply caution to dairy imports into China with additional caution. . .

Soundings in China by BusinessDesk suggest demand for Fonterra’s ingredients by Chinese food manufacturers and demand in supermarkets for New Zealand-sourced infant milk formula have been unaffected after a sharp, initial reaction when the issue was first revealed. . .

Trade officials are at pains to stress the issue reflects the fact that while China issues regulations from Beijing, these are interpreted autonomously by officials operating at each port. While delays to a wider range of New Zealand dairy products may persist for some time, they reflect caution rather than a punitive attitude, despite early Chinese media coverage deeply critical of Fonterra’s third Chinese food scare since 2008. . . .

There might be some politics and protectionism in the mix here but you can’t blame them for being cautious.

That caution reinforces the importance of the investigations being undertaken in the wake of Fonterra’s precautionary recall of products containing a small batch of whey protein concentrate.

They need to find answers to many questions about how the issue was handled which reassure customers and officials that our standards of food safety are as high as they can be.


Rural round-up

July 11, 2013

X-ray transfer system offers biosecurity boost:

Primary Industries Minister Nathan Guy has welcomed the beginning of trials for the use of x-ray images to screen airline baggage before it arrives in New Zealand.

The trials are a world-first and involve the transfer of aviation security x-ray images from Melbourne Airport to Auckland for passengers on Air New Zealand flights, while the passenger is on the flight. Passengers will still be subject to clearance requirements prior to boarding the plane.

“This technology will allow biosecurity staff to assess the x-ray images before the plane touches down. Any bag containing biosecurity risk items will then be matched with the passenger, who will face further scrutiny by officials upon landing,” says Mr Guy. . .

Plenty of hope but no solutions yet – Allan Barber:

The Red Meat Sector Conference, held in Auckland on Monday, was very well attended by 320 people from all parts of the industry.

There were interesting presentations from overseas and local speakers. The former spoke eloquently about the outstanding global prospects for the red meat sector, while the latter had plenty of statistics to illustrate their concerns about sheep and beef farming debt and shrinking livestock numbers.

The Prime Minister opened the Conference with an upbeat talk about an $8 billion industry of great importance to the country. While acknowledging farmer dissatisfaction with the status quo, he said it was up to the industry to drive change, but the government was sympathetic and supportive. . .

New Zealand red meat sector welcomes Economic Cooperation Agreement with Taiwan

Beef + Lamb New Zealand (B+LNZ) and the Meat Industry Association (MIA) say the signing of the Economic Cooperation Agreement (ECA) between New Zealand and Taiwan is a significant outcome for the New Zealand sheep and beef sector.

Eliminating all tariffs on beef within two years and sheepmeat within four years is important news B+LNZ Chairman, Mike Petersen and MIA Chairman, Bill Falconer said.

“This ECA will eliminate tariffs with Taiwan and it complements New Zealand’s existing free trade agreements with China and Hong Kong,” Petersen said.  .  .

ExportNZ welcomes economic cooperation agreement between New Zealand and Taiwan:

ExportNZ welcomes the announcement that New Zealand and Taiwan have signed an economic cooperation agreement.

Executive Director of ExportNZ, Catherine Beard, says this will be positive for both economies since they are very complementary, with Taiwan’s exports to New Zealand being dominated by high tech manufactured goods and New Zealand’s top exports to Taiwan being agricultural products. . . .

New Zealand – Taiwan Economic Cooperation Agreement positive for seafood trade:

Seafood New Zealand welcomes today’s announcement of the signing of an Economic Partnership Agreement (ANZTEC) between New Zealand and Taiwan and congratulates the Trade Minister, Tim Groser, and his team of negotiators for completing a negotiation that first started under the watch of the previous Labour-led administration.

All of New Zealand’s seafood trade interests with Taiwan have been fully included in the Agreement. All seafood items will be able to enter Taiwan tariff free within eight years – with many products benefitting much earlier. . .

‘ASEAN tigers’ offer growth opportunities for New Zealand’s dairy sector:

Burgeoning demand for dairy among consumers in the ASEAN-6 group of countries is creating substantial trade opportunities for dairy export countries including New Zealand, according to a new industry report.

In the report Dairy – Milk for the ASEAN-6 Tigers, global agribusiness banking specialist Rabobank says the ASEAN ‘six majors’ (the six largest economies of the Association of South East Asian Nations – Indonesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam) should be part of all dairy exporters’ global growth strategies, but particularly for New Zealand given its competitive advantage in these markets. . .

Latest Agreement gives New Zealand wine tariff-free access to Taiwan:

New Zealand Winegrowers welcomes the signing of the Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC). The Agreement will give New Zealand wine tariff-free access to the Taiwan market as soon as it comes into force.

“This is an important trade advantage for New Zealand wine exporters. Taiwan is a small but developed market that is well suited to the premium wine styles that New Zealand offers. Asia is an increasingly important destination for New Zealand wines. This Agreement will make New Zealand the only wine exporter with tariff-free access to China, Hong Kong and Taiwan.” said Dr John Barker, general manager advocacy and trade for New Zealand Winegrowers. . .

Latest research delivers encouraging signs for oyster industry ahead of AGM:

A collaborative research programme to breed oysters resilient to a virus that three years ago devastated New Zealand’s Pacific oyster industry is starting to deliver promising results.

Scientists at Cawthron Institute, together with industry partners, have been working towards breeding Pacific oysters resilient to the ostreid herpes (OsHV-1) virus that almost wiped out the country’s Pacific oyster stocks in 2010.

Cawthron Institute has today reported promising results from the latest research trials which it will present at the New Zealand Oyster Industry Association AGM this weekend (6 July).

“We have identified oyster families with a very high survival rate when exposed to the oyster virus, which decimated stocks in 2010,” Cawthron Institute Chief Executive Charles Eason says. “These recent findings are most encouraging. They suggest that selective breeding has great potential to address the current crisis.” . . .


Dirty birds

February 18, 2013

Towards the end of last year a report from the Otago Regional Council raised concerns about deteriorating water quality in the Kakanui River.

One of the contributing factors was an increased level of E.coli.

Dairying was blamed although the council couldn’t find the source.

One of the dairy farmers decided to do his own research and canoed down the river.

He found a couple of dead sheep caught in submerged branches then he came on a large colony of seagulls nesting in a canyon.

He reported this to the council which sent a helicopter up the river and found the source of the problem.

. . .  a large colony of nesting gulls – was found in rugged terrain, about 5 km above the Clifton Falls bridge.

Water quality samples were taken immediately above and below the colony, with widely divergent results Upstream of the colony, the bacteria concentrations were 214 E.coli/100ml, whereas immediately downstream, the concentration was far greater at 1300 E.coli/100ml .

ORC manager of resource science Matt Hickey said that according to Government water quality guidelines for recreational swimming areas, those with less than 260 E.coli/100m should be safe, whereas water with more than 550 E.coli/100ml could pose a health-risk.

Mr Hickey said six colonies of gulls were found in total, on steep rocky faces, where they clearly favoured the habitat for nesting.

While they had gone undetected up until now due to the inaccessible nature of the gorge, it was likely the gulls returned each year to breed in the same places.

“Unfortunately, these nesting gull colonies are likely to continue to cause high E.coli concentrations in the upper Kakanui River, particularly during the breeding season,” Mr Hickey said.

“Bird activity, river flow, or even whether it is a cloudy or sunny day, (as E.coli often died quickly in clear water when exposed to sunlight) will influence actual bacteria numbers at Clifton Falls bridge. With hindsight, it reflects the random nature of the historical bacteria results at this site.”

Mr Hickey said the E.coli concentrations reflected a large number of birds congregating in a small area and we are fortunate this situation was not common in Otago. Historically E.coli concentrations in the lower Kakanui River have been very low, despite the gull colonies being found upstream.

The council is warning people against swimming in the river but we’ve had no warning about drinking the water, presumably because it’s treated.

Locals are very keen to solve the problem but it’s not necessarily a simple matter:

Coastal Otago biodiversity programme manager David Agnew said the Department of Conservation would look into the situation and try to identify which species of gull were nesting in the area.

Mr Agnew said the species involved would determine what could be done to remove them.

”Black-backed gulls are not protected so that’s not a problem as far as if they are causing a problem. They are not rare or threatened, they are not even protected, whereas red-billed gulls and black-billed gulls both have their own conservation concerns.”

There’s no concern about conservation with cows. If they were causing water quality problems farmers could face prosecution and would have to act quickly to address the cause.

Some gulls have a special status and if they’re the ones fouling the water the clean up will take some time.


Milk up 2.4% in GDT auction

February 6, 2013

The trade weighted index increased 2.4% in this morning’s GlobalDairyTrade auction.

This is the fourth price gain in succession.

GDT Trade Weighted Index Changes

GDT feb 6The increase is particularly good news as this was the first auction since news broke of tiny traces of the nitrogen inhibitor DCD being found in some milk products.Even though there was no food safety risk there was a perception risk but that doesn’t seem to have impacted on demand.Price changes:  Anydrous milk fat was up 7.2%; butter milk powder increased 3.7%; cheddar was down .1%; milk protein concentrate was up 1.2%; rennet casein increased 3.3%; skim milk powder increased .5% and whole milk powder, which has the biggest impact on the farm gate price, increased 5.4%.


Dairy trumps wool

January 12, 2013

Fonterra Shareholders Fund units jumped 26% on their first day of trading and will tip wool carpet maker Cavalier Corp out of the benchmark NZX 50 index this month.

The Fonterra fund, which has surged by a third from their $5.50 offer price, has met the ranking and liquidity requirements and will join the benchmark index on Jan. 21, the stock exchange operator said in a statement after the close of business.

Cavalier, which has shed 23 percent over the past 12 months, will leave the top 50 being the lowest ranked stock.

Units in the Fonterra fund, which give investors a slice of Fonterra Cooperative Group’s dividend stream, rose 0.8 percent to $7.31 in trading today, while Cavalier shares gained 1.8 percent to $1.71. . . .

Given Fonterra is New Zealand’s biggest company it’s not surprising it is seen as an attractive investment. Cavalier is a much smaller operation.

However, the fortunes of the FSF units so farand Cavalier on the NZX 50 index is a reflection of dairy and wool farming.

Dairy conversions, while slowing from the peak, are still going ahead and wool is in the doldrums – again.

Wool ticks so many marketing boxes  free range, renewable, sustainably grown. It ought to just about sell itself.

But in spite of initiatives like Campaign for Wool demand is low and the price reflects that.

Fonterra’s forecast payout for this year is down on last year’s but the outlook for dairy is still far better than for wool.

However, Hugh Stringleman thinks Fonterra suppliers might have mixed feelings about the the increased price of shares:

Since Trading Among Farmers (TAF) was launched about $300,000 has been added to the share capital of the average Fonterra supplying farm.

That increases the temptation to redeem all or part of that capital to apply elsewhere in the farming business, where it would earn a better return and perhaps supply a Fonterra competitor.

Also, milk production increases averaging 5% nationwide in the season to date mean Fonterra farmers will eventually have to “share-up” (purchase new shares to match increased production) at the much higher market prices.

This will be especially important for recent conversions with expanding milk production in regions like Canterbury, which is 11% up on last season.

The new three-year rolling average share standard will, however, moderate the compliance cost for established farmers who most-recently increased their share holdings by 10% or more at $4.52/share, following the 2011-12 record milk season.

The high turnover of units, totalling two-thirds of the issue volume in fewer than 30 trading days since launch, shows the depth of investor interest in New Zealand dairying and in Fonterra in particular.

However, it also means the market tail is wagging vigorously, feeding farmers’ concerns over possible effects on the dog.

Is a well-informed market sure that higher world dairy prices are in prospect or is an investment bubble growing?

Will the high unit and share prices reinforce dairy farm values through demand from expanding farming families, corporate farmers and syndicates?

On the other hand, Fonterra’s forecast dividend of 32c reduces in yield as the unit and share prices climb, for farmer-shareholders and unit investors. . .

The international demand for milk is expected to increase and the end of the season looks better than the start did.

But it’s very early days to be drawing conclusions on the future prospects for the share price.


MIlk price up .7% in GDT auction

November 21, 2012

The trade-weighted price of dairy products increased .7% in this morning’s GlobalDairyTrade auction.

This is a reassuring trend after winter’s price drops.

GDT Trade Weighted Index Changes

Today’s results continue to keep the price above the long term average.

The price of anhydrous milk fat increased 1.2%, cheddar was up 12.4%; milk protein concentrate was down 1.8%; there was no change in the price for rennet casein; skim milk powder was down 1.7% and whole milk powder was down 1.9%.

 

 

 

 

 


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