Fonterra caught by non-tariff barriers

August 14, 2013

Russia, Belarus and Kazakhstan have banned products from most Fonterra plants .

Trade Minister Tim Groser’s office today confirmed the three former Soviet states had banned all Fonterra dairy products, despite none of the potentially affected product being shipped there.

Dairy exports in the three countries are worth $133 million a year.

Primary Industries Minister Nathan Guy said officials were working to rectify the ban.

“We’ve got our ambassador from Moscow working around the clock with Russian authorities to provide them with the information they are demanding,” he said. . .

Fonterra confirmed it sent none of the potentially affected why protein concentrate (WPC80) to these countries and no Fonterra products sent there used the affected WPC80 as an ingredient. . .

This is a non-tariff barrier.

It’s almost certain that Sri Lanka’s recall of Fonterra products is too.

Sri Lankan test results for agricultural chemical Dicyandiamide in Fonterra milk products were “off the charts” in comparison to other “extensive” testing according to New Zealand Prime Minister John Key.
 
Officials in Colombo have ordered a recall after they say DCD, a nitrate inhibitor used in fertiliser, was found in two batches of imported milk powder.

Fonterra disputes DCD traces were present in the product in Sri Lanka and says testing regimes are flawed. . .

This is disappointing when so much effort has been put into getting a toe-hold in these markets but non-tariff barriers can be just as difficult to combat as blatant protectionism.

 


Milk DCD free

February 22, 2013

Ministry of Primary Industries tests have confirmed no traces of DCD in milk since November.

“MPI and the New Zealand dairy industry have conducted voluntary testing of New Zealand dairy products to build a comprehensive picture of the presence of DCD in New Zealand’s milk supply,” MPI Director General Wayne McNee said.

The tests have found no traces of DCD in milk collected from New Zealand farms after mid November 2012.

“We are releasing the core findings of the testing today to be as open as we can be with our markets and customers, despite the fact that the quantities of DCD found in our dairy products creates absolutely no food safety risk whatsoever,” Mr McNee said.

With the co-operation of the dairy industry, nearly 2000 samples of dairy products have been tested from all the major dairy companies.

Testing has specifically targeted dairy products using milk collected during the New Zealand spring last year from the less than five percent of dairy farmers who used DCD on pastures. Results have been coming in as recently as last week.

As expected, minute traces of DCD have been found in various dairy products already in the supply chain from a variety of companies. However, there remains no food safety risk – all traces have been significantly below the European Commission’s daily intake level for DCD.

“Importantly, tests on products made from milk collected from farms after mid-November show no traces of DCD at all,” Mr McNee said.

“These findings confirm our expectations. We have informed markets of them.”

There never was a food safety issue.

The problem was there was no international standard for DCD but the tiny traces found in some milk products late last year were well below the EU standard.

There was a perception problem but the prices have continued to increase in Fonterra’s GlobalDairyTrade auctions since the announcement traces of DCD were found.

This shows that markets weren’t concerned, in spite of some opposition politicians attempts to manufacture a scandal.

It’s also a vote of confidence in New Zealand’s very high food safety standards and a reminder of why maintaining them is so important.


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%.


Rural round-up

February 5, 2013

ECann Rakaia River recommendation accepted:

Canterbury Earthquake Recovery Minister Gerry Brownlee says the Government has accepted Environment Canterbury’s recommendation to change the water conservation order that covers the Rakaia River.

The change will allow TrustPower to release water from Lake Coleridge for irrigation when the river is low, increasing the reliability of the water supply.

“Environment Canterbury’s report and recommendation is a good example of both environmental considerations and the needs of the farming community being taken into account,” Mr Brownlee says. . .

Why wash clean linen in public – Alan Emerson:

Farming is certainly in the mainstream media. 

Most outlets are covering the DCD saga and they weren’t helped by some woolly statements from the Ministry for Primary Industries (MPI) and Fonterra.

I thought the two fertiliser co-operatives, Ballance and Ravensdown, handled the issue well, with their media releases being factual and unemotive. Both withdrew their DCD product and that, in my opinion, should have been the end of the story.

The issue is simple – DCD is safe. It has been around since the 1920s and used in its current form since 1981 and that is the problem.

Because it isn’t a new product but an adaption of an existing chemical, it is not classified under the international Codex Alimentarium. For that reason there is no minimum or maximum allowable level.

The problem is technical and procedural – it is not a chemical or health issue. Googling DCD you can identify all the many countries using it. You can also read glowing references about the product’s ability to increase yields in tomatoes, wheat, barley, rice and grass. . .

Lessons learned on managing perception – Alan Williams:

THE DCD issue has thrown up some lessons on how to manage market perceptions when the debate gets away from the science, Ministry for Primary Industries deputy director general (Standards) Carol Barnao says.

MPI’s risk assessment team discovered quickly there were no food safety concerns from traces of DCD found in whole milk powder, but the time taken for action was seen by some people as too slow and the presence of an unexpected compound was linked with tainted food in some markets.

More than three months passed between Fonterra’s product testing and the withdrawal from the market of the fertilisers containing DCD.

If there had been food safety concerns action would have happened much sooner, Barnao said.

Working groups were set up as soon as MPI was alerted in early November but it took time to complete the testing methodology and the why, when, and how of what happened, she said. . .

Happy to break new ground - Hannah Lynch:

Primary industries might be getting a new minister, but it’s in the associate role where a woman will be getting to make a mark for the first time. Hannah Lynch reports from Parliament.

The first woman appointed to a ministerial role in agriculture is not afraid of bringing a touch of femininity to the job, revealing she wears high-heeled boots on the family farm. 

Jo Goodhew has just been made Associate Primary Industries Minister in a Cabinet reshuffle that elevated the previous associate, Nathan Guy, into the main role.

“It is exciting but it is part of the general trend we are seeing where women who have the right skills are doing anything,” Goodhew said. 

“Women are going into roles that were previously held by men but now it’s just recognition that if you have got the skills it doesn’t matter what gender you are.”  . . .

MyFarm expanding to sheep and beef farms – Hugh Stringleman:

MyFarm intends to use its farm ownership syndication model for sheep and beef farms as well as dairy farms.

It put together one sheep and beef farm syndicate in 2010, for Kaiangaroa farm east of Taihape, and during this year will offer several more.

MyFarm director Andrew Watters would not specify the locations but gave parameters for the suitable properties and regions.

They would be mainly sheep-breeding and lamb-finishing properties, with beef cattle only additional. . .

Farmers Preparing to Steak Their Claim :

Farmers across the country are selecting their entries for the 2013 Beef + Lamb New Zealand Steak of Origin.

The competition to find the country’s most tender and tasty steak is entering its 11th year and is keenly contested nationwide.

Beef + Lamb New Zealand CEO, Dr Scott Champion, says the competition is taken very seriously and winning has become a badge of honour.

“The Steak of Origin rewards farmers for their efforts and showcases the skill in the New Zealand beef farming industry,” says Champion. . .

Freshman Sire Highlights Final Day of Karaka 2013:

New Zealand Bloodstock’s 2013 National Yearling Sales Series has drawn to a close today at Karaka with the final 212 yearlings of the Festival Sale concluding a bumper seven days of selling that has seen a total of 1021 lots traded for $72,387,700.

For the third day in a row Westbury Stud’s first season sire Swiss Ace (Secret Savings) provided the top price of the day, this time it was the colt at Lot 1353 from the four-time winning Stravinsky mare Poetic Music bought by Rogerson Bloodstock for $95,000.
1353 web
Top lot of the day the Swiss Ace colt (Lot 1353) purchased by Rogerson Bloodstock for $95,000

“He was the nicest horse here today and he proved that because he was the top lot of the day.

http://www.fwplus.co.nz/article/alternative-view-why-wash-clean-linen-in-public?p=6


Tiny traces of DCD in Westland samples

January 31, 2013

Westland Milk has found tiny traces of DCD in some samples of its products in tests this week.

Westland Milk Products customers are being assured food safety and human health has not been put at risk by the discovery of traces of DCD in some of its own samples this week.

Following advice late last week from the Ministry of Primary Industries (MPI) of the discovery by Fonterra of traces of DCD in some of their milk products, Westland Milk Products commenced its own testing through an independent laboratory. These tests revealed minute trades of DCD in samples produced prior to 1 November 2012. The evidence indicates that product made after 1 November 2012 is free from DCD.

“While we are assured by independent health authorities and the New Zealand Government that DCD is not a food safety risk,” says Westland Chief Executive Rod Quin, “we are very aware that for many of our customers any residue in milk products is undesirable. Some of our customers in Asia have already requested tests for DCD following the MPI announcement last week.”

As a priority, Westland is currently conducting further testing in line with customer and government requirements and will report the results to customers as soon as possible.

“The best way to allay our customers’ fears is with accurate information,” says Rod Quin. “We will continue to work with the New Zealand dairy industry, MPI and Government to reassure suppliers, customers and stakeholders that DCD is not harmful to human health and that every step to remedy this situation and prevent its ongoing occurrence is being taken.”

Mr Quin said only a minority of Westland’s shareholders had used DCD, and that most of the application of the product occurred outside of peak milk production periods.

The use of nitrogen inhibitors, which contain DCD, wouldn’t have been confined to Fonterra suppliers so this isn’t a surprise.

There is no risk to health from the tiny amounts of DCD found in any products and nitrogen inhibitors haven’t been used for months but the company has done the right thing by letting its customers know.

New Zealand’s reputation for safe food relies on high standards, strict compliance and good communication.

 


Rural round-up

January 29, 2013

NZ food is safe and our systems work:

Federated Farmers says New Zealand’s continual testing for impurities and open disclosure is why New Zealand primary exports are of the highest quality.

“We are aware some media reporting seems to have moved beyond facts and into uninformed opinion,” says Dr William Rolleston, Federated Farmers spokesperson on food safety.

“Residues of DCD (Dicyandiamide) nitrification inhibitors were detected but the levels recorded were in the order of parts per million. These residues only came to light because New Zealand continually tests for and refines testing for impurities.

“I doubt many countries test to the level we do but once DCD was verified our consumers and trading partners were notified. We take this seriously, very seriously and any suggestion otherwise is scurrilous. . .

DCD scare will ‘enhance’ NZ’s reputation:

The head of Federated Farmers says Fonterra only had to report the presence of agricultural chemical dicyandiamide in its milk because of a “technicality”.

Both the Government and Fonterra have reassured the public and our trading partners that there is nothing to fear from dicyandiamide, also known as DCD, which is used to prevent nitrogen seeping into waterways.
Fonterra says the traces of the substance – found four months ago – were so small they were not worth mentioning. Federated Farmers CEO Conor English agrees, saying there has been a “massive overreaction”.

Red Meat PGP Collaboration Programme for Greater Farmer Profitability

The red meat industry has agreed to work together to promote and assist in the adoption of best practice by sheep and beef farmers, as part of a new $65 million dollar sector development project with Government co-funding.

Wayne McNee, Director-General of the Ministry for Primary Industries (MPI), has just approved a commitment of up to $32.4 million from MPI’s Primary Growth Partnership Fund (PGP) for the red meat sector’s new Collaboration for Sustainable Growth programme.

This seven-year programme will bring together a number of participants in New Zealand’s red meat sector including co-operatively owned and privately owned processing companies that together account for a substantial majority of New Zealand’s sheep and beef exports, two banks and Beef + Lamb New Zealand. . .

Beef + Lamb New Zealand Welcomes Government Support For PGP Programme

Beef + Lamb New Zealand Chairman, Mike Petersen has welcomed the announcement by Wayne McNee, Director-General of the Ministry for Primary Industries (MPI), of the Ministry’s commitment of up to $32.4 million from the Primary Growth Partnership Fund (PGP) for the red meat sector’s proposed $65 million, seven year, Collaboration for Sustainable Growth programme.

“This will be a huge boost for the sector and will accelerate progress in an increasingly collaborative approach across a range of issues that are important for sheep and beef farmers,” Mr Petersen said.

The Collaboration programme involves industry participants AFFCO, Alliance Group Ltd, ANZCO Foods, ANZ Bank, Beef + Lamb New Zealand, Blue Sky Meats, Deloitte, Progressive Meats, Rabobank and Silver Fern Farms, who following approval and contracting processes will match MPI’s investment and establish a joint venture entity to undertake the programme. The programme is open to new investors who can join once the programme starts. . .

Start networking with the farming world don’t become isolated – Pasture to Profit:

There is a new opportunity to network with the farming world. Farming can be a very isolated profession. Farms can be remote. The very nature of the profession means that you are often working alone. It’s that same feature which of course attracts people to farming. Farming gives you the ability to be your own boss and to make your own decisions. Running your own business can be both exhilarating & very stressful.

You don’t have to farm alone or in isolation! Today there are some very good online farming Discussion Groups. Social media won’t ever replace face to face talking with other farmers. However on for example; Twitter forums like #AgchatNZ, #AgchatOZ, #Agchat, #AgrichatUK provide an opportunity for talking to likeminded farming professionals. . .

 

2013 – Tipping Point Year for the ‘Blackcurrant Renaissance’:

Over the last 500 years the blackcurrant has gone from being one of the most respected health foods of the medieval era to a staple household beverage, to being overshadowed by trendy new berries in recent times. But a Renaissance is underway and 2013 looks set to be a pivotal year for the blackcurrant industry, says global blackcurrant industry leader, Svend Jensen.

“For hundreds of years the blackcurrant has been a staple of the berry basket in European civilisation, as a health tonic and as a food. But over the last 30 years scientists have started to unveil the true health potential of the “king of berries”. New generation research started in Japan in the 1980’s and then the United Kingdom and New Zealand. Now exciting projects are also being undertaken by research teams in Scandinavia, France, Eastern Europe, and the USA,” says Jensen, President of the 5-year old industry group, the International Blackcurrant Association. . .

And from a new-found blog, The Farming Game, which aims to give an insight into the real world of farming in Australia, a bit of variety:

Wednesday night was the last night of this irrigation cycle with day shift wrapping up the final field Thursday afternoon, so it was an early start on Friday to go chipping. Volunteer cotton from last season was coming up in one of the refugee crops and needed to be removed, the only way to remove it is to chip it out so we had to walk up and down the rows and chip out the volunteer cotton and weeds with a hoe. Its not the best job to do but it needs to be done. . . .

And from the northern hemisphere – life of the farmer in January from the Peterson Farm Bros:


Petty politicking feeds perception problems

January 29, 2013

Opposition MPs are supposed to oppose the government but in trying to score points against the MPI, Labour’s agriculture spokesman Damien O’Connor has gone far, too far:

Fonterra chief executive Theo Spierings has torn strips off Labour agriculture spokesman Damien O’Connor for, he says, endangering the whole of the New Zealand dairy industry with “drastic” allegations relating to traces of a benign chemical, DCD, found in some powdered milk.

O’Connor issued a press statement alleging a cover-up of the DCD findings in September to allow the Fonterra Shareholder Fund float to occur unimpeded in November.

“If you do those allegations, you better come with some evidence,” Spierings told BusinessDesk. “What you are doing here is not just a Fonterra issue, it is a New Zealand issue. You are attacking your key sector of the country.

“I’m sorry. I get a little bit emotional about it. I don’t like this kind of attitude,” said the recently appointed Dutch ceo, who said O’Connor risked undoing three days’ intensive work, including Prime Minister John Key, with international investors and media. The issue got out of control internationally when a Wall Street Journal article questioned the safety of New Zealand milk.

 Spierings is deeply offended by O’Connor’s attack, and scathing of WSJ’s use of a local journalist he claims was “filling in for someone” to kick the issue into international prominence.

He defends Fonterra’s process once it found DCD, a nitrate inhibitor used to curb greenhouse gas emissions from farming, in tiny quantities in milk powder last spring, saying the first thing considered was whether it got “a green tick on food safety.”

It did. DCD levels were 100 times lower than standards in the European Union. In other parts of the world, no standards exist.

With a “dark green” tick on food safety, the company had “a little bit of time” for collective action with fertiliser companies, telling them they must either manage the DCD issue with farmers or have Fonterra tell farmers to stop using it in the meantime, while international standards were sorted out.

The manufacturers, Ballance Agri-Nutrients and Ravensdown, withdrew fertilisers containing DCD voluntarily, a fact not notified publicly until late last week.

“We are coming with answers and telling the truth,” said Spierings.

FSF units took a small hit early in trading, falling as much as 9 cents to $7.14, as international investors digested the information Fonterra sent on the issue.

The biggest risk for Fonterra would be if one country were to decide to impose even a brief, precautionary ban on milkpowder imports, which constitute a large proportion of Fonterra’s $14.5 billion annual export revenues, said Andrew Bascand, managing director at Harbour Asset Management in Wellington.

“To date, there’s been no market there’s been that sort of reaction. Fonterra appear to be on the front foot handling it. The commentary from our Chinese agents says they feel comfortable with where are at.”

Bascand said any weakness in the FSF price caused by the issue would be seen by some investors as a buying opportunity. The units were sold at IPO last November for $5.50. They listed at $6.60, and have risen above $7 since.

Spierings rubbished O’Connor’s claim the DCD issue was hushed up ahead of the listing, the largest equity event in New Zealand stock exchange’s history for at least a generation.

“If there had been a public health or safety issue, we would have disclosed,” Spierings said.

The range of elements being tested in milk was constantly expanding as testing was becoming more sophisticated. Where there was no public health risk, Spierings argues against mandatory immediate disclosure because of the volume of disclosures that would create.

“We should not need to disclose in our whole business things we want to improve,” said Spierings. “It would get (to be) a zoo. We could not run the company.”

O’Connor’s media release was headlined hard sell after milk taint hushed up.

It not only questions the integrity of Primary Industries Minister David Carter, the MPI and Fonterra, it undermines are very, very high food safety standards.

This is not a health or safety issue it’s a marketing and perception issue.

O’Connor’s petty politicking has the potential to do far more damage not just to Fonterra but to New Zealand’s hard-earned and well-deserved reputation for food safety.

The trade-weighted increase has increased in the first two GlobalDairyTrade auctions this year. This week’s auction will give an indication of whether the perception of problems has affected demand for our products.


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