Labour, Green still anti-dairy

August 7, 2014

Labour could hardly contain its glee at the drop in the prices in yesterday’s GlobalDairyTrade auction:

“Another massive drop in milk prices overnight shows New Zealand needs an Economic Upgrade to limit its overreliance on the dairy industry, Labour Leader David Cunliffe says.

“Since February, milk prices have collapsed by 41 per cent, which suggests the short-lived economic recovery may have already ended. . .

“New Zealand is too reliant on one industry – riding the wave of commodity prices is not a long-term solution to grow jobs and incomes. . .

But while crying crocodile tears over the milk price it was announcing a tax that will hit dairy farmers:

. . . “We believe that the use of water for irrigation is a privilege, not an inalienable right. A resource rental is the best tool for making sure fresh water is used efficiently. However we will support proposals for water storage and irrigation schemes provided they have a broad consensus from their communities.

“Labour will use resource rentals to pay for irrigation schemes rather than paying for them out of tax and asset sales. . .

Individuals and communities already have a say in any water storage and irrigation schemes through the resource consent process.

The initial stages of any irrigation scheme are the most expensive for irrigation companies and water users.

Resource rental is just another name for another tax which will  add costs without benefits, make irrigation schemes less viable, production more expensive and lead to increases in food prices.

The Green Party was equally quick to seize on the fall in dairy prices for political purposes:

Falling dairy prices are highlighting the danger of National’s economic strategy that focuses on the export of a few, simple commodities, the Green Party said today. . .

“National’s economic strategy has simplified our economy and concentrated our exports on a few, low-value-added commodities,” said Green Party Co-leader Dr Russel Norman.

“National has bet the farm on the farm and it isn’t working. A growing reliance on one or two commodity exports has made our economy more vulnerable to commodity price swings. . .

Both parties either don’t understand or are ignoring the fact that the increase in dairying had nothing to do with government policy.

Farmers made individual decisions on converting farms in response to market signals.

They did so in the knowledge that in the market prices go up and they go down.

They went up last season because demand was high.

They are going down now because supply has increased.

Both parties are also conveniently ignoring the statistics.
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Dairy is important but it accounted for only 21% of our exports in 2012 and has gone up only a little since then.

The risk for dairy isn’t current government policies but those a Labour/Green government would impose including a carbon tax:

. . . Agriculture – which is currently exempt from the ETS – would pay a reduced rate of $12.50 per tonne. This works out as an 12.5 per cent hit on farmers’ income. This includes 2 per cent on the working expenses of the average farm. A Berl Economics report, released with the policy, said dairying will be ”adversely affected.”

But it adds: ”However, at the currently projected pay-out for milk solids, even dairy farms in the lowest decile would remain well above break even in the face of an emissions levy.” . .

That payout projection is much lower now.

When he announced the policy, Norman said dairy farmers could afford it.

It wouldn’t be wise to hold your breath while waiting for him to axe that tax because they can’t afford it now.

Labour and the Greens are simply anti-dairy.

They are vociferous about the costs, ignore the benefits and take no notice of the efforts farmers are making to protect and enhance water and soils.


Rural round-up

July 27, 2014

Changes likely in lakes camping – David Bruce:

Thousands of campers who pour in to Waitaki lakes camp sites during summer face some major changes in management by the Waitaki District Council.

Most of the camps could be handed over to private operators under leases or contracts, but before any final decisions are made, people will be asked what they want.

That is likely to be contentious. Similar proposals in the past have caused consternation among some campers.

But they could also look at the Mackenzie District Council’s Haldon Arm Camp, which is administered by the Haldon Arm Reserve Trust Board, made up of campers. . .

Water deal celebrated – Sally Brooker:

Compromise and co-operation are being hailed as the main ingredients in a South Canterbury agreement on nitrogen limits.

Farmers in the Lower Waitaki-South Coastal Canterbury catchment had asked their Environment Canterbury zone committee for more time to work on allocating nitrogen emissions, within the maximum already set to meet the goals of a healthy environment and vibrant economy.

Since February, the farmers have held more than 10 meetings, with ECan supplying technical advisers. After fearing they would not agree, they eventually did.” . . .

Asian markets driving growth for NZ food & beverage exports:

Consumer demand in East and South East Asia for high value foods and beverages is driving export growth and diversification, a new Government report shows.

‘What does Asia Want for Dinner? Emerging Market Opportunities for New Zealand food & beverages in East & South East Asia’ was released today by Economic Development Minister Steven Joyce and Primary Industries Minister Nathan Guy.

The report finds that New Zealand’s overall food and beverage export performance to Asia is excellent; performing strongly in dairy, as well as in meat, seafood, produce and processed foods.

“Asia is the fastest growing food market in the world and is increasingly important for New Zealand exports”, Mr Joyce says. . .

Māori agribusiness showcased to international delegation:

New Zealand’s Māori agribusiness programmes are on show this week, as delegates from Asia-Pacific Economic Cooperation (APEC) economies visit New Zealand to address common barriers to rural economic development. Through case studies and on-farm visits, the Ministry for Primary Industries (MPI) will share experiences learned while helping to build the capability of New Zealand’s rural economic development.

The visiting delegates from Peru, Indonesia, Japan, China, Chinese Taipei, Thailand, Vietnam and the Philippines will attend a two-day APEC PPFS Rural Development workshop from 22-24 July 2014, hosted by MPI and the Northland Māori agribusiness partners.

“Food security is a common APEC challenge with increasing demands and a need to focus on sustainable productivity,” says MPI’s Deputy Director-General Ben Dalton. . .

Don’t write of dairying MyFarm says:

People should not be in any hurry to write off dairy farming just because prices have taken a dive, MyFarm executive director Andrew Watters says.

The average whole milk powder price in the Fonterra GlobalDairyTrade auctions has fallen by 38 percent since February.

Dairy farmers and economists say with the recent sharp drop in prices, it is inevitable Fonterra’s $7 per kilogram of milksolids price forecast will come down – one predicted as low as $6.

But Mr Watters said predictions of the end of the good times in the dairy industry were premature.

He pointed out that Fonterra only sold only about a third of its product at the auction, and that volumes at recent auctions had been low.

The positive, longer-term outlook for dairy farming had not changed, he said. . .

Grow Movie – A Great Documentary Which Outlines Young Urbanites Turning To Farming - Milking on the Moove:

I watched the Grow Movie the other night. 

It’s a documentary that tells the story of how young urban people are being attracted to farming.

The movie follows a few young farmers in the US state of Georgia. We learn how they found themselves farming & why they love it.

Most of the people were highly educated with degrees in finance, engineering & soil science etc, but they have chosen the small scale rural lifestyle. . .

MPI introduces new biosecurity sniffers

Two young biosecurity sniffers were introduced to the world today, along with a new type of detector dog and a new home for the Ministry for Primary Industries’ (MPI) Auckland-based canine team.

Beagle puppies Darcie (girl) and Darwin (boy), collectively known as D-litter, were born by caesarean in May to working detector dog Zuma under the MPI detector dog breeding programme.

Steve Gilbert, MPI Director Border Clearance Services says the MPI breeding programme “provides a cost-effective way of producing fit-for-purpose biosecurity detector dogs”.

The programme has produced 27 litters since 1996 and nearly 80 percent of the individual puppies have become successful biosecurity detector dogs. . .

Brits buy record amount of NZ wine:

New Zealand premium wine sales soar in the UK market

New Zealand wine has become the number 2 country of origin in the UK market for wine sold over £7 according to the latest Nielsen data (MAT 21-6-14). New Zealand now sells 18% of all wines sold in this premium price segment, having overtaken Australia and now sits behind France.

The latest statistics also show New Zealand’s average price per bottle has increased to £7.34 from £6.79 – an 8.1% increase (Nielsen MAT 21-6-14). . . . .

 New Zealand Kiwifruit Growers Welcome Boost to Horticulture Industry:

New Zealand Kiwifruit Growers Incorporated (NZKGI) has welcomed the Government’s plans to get more Kiwis into seasonal work, and its decision to increase the annual Recognised Seasonal Employer (RSE) cap to a total of 9000 workers.

NZKGI President, Neil Trebilco, says this boost to seasonal workers is essential in delivering the industry’s forecasted future growth.

“The kiwifruit industry is recovering quickly from Psa and is poised for big future growth. Over the next few years we are going to see a significant increase in Gold3 volume. . . .


GDT drops 4.9%

July 2, 2014

The GlobalDairyTrade price index dropped 4.9% in this morning’s auction.

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Dairy prices up in GDT auction

June 18, 2014

The price index increased .9%  in this morning’s GlobalDairyTrade auction.

That’s the first price rise since February and follow eight drops.

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Dairy price down, dollar down

June 5, 2014

The GlobalDairyTrade price index fell 4.2% in yesterday’s auction, the eight fall in a row.

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That’s a reflection on increased supply of milk here and overseas.

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It’s not a reason for panic.

Fonterra’s opening forecast for this season of $7 is the fourth highest.

The value of our dollar declined after the announcement which might be of comfort for those who think it’s too high.

That’s all of the opposition, most of whom are at best not very enthusiastic about dairying.

A conspiracy theorist might think their antipathy to dairying is, at least unconsciously, linked to their desire to erode the value of everyone’s earnings by devaluing our currency.

 

 

 

 

 

 


Where will milk price go?

May 22, 2014

Fonterra will announce its forecast payout for the 2014/15 season next week.

This graph showing the relationship between GlobalDairyTrade auction prices and the payout give a good indication of where it’s likely to go:

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The milk price has shadowed the GDT price index until the last few months when the index has fallen but the payout has remained higher.

Even the most optimistic forecasts for the coming season indicate a fall from the 2013/14 record payout.

This graph reinforces that and there’s speculation the new season’s inaugural forecast could be down by more than $1.50, to $7 per kilogram of milk solids (kg ms).  

. . . BNZ economist Doug Steel said a lower payout forecast was unlikely to surprise farmers, given highly visible declines in world prices to date.

Given current price and currency conditions, a milk price forecast somewhere around the $7 kg ms mark seemed plausible, Mr Steel said.

”This [latest decline] fits within our view that dairy prices would be lower this year,” he said in a statement.

Westpac chief economist Dominick Stephens also believed the new season payout forecast next week would be well down, at around $7.10kg ms, while also picking the present season forecast would be downgraded, from $8.65 to $8.50kg ms.

Because the dairy sector carried the majority, or about 65% of all agricultural debt, and half the dairy debt was held by about 10% of all farmers, the Reserve Bank was watching the sector closely, he said. . .

Wise farmers have used this season’s record payout to reduce debt and have been budgeting on a lower payout for the coming season.

 


GDT down for 6th auction in row

May 21, 2014

The GolabalDairyPrice Index fell 1.8% in this morning’s auction, the sixth drop in a row.

 

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GDT drops 1.1%

May 7, 2014

Fonterra’s GlobalDairyTrade Index dropped 1.1% in this morning’s auction.

This is the sixth fall in a row and takes prices back to where they were this time last year.

That wasn’t seen as a bad price and is still well above the long term average.

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GDT down 2.6%

April 16, 2014

The GlobalDairyTrade index dropped 2.6% in this morning’s auction.

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The price of anhydrous milk fat increase .6%; butter dropped 4.9%; butter milk powder dropped 8.6%; cheddar was down 3.3%; milk protein concentrate fell 7%, rennet casein was down 4.3%; skim milk powder went down 4.4% and whole milk powder was down 1.6%.

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This doesn’t mean the sky is falling.

The price is still above the long term average.

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The lower price is just reflecting greater supply here and overseas, in particular in the USA where a reduction in the demand for crop for biofuels has made cattle feed cheaper.

It does however, mean that sensible dairy farmers will be budgeting on a lower payout next season.


GDT drops 8.9%

April 2, 2014

GlobalDairyTrade’s Price Index dropped 8.9% in this morning’s auction.

It’s the second big drop in a row and reflects increasing supply in other countries.

Northern Hemisphere dairy production is in full swing and a big drop in the need for biofuel in the USA has lowered the cost of cow feed.

 

 

 


Milk price down 4%

March 5, 2014

What goes up can also go down and the price index dropped 4% in this morning’s GlobalDairyTrade auction.

 

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The price of anhydrous milk fat fell 3.5%; butter increased 3.9%; butter milk powder dropped 5.8%; cheddar increased .7%; milk protein concentrated dropped 3.3%; rennet casein increased 2.9%; skim milk powder dropped 3.9% and whole milk powder fell 5.7%.

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GDT price index up .5%

February 5, 2014

GlobalDairyTrade’s Price Index increased .5% in this morning’s auction.

GDT Trade Weighted Index Changes

GDT 5.2.14

The price of anhydrous milk fat dropped 1.2%, butter increased 2.6%; butter milk powder was down by 1.2%, cheddar dropped 4.3%; lactose was down 2.7%, milk protein concentrate fell 3.3%; rennet casein dropped 3.7%,  and whole milk powder  increased by 1.4%.


Rural round-up

January 24, 2014

Promise of plenty – Nigel Stirling:

This year has the potential to be a vintage one for breaking down barriers to New Zealand’s agricultural trade with the rest of the world.

But don’t break out the champagne just yet.

It is a fine line between success and failure in trade negotiations, which have a habit of falling at the last hurdle. . .

Dam directors keep the faith – Tim Fulton:

The 6.2 magnitude earthquake near Eketahuna had Tim Fulton asking what quakes mean for dams like Ruataniwha in Hawke’s Bay.

The Ruataniwha dam will be strong enough to withstand a large earthquake, project manager Graeme Hansen says.

The planning team had done quake investigations to death, he said.

The Mohaka fault goes through the water-storage scheme’s proposed reservoir area.

“It’s certainly been a bone of contention, or should I say a topic of conversation, around building a water-storage structure on or near a major fault,” Hansen said. . .

Dairying boost tipped for economy – Christopher Adams:

Economists say a combination of rising international dairy prices and favourable farming conditions bode well for New Zealand’s economic growth, which is already expected to outpace most other developed nations this year.

Dairy product prices in Tuesday night’s GlobalDairyTrade auction rose 1.4 per cent from the last sale on January 8, led by surging prices for butter and cheese. Those two products have posed problems for Fonterra as their prices lagged behind whole milk powder.

The average winning price was US$5025 ($6040) a tonne from US$4953 a tonne at the last auction. About 41,024 tonnes of product was sold, down from 46,418 two weeks ago, for about US$206.1 million. . .

Manuka authentication project:

An organisation representing most of the country’s manuka honey producers says it’s got the backing of a major overseas customer for a project authenticating the highly-prized honey.

The Ministry for Primary Industries has begun working on a new guideline for New Zealand’s most valuable honey, after concerns were raised in some overseas markets about false claims and labelling for manuka, which commands top prices for its anti-bacterial and healing qualities.

Meanwhile, the Unique Manuka Factor or Honey Association is collecting samples from around the country to establish a chemical profile of manuka. . .

Looking forward to 2014 – Kirsten Bryant;

There’s been plenty to keep us occupied on the farm over January, so it’s been very much a case of head down. But, out the corner of my eye, I optimistically note that we’ve had great grass growth and improved stock performance.

Year to date, my impression is that, while we don’t have the certainty of price that dairy farmers enjoy, sheep and beef farmers are cautiously optimistic about the year ahead. It’s amazing the effect available feed and forecast rain have on the soul and, consequently, our outlooks. It feels good.

This week, I had the privilege of listening to the inspirational Kevin Biggar – one half of TVNZ’s First Crossings’ duo. Kevin was speaking about his journey from self-admitted couch potato, to Trans-Atlantic rower and South Pole adventurer. . .

Rabbits threatens our gin and tonic: Wild animals are overgrazing on juniper berries:

Wild rabbits are threatening the traditional British gin and tonic by over-grazing on juniper berries – a key ingredient of the drink.

The animals have eaten so many plants that experts fear the juniper could be wiped out in parts of the country.

Now a gin manufacturer has donated £1,000 to Steyning Downland Scheme, a charity working to save the ancient plant which is also under threat from disease.

It will use the money from No.3 London Dry Gin to put up fences around the few remaining junipers near Lancing, West Sussex.

It is hoped the barriers will keep the rabbits out and protect the juniper, which gives gin its distinctive bitter taste. . .


GDT up 1.4% butter, cheese soar

January 22, 2014

The GDT Price Index increased 1.4 in the second GlobalDairyTrade auction of the year boosted by steep rises in the prices paid for butter and cheese.

GDT Trade Weighted Index Changes

 

 

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The price of anhydrous milk fat increased 2.2%; butter soared 10.8%; butter milk was up by 3%; cheddar increased 10.4%; milk protein concentrate rose 7.2% rennet casein increased 4.2%; skim milk powder dropped .5% and whole milk powder eased up .1%.

 

 

 


GDT auction down .8%

January 8, 2014

Dairy prices dipped slightly with a .8% drop in the GlobalDairyTrade price index in the first auction of the year this morning.

Prices are expected to be less buoyant this year.

Demand from Asia is still growing but milk production in the USA is expected to increase.

Demand for corn for fuel there is dropping. That reduces the cost of feed for cattle which is likely to lead to a boost in the supply of milk.

 

GDT Trade Weighted Index Changes

GDT Trade Weighted Index Changes

gdt 1.14

The price of anhydrous milk fat dropped 1.8%; butter gained 5%; butter milk powder was up .5%; cheddar increased 1.9%; lactose was up 5.8%, milk protein concentrate rose 5.2%; rennet casein increased by 1.1% skim milk powder fell 3.4% and whole milk powder was down .6%.

 


GDT milk price up .2%

December 18, 2013

The global Dairy Trade milk price index edged up .2% in this morning’s auction.

GDT Trade Weighted Index Changes

gdt 18.12

The price of anhydrous milk fat increased 4.4%; butter rose 7.9 %; butter milk fat was up 2.2%; cheddar was up 1%; milk protein concentrate was up 3.9%; rennet casein increased 7.3%; skim milk powder was up 1.7% and whole milk powder was down by 1.5%.


GDT Price Index down 1.8%

November 6, 2013

The Price Index in this morning’s GlobalDairyTrade auction dropped 1.8%.

GDT Trade Weighted Index Changes

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The price of anhydrous milk fat increased 6.9%; butter dropped 7.0%;  butter milk powder was up 1.8%; cheddar was up 1.2%; lactose increased 3.2%;  milk protein concentrate was up by 4.6%; rennet casein and skim milk powder both increased by 5.% and whole milk powder dropped 3.7%.


GDT price index down 1.9%

October 16, 2013

The GlboalDairyTrade Price Index dropped 1.9% in this morning’s auction.

GDT Trade Weighted Index Changes

The price of anydrous milk fat was down 1.2%, butter dropped 3.5%, butter milk powder dropped 5.2%, cheddar was down 1.7%, lactose was up 1.7%, rennet casein increased 1.5%, skim milk powder was up 0.7% and wholemilk powder was down 2.9%.

 


GDT price index up 2.4%

October 2, 2013

Global Dairy Trade’s price index rose 2.4% in this morning’s auction.

 

GDT Trade Weighted Index Changes

gdt 3.10

The price of anhydrous milk fat increased 2.7%; butter was up 0.1%; butter milk was up 2.7%; cheddar increased 2.3%; lactose rose 14.8%; milk protein concentrate dropped -3.9%; rennet casein was down .8% , skim milk increased 3.9% and whole milk powder was up 2.3%.


100th auction proves GDT’s worth

September 20, 2013

Fonterra’s GlobalDairyTrade passed a significant milestone on Tuesday with its 100th auction.

Global Dairy Trade Director Paul Grave says the 100th successful auction marks a coming of age for the platform which is now in its fifth year of trading and surpassed US$10 billion in aggregate sales earlier this year (July 2013).

“Achieving our 100th trading event proves the success of the online model.  It shows that Global Dairy Trade has matured to become an essential feature of the global dairy industry.  GDT now provides price transparency and highly efficient purchasing for more than 850 registered bidders from 90 countries,” Mr Grave said.

“The strong support for the platform shows we are meeting a real market need to find a robust reference price that reflects true levels of supply and demand in the market,” Mr Grave says.

The platform is now used by six global companies supplying product for sale.  This includes Fonterra (New Zealand), Dairy America (USA), Amul (India), Arla (Denmark), Murray Goulburn (Australia) and Euroserum (France). A typical auction event lasting around two hours will sell enough product to completely fill a container ship; amounting to around  2,500 standard twenty-foot containers, valued at between US$100 and $250 million.

Global Dairy Trade operates at arm’s length from its owner Fonterra.  Fortnightly auctions are conducted on behalf of GDT by Boston-based, NASDAQ-listed CRA International in accordance with market rules monitored by an independent advisory board of sellers and buyers. 

“We are delighted that Global Dairy Trade is today centre-stage of a vibrant global dairy industry which is experiencing annual demand growth of well over 2.5%.  We will be seeking to continuously improve our service as technology evolves over the years ahead,” Mr Grave says.

There was concern and scepticism from within New Zealand and abroad about the on-line auction system when it was first launched but this milestone proves it’s working and shows its worth to Fonterra, its shareholders and suppliers and customers.

The company trades only a small proportion of its product through the auction but it is a useful indicator of demand and price.

It’s also used as a benchmark by other companies here and overseas.

When we were in Holland last year the latest GDT auction results featured on the front page of a farming paper.


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