Rural round-up

October 29, 2014

TPP Too Important for Compromised Finish:

The New Zealand dairy industry is urging Trans Pacific Partnership (TPP) partners not to compromise on the quality of the deal to get it done quickly.

The Dairy Companies Association of New Zealand (DCANZ) is concerned at reports that the US and Japan may seek to conclude a deal which leaves dairy trade liberalisation out in the cold.

“We urge leaders to stand by their 2011 commitment to a comprehensive deal,” says DCANZ Chairman Malcolm Bailey. “This cannot be achieved without addressing access for dairy, which remains one of the most protected sectors amongst the TPP partner countries.”

The Japanese World Trade Organisation (WTO) bound tariffs for skim milk powder and butter are equal to 217% and 360% respectively. Canada’s dairy market access regime is characterised by small quotas and large out of quota tariffs in the order of 200 – 300%. These conditions often mean trade is prevented. . .

Lisa Owen interviews Fonterra CEO Theo Spierings

Headlines:

Fonterra boss worried about the spread of Ebola in West Africa and potential “big consequences” for the company, saying “it doesn’t feel to me like that it is under control at the moment”

Estimates if Ebola worsens, it could “very quickly” hit 5-6% of Fonterra’s exports, worth $150 million in sales.

Spierings says China as a market is “stable” – volume growth might slow to 4% from 6%

Downplays chance of sealing a Trans-Pacific trade deal – “where the world is right now, we should not be overly optimistic on reaching this… it’s going to be very difficult”.

Can envisage a day when New Zealand reaches ‘peak cow’ – “there could be a point in time that you say no more” – but not for some years. . . .

Massey to host $5m Food Safety Research Centre:

Science and Innovation Minister Steven Joyce and Food Safety Minister Jo Goodhew today announced that Massey University will host the new Food Safety Science and Research Centre.

The Centre will promote, co-ordinate, and deliver food safety science and research for New Zealand. It was a key recommendation from the Government Inquiry into the Whey Protein Concentrate (WPC) Contamination Incident.

“New Zealand’s food exports are dependent on a robust and internationally credible food safety system,” Mr Joyce says. “It is vital therefore that New Zealand is a visible leader in food safety science and research, and remains a producer of trusted, high-quality food products.” . . .

Venison: Breaking with Tradition:

Deer farmers have enjoyed better prices for their venison this October, the time of the year when chilled venison demand peaks in Europe. But the industry’s real focus is on getting chilled season prices all year-round.

Since early October the national average venison schedule for benchmark 60 kg stags has been sitting at around $7.73 a kilo, up from $7.43 last year. Some farmers have been receiving more than $8.00 a kilo.

“This is good news,” says Deer Industry NZ (DINZ) chief executive Dan Coup. “But once the last chilled season shipment to Europe departs our shores in early November, the reality is that venison prices will most likely ease again.” . . .

 

Silver Fern Farms Confirms Positive 2014, Sets 2015 Plan Including Organisational Change And Outlook:

October 28: Silver Fern Farms Chairman Rob Hewett says Silver Fern Farms is on track to deliver a significantly improved profit for the 2014 year following a strategic review of the business and a focus on debt reduction.

“We expect the audited pre-tax earnings for the company will be $5 – 7m for the year just ended to 30 September 2014, which will represent a greater than $40m net profit before tax improvement in performance on 2013. We know many of our farmer shareholders see our profitability as a priority for the company this season, which is what we have delivered,” Mr Hewett says.

Over the same period the company has also paid down $100 million in debt as part of a plan to reduce the cost of debt servicing to the company.

Mr Hewett also announced Chief Executive Keith Cooper was stepping down from the role. . . .

 

Dairy Awards Offers i-Incentive to Enter

Those that enter early in the 2015 New Zealand Dairy Industry Awards could win some great Apple Inc prizes, with more than $12,500 of products being given away in an Early Bird Entry Prize Draw.

Entries are now being accepted in the New Zealand Sharemilker/Equity Farmer of the Year, New Zealand Farm Manager of the Year and New Zealand Dairy Trainee of the Year competitions.

All entries are accepted online at www.dairyindustryawards.co.nz and close on November 30.

National Convenor Chris Keeping says the Early Bird Entry Prize Draw provides a great incentive for those planning to enter the awards to get their entry in early. There are two packages of an iPhone 5S and iPad Air worth $2100 to be won in each of the three competitions, six in total. . . .


GDT index up 1.4%

October 16, 2014

GlobalDairyTrade’s price index rose 1.4% in this morning’s auction.

That is welcome news after the big fall in the index at the previous auction.


Rural round-up

September 30, 2014

Excitement at wool levy possibilities – Sally Rae:

When Sandra Faulkner was a young girl, her father gave her a valuable message – ”don’t grizzle unless you’re planning on getting involved”.
The Muriwai farmer is now chairwoman of the Wool Levy Group, which is behind next month’s referendum seeking to reintroduce a wool levy.

”I guess it’s never really been an option to sit back and let somebody else do it. You gain the right to comment for being involved,” Mrs Faulkner said. . .

Farmhand pilot programme welcomed – Sally Rae:

Farming is the career path Emma Hollamby knows she wants to follow.

Ms Hollamby (25) was among the first intake of the pilot of the Farmhand training programme, launched in Dunedin last week.

The programme, which runs for 12 weeks, aims to expose the city’s disengaged youth to rural work opportunities.

For Ms Hollamby, who had previously worked on dairy farms and loved the outdoors, it was an opportunity to broaden her horizons and ”get a feel for sheep”. . .

Fonterra Farmers and Farm Source – together as one:

Fonterra has signalled a significant step-up in its relationship with farmers, rolling out Farm Source which will support farmers and their farming businesses and bolster the Co-operative’s connection with rural communities in New Zealand.

Farm Source combines service, support, rewards, digital technology and financial options for farmers together with local Farm Source hubs to support the major dairying regions throughout the country.

Speaking at today’s launch in Methven, Fonterra Chairman John Wilson said Farm Source’s seed was discussions with farmers and the “together as one” principle behind co-operatives.
Brothers show how they grow it in Kansas – Market to Market:

The Kansas prairie is well known for its fields of wheat, soybeans and irrigation rigs.

Tucked into the central part of the sunflower state near Assaria, is a farmstead known around the world.

Well, the world-wide web, that is.

What began as a tribute to the beauty of the Kansas landscape, quickly escalates into a rap parody as performed by the Peterson Brothers; college senior Greg, college freshman Nathan and high school junior Kendal.

Greg Peterson, Assaria, KS: “I was at Sonic and I was with my friends and a song comes on the radio and I’m like all right, it is that stupid song again. And I am going to change the words and my friends thought it was funny and I was like maybe I will make a music video out of that.”

That springtime idea inspired by LMFAO’s “Sexy And I Know It,” became a summer sensation “I’m Farming and I Grow It.” . . .

 


Rural round-up

September 29, 2014

Te Puni Kōkiri Chief Executive Hails Growing Success Of Māori Agribusiness at Ahuwhenua competition launch – 2014 FOMA Conference:

Speaking at the official launch of the 2015 BNZ Māori in Farming Award – Sheep & Beef (Ahuwhenua Trophy) at the FoMA Conference in Whanganui this evening, Te Puni Kōkiri chief executive Michelle Hippolite said: “The Ahuwhenua Trophy Competition remains a preeminent showcase for excellence, achievement, and for growing Māori innovation for economic prosperity.”
Looking around the room, Michelle said that those at the conference showed the depth and calibre of talent at the helm of large Māori farming enterprises around the country.

“Over the years, most of these Māori farm enterprises had featured as entrants and finalists in the Ahuwhenua Trophy Competition,” she said. “Today the competition could be credited with driving continued improvements occurring in Māori agribusiness, and which were now pushing it to the forefront of the sector.” . . .

Second hand TradeMe buys boosts farm change – Jill Galloway & Sandra Crosbie:

Ryley Short says that when the Fonterra tanker first came to collect milk at her Mt Stewart farm there were 10 people there cheering. They were all involved in converting the farm to dairy, wanting to see it succeed.

“The tanker driver was a bit surprised,” Ryley says. “He asked if this was the first milk picked up. It was. It had been a sheep and beef farm before the conversion.”

The switch by Ryley Short and her husband Mike to dairying is a conversion with a difference. They have relied a great deal on Trade Me for secondhand equipment, which they often get cheaply. Even the dairy shed came through the online auction website. . .

Production at demo farm reaches record level  -

Daily milksolids (MS) production for each cow on the Waimate West Demonstration Farm near Manaia in Taranaki is at its highest ever.

The daily per cow MS production has reached two kilograms in the third and final season of a trial that’s investigating the viability of integrating cropping on the dairy platform.

Twenty-five per cent of the farm is being planted in crops for the trial.

At last week’s spring field day on the farm, DairyNZ scientist Kevin Macdonald produced figures showing daily milksolids per cow to mid-September was almost half a kilogram higher than last year’s figure of 1.56kg. . . .

National’s Freshwater Fund may spur on-farm wetlands:

 Having worked with DairyNZ to analyse the $100m freshwater fund policy, recently announced by the National Party, Federated Farmers believes it could vastly improve water quality outcomes.

“The Fund to retire farmland would be perhaps better interpreted as a policy to create on-farm wetlands,” says Ian Mackenzie, Federated Farmers Environment spokesperson.

“After talking with the team at DairyNZ we’ve arrived at a very different conclusion to that other groups have come up with.

“Instead of looking at this as a linear purchase of land, or trying to recreate MAF’s old farm advisory division, think more along the lines of NIWA’s guidelines for constructed wetlands.

“A fund $10 million a year could purchase at least 286 hectares. Using NIWA guidelines and if turned into strategically located wetlands, DairyNZ and Federated Farmers believe it could remove 60-70 percent of Nitrogen from around 9,500 hectares of farmland. . .

 Sweet Success for Villa Maria at International Wine Show:

It was sweet success for Villa Maria last evening, collecting nine gold medals and the trophy for Champion Sweet Wine at the New Zealand International Wine Show, held at the Crowne Plaza Hotel in Auckland.

The New Zealand International Wine show is the country’s largest wine show, in its tenth year with over 2000 global entries, it gives recognition to wines that are or will be sold in New Zealand.

The world renowned show organised by Kingsley Wood of First Glass Wines of Auckland, has a panel of over twenty experts judging the high calibre of entrants, overseen by Chief Judge Bob Campbell, MW. . .

 


Rural round-up

September 25, 2014

ECan commissioner vents spleen at nutrient meeting -

Environment Canterbury commissioner David Bedford lost his cool at a packed zone committee meeting in North Canterbury.

Trying to resume the meeting after a short tea break, Bedford used several expletives suggesting he was sick of farmers who turned up to meetings for just a short time.

His outburst reflected the often tense tone of the meeting, which drew several hundred dryland sheep-and-beef farmers to the small Waikari hall.

They came to express their concern at nutrient regulations that would leave many low-emitting dryland sheep-and-beef farmers unable to increase their lambing percentage, plant a stand of Lucerne, or grow an extra feed crop. . .

Agri-food opportunities in China – Keith Woodford:

Over the last two years I have written, together with my colleague Xiaomeng (Sharon) Lucock,  a series of six articles on various aspects of China’s  agri-food industries. They have been published in the Journal Primary Industry Management, which is the quarterly journal of the New Zealand Institute of Primary Industry Management.

The first article, attached at the bottom of this post, was written in late 2012.

Some things have moved on since then – for example we reported in that article that New Zealand’s exports to China in the year ending 30 June 2012 were $NZ6.1 billion, which was a three-fold increase in only five years. In the two years since then to 30 June 2014 they have almost doubled again to $NZ11.6 billion. However, the key drivers of change as we set out in that article remain the same.

These key drivers are increasing wealth, urbanisation, changing cuisine, food safety, agricultural production constraints, and associated food security issues. . .

Sheep meat in China and the opportunities for NZ – Keith Woodford:

This is the second of the “China series’  that Xiaomeng (Sharon) Lucock and I wrote for the journal  ‘Primary Industry Management’. It was written in December 2012 and published in March 2013.

As with everything relating to China, the statistics do not stand still.  In the year ending December 2012, 13% of New Zealand’s sheep meat exports income came from China. Move forward six months, and in the 12 months ending June 2013 this had risen to 21%. Then in the 12 months to June 2014 it rose again to 30%.  On a monthly basis, the latest statistics for March 2014 show the China component of New Zealand’s sheep meat trade was 31% by value and 44% by volume. . . .

Doing Agri-business in China – Keith Woodford:

This is the third of a series of six papers written for the journal ‘Primary Industry Management’. This one was published in June 2013.

For this paper we had three authors: Xiaomeng (Sharon) Lucock, Malcolm Cone and myself. The work was led by Sharon and formed the first part of her PhD studies.  It is based on case study work undertaken with New Zealand firms operating in China.

The focus of the work has been on cultural differences and how they affect business practices and relationships. About half the interviews were with Kiwis and undertaken in English. The other half were with Chinese and mainly undertaken in the Chinese language. . . .

Venison finishing margin better – Joanna Grigg:

Daniel Stack puts it bluntly.

“If venison prices are the same as last year venison farming will struggle to be both sustainable and competitive with alternative land uses, like dairy grazing.”

That said, he is poised to increase deer numbers if things come right. The Canterbury Plains venison finisher and dairy grazer hopes that indications from some venison exporters of the October schedule peak reaching $8/kilogram (kg) for 55 to 60kg AP stags will bear out. This would put returns at a level seen in 2012, when the average published schedule peak was $7.95/kg. It is also up on the past season’s $7.40/kg peak.

Stack said that to increase the number of deer weaners bought in, back to his typical 500 a year, he would need to see the schedule price at eight dollars. . .

 Take a long, hard look at your farming systems:

Industry body DairyNZ says the latest drop in Fonterra’s forecast Farmgate Milk Price for the 2014/15 season is a signal to farmers to reassess the costs of their farm system.

Fonterra Co-operative Group Limited today reduced its forecast Farmgate Milk Price for the 2014/15 season from $6.00 to $5.30 per kg milksolids (kgMS). It also increased and widened the estimated dividend range from 20-25 cents per share to 25-35 cents – amounting to a forecast Cash Payout of $5.55-$5.65 for the current season.

DairyNZ’s general manager of research and development, David McCall, says most farmers should cope with lower prices this season, provided another drought doesn’t hit the country. However, around a quarter of the country’s farmers, those with a lot of debt, may have difficulty meeting their farm working expenses and interest payments. . . .

 Cattle and dairy lead rise in exports:

Goods exports rose $227 million in August 2014 compared with August 2013, to $3.5 billion, Statistics New Zealand said today.

Live animals led the rise in exports, due to live cattle. Milk powder, butter, and cheese exports also contributed to the increase, led by higher quantities. The 16-percent rise in milk powder, butter, and cheese was led by milk fat and cheese.

“Cattle, milk fat, and cheese contributed to the rise in exports,” international statistics manager Jason Attewell said. “It is the first time in three years that a rise in dairy was not led by milk powder.” . . .

Award winner becomes Dairy Women’s Network Chair:

Dairy Women’s Network has appointed one of its past Dairy Woman of the Year winners as incoming chair.

Incumbent network chair Michelle Wilson has announced 2013 Dairy Woman of the Year winner Justine Kidd as the organisation’s new chair; a role she will assume following the organisation’s annual general meeting on 22 October.

“It is a credit to the Dairy Women’s Network board to have a person with Justine’s knowledge of agriculture and governance experience at the helm,” said Wilson.

“As outgoing chair I take a lot of comfort in knowing that the organisation will continue to grow from strength to strength with strong leadership at the board table.” . .


Rural round-up

September 24, 2014

Beef surges to record on US demand for hamburgers, outlook upbeat – Tina Morrison:

(BusinessDesk) – Prices for beef used in hamburger patties in the US are likely to hold at elevated levels after surging to a record in the past year as drought-ridden American farmers rebuild their herds, boding well for kiwi farmers, an analyst says.

The price for US imported 95CL bull beef, the raw ingredient for meat patties, has surged 59 percent to US$3.18 a pound in the past year, according to Agrifax data. In New Zealand dollar terms, the price is at $8.37 per kilogram, beating the previous record of $6.60/kg in 2001.

“It has just been rocketing up very sharply. It is well into record territory now,” said Nick Handley, senior sheep and beef analyst at Agrifax. “If prices can stay anywhere near these levels, it’s extremely positive for New Zealand because you expect a lot of that to flow through to New Zealand processors and New Zealand farmers.” . . .

Time right for large irrigation schemes:

Farming and irrigation lobby groups are eager for the new Government to change environmental rules and get large-scale irrigation schemes up and running.

Lobby groups Federated Farmers and Irrigation New Zealand say the time is right, with the National Party being re-elected by a handsome margin for the Resource Management Act to be reformed.

Irrigation New Zealand chief executive Andrew Curtis said today that proposals by Labour and the Green parties to tax water did not find favour with irrigators, and National’s resounding win on Saturday gives them more confidence.

Mr Curtis said Irrigation New Zealand wants to see changes to the RMA. . .

Farmers Disappointed with Milk Price Drop, Cautious Approach Required:

Fonterra Shareholders’ Council Chairman, Ian Brown said Farmers will be disappointed following the Co-operative’s latest drop in its 2014/15 forecast farmgate Milk Price to $5.30 per kg/MS.
The Co-op also announced an estimated dividend range of 25-35 cents per share.

Mr Brown: “Even though Farmers are aware of the prevailing market conditions and the effect they have on the price they receive for their milk the announcement will add to the challenges being faced on-farm.

“It is in these seasons that Farmers will want to receive the full benefit from the integrated supply chain that their Co-op provides. . .

Great Result for Farmers Following Challenging Year for Co-Op:

Fonterra Shareholders’ Council Chairman, Ian Brown said the 2013/14 season was one of real complexities for the Co-operative yet produced a great result for Farmers.

Mr Brown: “The farmgate Milk Price of $8.40 per kg/MS has come on the back of a season in which good production was supported by strong demand and high prices.”

“This will be very well received by Farmers.”

Mr Brown said it was important to recognise that the same factors which positively affected the farmgate Milk Price, such as the demand for milk powders, contributed to the challenges faced by the business in terms of profit as evidenced by the Earnings Before Interest and Tax (EBIT) figures. . .

 Couple give their farm to university – Jill Galloway:

It was a time for celebrating.

After 10 years, Bulls-Marton farm owners Jim and Diana Howard found they could work with Lincoln University and it had a deal with local iwi Ngati Apa.

It had not been for lack of trying to find a like-minded partner.

But now it has come together – a demonstration farm that local farmers can look over the fence at, and get good ideas, as well as a farm to train people in sheep and beef and cropping.

That was what the Howards wanted and they have given their farm to the Lincoln Westoe Trust. . .

Candidates for Fonterra Board of Directors’ Election Confirmed:

Candidates for the Fonterra Directors’ Election were announced by the Returning Officer, Warwick Lampp today following the completion of the Candidate Assessment Panel (CAP) process.

This year there are six candidates standing for the Board of Directors. They are Gray Baldwin, Leonie Guiney, David MacLeod, John Monaghan, Garry Reymer and Grant Rowan.

As in previous years, the CAP process was available to assess the capabilities, experience and qualifications of Director candidates and provide Fonterra shareholders with more information to help in making an informed vote. While the CAP process is open to all Director candidates, it is not compulsory. This year all candidates went through CAP. . .

 

Pahiatua Company Announced as New Zealand Innovators Awards Finalist:

Pahiatua company, DTexH2o, has been named as a finalist in the Innovation in Agriculture & Environment category of the prestigious New Zealand Innovators Awards.

The company’s innovative product, DTexH2o, is an in-line electronic probe that detects the difference between milk and water in the cowshed milk line.

Founders of the company, Graeme and Alison Franklin, said the DTexH2o uses an alarm to stop farmers spilling milk down the drain or getting water in the milk vat during wash-down.

“When a farmer washes-up the milk line, water is pumped through the pipes, pushing the last milk through into the vat. The farmer must manually turn the valve to re-route the water to stop it going in the vat,” Alison said. . .

New Chairman Excited by Gimblett Gravels Opportunities:

Less than a week into his role, new Gimblett Gravels Winegrowers Association (GGWA) Chairman, Gordon Russell, is already working on plans for GIMBLETT GRAVELS future success.

Esk Valley’s Senior Winemaker, Gordon says, “I am honoured to become Chairman of this talented group of growers and wine producers. I would like to carry on the work of outgoing Chairman, Tony Bish of Sacred Hill, whose strategic direction and dedication over the last two years has significantly raised the profile of GIMBLETT GRAVELS wines, both in New Zealand and on the international stage. . .


Fonterra drops payout, ups dividend

September 24, 2014

Fonterra has dropped its forecast payout for this season but increased the forecast dividend:

Fonterra Co-operative Group Limited today reduced its forecast Farmgate Milk Price for the 2014/15 season from $6.00 to $5.30 per kgMS, and increased and widened the estimated dividend range from 20-25 cents per share to 25-35 cents – amounting to a forecast Cash Payout of $5.55-$5.65 for the current season.

Chairman John Wilson said the lower forecast Farmgate Milk Price reflected continuing volatility, with the GlobalDairyTrade price index declining 6 per cent in the past two trading events.

“The market is currently influenced by strong milk production globally, the impact of Russia’s ban on the importation of dairy products, and the levels of inventory in China. Some relief has been provided by exchange rates, with the NZ dollar recently showing some signs of falling against the US dollar.

“Under the current market conditions, there is further downside risk.  However, the forecast reflects expectations that prices will increase in the medium term,” Mr Wilson said.

Chief Executive Theo Spierings said the estimated dividend range reflected the positive impact of a lower forecast Farmgate Milk Price on product margins but also significant volatility in commodity prices.

“A lower forecast Farmgate Milk Price reduces input costs in our consumer and foodservice businesses. In turn, we do expect to deliver increased returns as a result of a recovery in margins on our products.

“In addition, stream returns for Non-Reference Commodity Products such as cheese and casein are currently making a positive earnings contribution, but it is still very early in the financial year.

“With volatility in commodity prices, a wide range of outcomes are possible in relation to stream returns. The wider dividend range reflects this volatility, and at this stage of the financial year, it is not realistic to be able to accurately forecast the final result for the year within a narrower range.”

Mr Wilson said that the forecast Farmgate Milk Price remained reliant on increasing dairy prices in the medium term.

“The forecast Farmgate Milk Price is reduced based on current estimates of future pricing. There remains significant volatility in international dairy commodity prices and given this, this forecast is our best judgment at this time.

“As always, we recommend caution with regards to on-farm budgets in this environment of continuing uncertainty.”

The news wasn’t all bad. Fonterra confirmed a record payout for last season:

Fonterra Co-operative Group announced today a final Cash Payout of $8.50 for the 2014 year for a 100 percent share-backed farmer, comprising a Farmgate Milk Price of $8.40 per kgMS and a dividend of 10 cents per share.

Chairman John Wilson said that the Cash Payout to the Co-operative’s 10,500 farmer shareholders was the highest ever made since Fonterra’s formation in 2001.

“The Farmgate Milk Price on its own represents an injection of more than $13.3 billion to the New Zealand economy for the season.

“It is a strong result, reflecting the determination of our farmer shareholders to lift on-farm performance, matched within the business by a focus on driving revenue.

“Our farmers took advantage of good conditions to produce 1,584 million kgMS, eight percent more than last season, to make the most of the good prevailing prices early in the season.

“North Island volumes were up nine percent at 969 million kgMS, while the South Island delivered a seven per cent rise in volumes to 615 million kgMS.

“A very good spring saw our farmer shareholders achieve record milk production through an extended peak, stretching our production capacity for powders. This led to early impacts on stream returns from the less valuable products we were forced to make.”

Fonterra CEO Theo Spierings said the Co-operative had come through a very demanding year.

“We have continued to stay on track with our strategy, focusing on securing the best returns to our farmer shareholders.

“We achieved record revenue of $22.3 billion for the year, a direct result of the focus on achieving the highest possible revenue line that is good for the Farmgate Milk Price.

“Constrained margins in our foodservice and consumer businesses and on non-milk powder products were the knock-on effect, contributing to a 27 per cent rise to $19.8 billion in the cost of goods sold. However, we maintained our focus on efficiency and achieved a two per cent reduction of $46 million in our operating costs.

“Our higher cost of goods sold, along with higher interest and taxation, saw our net profit after tax decline by 76 per cent to $179 million.” . . .

The cut in this season’s forecast was expected and last season’s record payout will be some compensation.

However, the reduced payout will impact not just on farmers but the people and businesses who service and supply them and the wider economy.

When the price goes up there’s always calls from the left for farmers to subsidise consumers.

There won’t be a call to subsidise farmers now the price has gone down, nor would we want it.


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