Rural round-up

Go farming, young Kiwis - Bruce Wills:

What is your perception of a farm worker? The response from those who do not know much about farming is possibly that they are low-skilled, low-waged and over-worked.

Federated Farmers, with Rabobank, have produced an annual remuneration survey for a number of years with the most recent released last month. The positive thing about social media is that it is easy to catch out those ‘swinging the lead’. The downside is that it anyone with a keyboard can take aim and fire a salvo.

The response to our 2013 survey, aside from one colourful Facebook post, has been that it is on the money, if you excuse a poorly chosen pun.

We are coming out of the shadows on farm worker remuneration to counter the “response” we sometimes get. It also comes after seeing hundreds of Aucklanders queuing for seven jobs at a factory to earn just over $15 an hour. . .

Integration lifts Maori farming:

A STRATEGY shift a few years ago to integrate the dairy and sheep and beef units with a flexible stocking policy provided a step change in performance for large-scale Maori-owned farm business, Te Uranga B2.

Now, its sheep and beef unit is one of three finalists in this year’s Ahuwhenua Trophy for excellence in Maori farming.

“The farming philosophy is around maximising pasture production, optimising feed conversion and then maximising productivity,” says Te Uranga B2 chairman Traci Houpapa. . .

Tech summit for primary industries:

For the first time in New Zealand, a mobile communications event is being run specifically for primary industries.

MobileTECH Summit 2013 runs in Wellington on August 7-8. A two-day programme bringing together this country’s leading communications specialists, technology providers and those working in the primary industries, has just been released. Details can be found on the event website, www.mobiletechevents.com. . .

Why export when you can milk it abroad? -  Simon Day:

Hundreds of plump cows line their concrete stalls like rows of dominoes at Fonterra’s Yutian 2 farm, 120 kilometres east of Beijing.

The cows push their heads through the steel bars of their confinements to eat imported alfalfa feed off the floor. Fans line the roof of the long barns, cooling the herd on a hot China day.

There is no grass in sight.

These are Kiwi cows, shipped to China or bred locally from New Zealand genetics. But this looks nothing like New Zealand farming. . .

Too late to avoid ‘dirty dairying’ taint – Aaron Leaman:

The directors of a Mangakino farming company fined $30,000 for breaches of the Resource Management Act have expressed their “shame” at being labelled dirty dairy farmers.

Fernaig Farms Ltd, owner of a 210-hectare block in McDonald Rd, Mangakino, was this week fined $30,037 and ordered to pay $132 costs after pleading guilty to two charges of unlawfully discharging animal effluent to land.

The prosecution, brought by Waikato Regional Council, related to offending on February 23 last year in which effluent was discharged from a holding pond and from an irrigator.

Council staff visited the property after an aerial flyover of dairy farms in the region. . .

Exploring alternatives to quad bikes -  James Houghton:

There has been a huge amount of discussion around quad bikes again, after LandCorp announced they are not using them on their new North Island farms and will be moving away from them on all other operations. Certainly, having 20 accidents involving their staff and quad bikes since December is a sobering statistic. Perhaps for large corporate farmers, with huge numbers of staff to think about, looking at other options is a sensible solution.

Just because LandCorp does something it doesn’t mean all farmers have to follow suit, but it is good to follow the discussion and know what the options are. Many farmers seem to be moving towards the “side by side” or farm utility vehicle options for getting about on their farms because they allow for passengers, carrying loads and do not require a helmet.

Within this category there are again many options. It is about looking at the needs you have on your farm, selecting the best tool for the job and making sure everyone using them is trained to operate that tool safely. . .

Risk good reason for sale

Opponents of the government’s programme for the partial sale of a few state owned assets are seizing on the risks to investors.

They purport to be worried that people who buy shares in Mighty River Power might lose money.

Their concern is no more than crocodile tears because they also complain that only the wealthy will be able to afford the shares.

But in raising fears of potential losses, they appear not to understand that if no shares are sold the government carries all that risk.

The risk of investment in non-core assets is not a reason for continued state ownership. It’s a very good reason the state should divest itself of them.

The government ought to ensure every cent of public money is put to best use.

There is potential gain in any business but there is also a potential for loss and that’s not a risk the state should be taking when there are far better uses for its very scarce resources.

While we’re on the subject of risk, Landcorp has told Shanghai Pengxin, which took over the former Crafar farms from receivers, that its investment will make a loss this year.

Chief executive Chris Kelly said the drought has had significant affect on revenue. Extra capital expenditure by Shanghai Pengxin has also been required.

People opposing land sales to foreigners are concerned about profits going overseas. At least this year, the owners will be losing money.

The risk the state takes in owning non-core assets is also illustrated by Landcorp’s half-year report:

At the time this report went to the printer, an operating result of around$6 million to $8 million for the full year 2012/13 was expected. Since then,Landcorp has experienced the worst widespread drought in many years. As a result, it is unlikely that the Company will report an operating profit for the year and consequently it is not likely to pay a full year dividend.

Around $1.6 billion in assets and no dividend. There are far better, and less risky, uses for public money than that.

 

Rural round-up

Senior Aussie PGG Wrigthson exec to head Landcorp:

 (BusinessDesk) – PGG Wrightson’s Steve Carden, who heads up its Australian seeds unit, will leave the country’s biggest rural supplies firm to take up the reins at New Zealand government-owned Landcorp Farming in July.

The Wrightson general manager will take up the chief executive role being left vacant by long-standing Landcorp boss Chris Kelly, the company said in a statement.

Carden has been with Wrightson since 2008, and responsible for the Australian seeds business since 2010, overseeing the acquisition and integration of a number of businesses while confronting some challenging climatic and market conditions. . .

Collaborative water management delivers water solutions in North Canterbury – David Eder and Ian Whitehouse:

In July 2013 the Hurunui-Waiau Zone Committee will notch up three years of work. It was set up as part of the Canterbury Water Management Strategy – a collaborative process for finding local solutions to water issues within an environmentally sustainable framework.

In July 2010 the committee’s daunting task was to sort out water storage in the Hurunui catchment and set water quality limits.

We held dozens of committee meetings, public meetings involving more than 300 people, and received written feedback from more than 120 people before finalising our zone implementation programme of recommendations.

Working collaboratively empowered us to reach consensus decisions on local water issues that are acceptable to a wide range of people. The ZIP now guides local government work programmes and policy to achieve the agreed goals of the Strategy. . .

 

TAF scheme could benefit independent processors:

Massey University’s professor of agribusiness thinks Fonterra’s Trading Among Farmers (TAF) system will play into the hands of independent dairy processors, including Chinese companies, setting up new milk powder plants in New Zealand.

Two Chinese companies have been cleared by the Overseas Investment Office to establish plants in South Canterbury and northern Waikato processing milk for infant formulas.

Hamish Gow does not think they will have a problem finding a supply of milk from local farmers. . .

South Canterbury farmer welcomes Chinese investment:

A dairy farmer who sold part of his land for a new Chinese owned milk powder factory to be built in South Canterbury says it will be a huge economic boost for the region.

Aad van Leeuwen had a 12.5% shareholding in the Oceania Dairy company – which has just been bought out by the Inner Mongolia Yili Industrial Group, after it got Overseas Investment Office approval. . .

Westland Milk Products’ new nutritional plant enters commercial production:

Westland Milk Products, New Zealand’s second largest dairy cooperative, has made a bold strategic step into the international high-value paediatric nutrition market with the commissioning of a state-of-the-art nutritionals plant at Hokitika.

The new multi-million dollar plant commenced commercial production in February and already has committed customers, taking Westland from being a well-respected dairy ingredient supplier to an exciting new entrant in the infant nutrition sector. . .

Happy, Profitable, Sustainable Dairy Business Wins Top Prize in Waikato Ballance Farm Environment Awards:

Walton farmers Grant Wills and Karen Preston have scooped a string of awards in the 2013 Waikato Ballance Farm Environment Awards, including the highly coveted Supreme title.

Judges said decision making on the couple’s 244ha (215ha effective) dairy farm ‘Tremeer’ focuses on profitability while caring for the people, the cows and the environment.

Grant and Karen were announced winners of the Supreme Award at a Ballance Farm Environment Awards (BFEA) ceremony on April 3. They also collected the Ballance Agri-Nutrients – Nutrient Management Award, the LIC Dairy Farm Award, the Hill Laboratories Harvest Award, the Massey University Discovery Award and the Meridian Energy Excellence Award. . .

Adding a hole lot of value to a piece of pine – Peter Kerr:

We all know that we’d prefer to export more than just a log of pine to overseas markets.

At the same time, the NZ Inc desire to add value to our raw commodities such as trees is almost tiresome through over-use.

So, it is a pleasure to be able to highlight a company and person doing something different and in their case, making a better pine pole. 

Now TTT Products (and no, I’d never heard of them either until going through a recent exercise to maximise the return from a 20 year old four hectare block of pines that I’m involved with) isn’t a small firm. Its North Island headquarters at Tuakau covers 20ha, specialising in creating pine poles of many different sorts.

Search begins for the 2013 Young Horticulturist of the Year:

The future of New Zealand’s horticulture industry could easily be in the hands of the finalists in the 2013 Young Horticulturist of the Year. Professor Jacqueline Rowarth says that the life skills that the contestants learn through the competition sets them on the path to future leadership.

This statement launches the search for the 2013 Young Horticulturist of the Year, and for up to 7 finalists to line up in the grand final in November.

Finalists (30 years and under) compete for a prize pool of over $40,000 that includes a $7,500 travel and accommodation package, and a $5,500 Massey University study scholarship and travel. While the prizes are tempting, it is the development opportunities that are the real reward for finalists in the Young Horticulturist of the Year competition. . .

Green Meadows Beef Continues To Grow Demand. Export- Quality, 100% Grass-Fed Beef Now Available In Wellington & New Plymouth:

Green Meadows Beef, 100% grass-fed, free-range, export–quality Angus beef from South Taranaki, has responded to increased demand for their beef by making it available in two North Island food stores. Moore Wilson in Wellington and Fresha in New Plymouth are now both stocking a wide variety of Green Meadows Beef, from Scotch Fillet and Rump Steaks to Premium Beef Mince.

Moore Wilson will publicly launch Green Meadows Beef at an in-store tasting event on Sunday, 7 April from 10:00am to 2:00pm. Wellington chef, Liam Brash, who has worked at The Savoy in London, will be cooking up a variety of gourmet bite-sized beef treats for the public to try. Green Meadows Beef Directors, Michael and Nick Carey, will be on hand to answer questions about the different cuts of beef and the Green Meadows Beef way of farming. . .

Sell Landcorp – Act

Act wants the government to include Landcorp in its asset sales programme.

Associate Primary Industry Spokesman Robin Grieve says:

“ACT believes the Government should not be involved in the business of farm ownership and that 100 per cent of Landcorp should be sold,” Mr Grieve said.

I agree that the government shouldn’t be in the business of farming but National campaigned on selling a minority share in a few state assets and Landcorp wasn’t among them.

For that reason the sale of the company shouldn’t happen this term. The sale could be part of a future campaign but Landcorp shouldn’t be sold as a whole.

Putting the whole company up for sale in its entirety would limit the number of potential buyers to a very few. Most if not all who could afford to pay the more than a billion and a half dollars its worth would be from overseas.

While I’m not opposed to overseas ownership in general it wouldn’t be sensible to structure a sale so that all the farms were almost certain to go to foreign interests.

The only reason for the government to own the farms is to maintain a land bank for treaty settlements.

Once that is no longer needed any farms left in state ownership should be put on the market one by one until they’re all sold.

The company has a good reputation for farm management and its possible that a company making use of that could also be floated.

Act is right that the state shouldn’t be farming but its policy for Landcorp to be sold as a whole would be neither politically nor financially sensible.

It would be easier to sell the policy and ensure a better return for the land by selling the farms individually and over time.

Why is the state still farming?

The nationwide drought has reduced Landcorp’s earnings by $12.3 million.

The company would break even for the year, though a change in the weather could alter that, chief executive Chris Kelly said yesterday.

However, the Government’s expectation of a year-end dividend would not be met. . . .

Landcorp is an SOE with about $1.6 billion of assets yet won’t be paying a dividend.

Why is the state still farming?

The company shouldn’t be sold as a whole but it should gradually sell its 122 farms and free up the capital for use in other assets which are core government business.

 

Crafar farms sale finally settled

It’s taken far longer than it ought to have, but the sale of the former Crafar farms has finally been settled.

Today, after a long and extensive process, the Receivers from KordaMentha have secured final settlement with Pengxin New Zealand Farm Group Limited for the Crafar Farms.

Pengxin New Zealand Farm Group Limited’s offer was accepted by the Receivers two years ago and has been subject to many hurdles, opposition and challenges.

Brendon Gibson of KordaMentha said “despite a long and challenging process, we are happy to have secured the sale of the Crafar farms at a very pleasing price. Following extensive local and international marketing of the farms as individual units and as a group, Pengxin’s offer was far and above the best received so we are very satisfied to secure final settlement.

“We have operated the properties for three years and the farms will be handed over as a full going concern for Pengxin and Landcorp. The farms we inherited required some hard work and investment during a volatile economic environment, the support of our appointing banks, staff and sharemilkers during these challenging three years has been exceptional. We understand the new owners and operators will continue that work and investment in the farms. . .

While I don’t think the government should be farming that is a political view about best use of public money which doesn’t reflect on Landcorp’s ability to manage farms.

The company makes a poor return on capital.

But the farms it owns and manages are generally well run and the former Crafar farms should do much betteer under Landcorp management.

 

Rural round-up

New Zealand urged to protect its brand – Sally Rae:

For an export nation like New Zealand, being “clean and green” is not enough any more, Oritain Global chief executive Dr Helen Darling says.

‘We actually need to be clean, green and clever,” Dr Darling said yesterday, while referring to the increasing instances of global food fraud.

Food fraud was an emerging risk for both consumers and producers worldwide, with the OECD estimating it cost legitimate producers about $US250 billion every year and that figure was growing, she said. . .

Local water focus urged – Howard Keene:

This month’s release of the third and final Land and Water Forum report marks a new consensus-driven approach to reform laws and practices around freshwater management in New Zealand, but its success will depend on how much the three reports the Government is willing to adopt.

The report recommends that local communities make decisions on individual catchments, acting within a national framework and bottom lines set by the Government. It also says water should be made more easily transferable between users.

While the report has received a mostly positive response there have been some cautioning voices. . .

Sweet smelling possums may help eradicate TB:

Using sex pheromones to capture possums is one example of the cutting-edge TB control initiatives featured in this year’s Animal Health Board (AHB) annual report and research report.

A two-year study into using sexually receptive female possums as a way to capture possums of both sexes in areas where numbers are low is among the scientific work forming part of the $2.5 million annually allocated by the AHB to research.

AHB chief executive William McCook said the two reports show the continuing significant progress being made in controlling and eradicating bovine TB from New Zealand, with the support of a range of government and industry partners. . .

Landcorp goal 80% fixed price sales – Alan Williams:

Landcorp sold more than 70% of its export lambs under fixed price contracts in its latest year, as part of a longer term goal to have 80% of all red meat sales handled this way.

This makes more than 230,000 lambs on fixed contracts out of a total 330,000 sent to processing companies in the year ended June 30 by the state-owned farmer.

Prices were on average higher than those achieved on traditional schedules, Landcorp livestock marketing manager Andrew Hall said in the written annual report.

About half the fixed price lamb contracts were for supply to the United Kingdom’s biggest grocery chain Tesco, he later told The New Zealand Farmers Weekly. . .

Rabobank Report: A New Wine Frontier:

With maturing or declining sales in many traditional markets, wine companies across the globe are increasingly searching for new growth markets. Emerging markets are attracting the interest of nearly all major wine companies. But those companies that were late to invest in these markets often have a greater challenge as the competition has already established routes to market and has garnered share of mind with the consumer. While China and South Korea probably rank as the most attractive emerging wine markets, Rabobank has identified Mexico, Brazil, Poland and Nigeria as four ‘hidden gems’ that have the potential to become important growth markets. Early investments to establish a route to market and build brand awareness hold the key to long term growth in these markets. . . 

And from Facebook:

Rural round-up

Synlait Farms Takes Out South Island Farmer of the Year title for 2012

Canterbury-based dairy enterprise Synlait Farms clinched the Lincoln University Foundation’s South Island Farmer of the Year competition for 2012 last night (Thursday 8 November 2012) with an entry that judges hailed as a prime example of New Zealand’s leadership role in innovative and entrepreneurial agricultural practice.

Chief Judge Bob Simpson said that all four finalists demonstrated leadership, excellence and innovation.

“Any of the finalists could have won this award tonight,” Simpson said. “But in the finish it was Synlait’s blend of family-based traditional farming practices with the very best of modern corporate innovation and management systems that saw this multi-farm company stand out. Synlait’s approach to its people, its stock and its land can be held up as an example of what can be achieved when good leadership and good people go hand-in-hand.” . . .

Landcorp ready to run Crafar farms – Andrea Fox:

State farmer Landcorp says its Chinese client Shanghai Pengxin will settle the Crafar farms purchase with receivers on November 30 and it is scheduled to start managing the dairy farming estate the next day.

Landcorp chief executive Chris Kelly said that to the best of his knowledge this was the timetable that would mark the end of the tortuous three-year Crafar farms sales process.

Landcorp’s management of the 16 central North Island farms is a condition of Government consent to the controversial sale to the Chinese company, which has waited through a string of court challenges and consent processes to put its money on the table as receiver KordaMentha’s preferred bidder. . .

Wool growers asked for $10m – Gerald Piddock:

Wools of New Zealand is asking for $10 million from strong wool growers in a capital raising offer to expand its sales and marketing capabilities.

The raising would give strong wool growers the opportunity to invest in a grower-owned sales and marketing, company, chairman Mark Shadbolt said.

The company has made significant inroads into transforming Wools of New Zealand into a commercial entity, aimed at connecting customer to grower, he said. . .

Wine sector senses a whiff of recovery – Claire Rogers:

The wine industry is on the mend after a gruelling few years that prompted a string of closures and collapses, New Zealand Winegrowers says.

One recent high-profile casualty, Hawke’s Bay winery and vineyard Matariki Group was put into receivership in September owing creditors, including the Government, about $11.2 million. Receivers PricewaterhouseCoopers said the winery struck financial trouble after reduced harvests in 2011 and 2012 led to weak sales, and that was compounded by a lack of capital.

New Zealand Winegrowers chief executive Philip Gregan said the 2012 harvest was down 19 per cent on 2011, and that had dealt another blow to the industry, which had been struggling since 2008 with over-supply and weak demand from the global downturn. . .

Sea air tenderises spring lamb – Jon Morgan:

Logan Brown’s head chef Shaun Clouston takes a bite, chews thoughtfully, swallows and then licks his lips.

“By crikey, that’s beautiful,” he says, shaking his head slowly, wonder in his voice.

On the plate is a lamb rump, finely sliced, with kumara, crushed peas and roasted tomatoes. It’s a simple dish. “I want the lamb to be the hero,” Clouston says.

This is not any lamb. The meat is from a young spring lamb, only 4 months old when it was sent to slaughter, and from a farm on the coast south of Whanganui. . .

Kiwi to Lead International Tree Society

A Dunedin arborist became the first-ever Australasian president of the International Society of Arboriculture (ISA) last week.

Mark Roberts, an experienced arborist and academic director of horticulture training firm Thoughtplanters, is the second non-American elected to lead the 88-year-old society.

More than 20,000 arborists from 18 countries are members of ISA today. . .

Rural round-up

New growing sites may help save kiwifruit - Jamie Morton:

The Psa bacterium is here to stay so growers must manage it, says horticulture expert.

Kiwifruit growing regions outside the Bay of Plenty could soon play bigger parts in a $1 billion-a-year industry battling a bacterial scourge that is here to stay.

Professor Ian Warrington, co-president of the International Horticulture Congress, has suggested ways New Zealand could live with Psa-V, which has now spread as far as Hawkes Bay since its discovery in heartland Te Puke nearly two years ago. . .

Landcorp denies Crafar farms ale meddling – Andrea Fox:

Landcorp chief executive Chris Kelly says he’s getting fed up with suggestions that, as intended Crafar farms manager for Chinese purchaser Shanghai Pengxin, he is frustrating iwi efforts to buy two of the central North Island farms.

The state-owned enterprise boss said he had heard the rumours and they were “simply not correct”.

However he said that as the two farms at Benneydale constituted a significant 25 per cent of the whole 16 farm Crafar estate package, personally, he would be asking Landcorp’s future Chinese partner to consider why it would want to sell them. . .

 

Trial may be of global importance:

The Clutha Agricultural Development Board’s latest project, on the value of probiotics to calves in their first few weeks of life, is believed to be of national and possibly international importance.

The project involved about 300 calves on three farms in the Clutha district.

In New Zealand, only one limited study of the possible weight gain and health benefits to calves has been done previously, and the board was thought to be undertaking a “significant study of national and perhaps international importance”, the board said. . .

Future of sheep farming ‘not flash‘ – Sally Rae:

The potential for New Zealand’s primary sector is significant but the industry must get better at how it takes its products to markets, both individually and collectively, New Zealand Merino Company chief executive John Brakenridge tells Agribusiness reporter Sally Rae.

Imagine New Zealand without sheep and without a sheep industry.

That is a scenario New Zealand Merino Company chief executive John Brakenridge poses.

A scenario that he says is “actually quite on the cards” if the status quo continues. . .

Bettering deer genetics just the job for Sharon – Sally Rae:

Sharon McIntyre reckons her new role as DEERSelect manager is about “a perfect fit” for her skill set.

The Gore-based farm consultant, who has been heavily involved in genetics for 25 years, was enthusiastic about the part-time position.

She has provided technical assistance to Sheep Improvement Ltd (SIL) for five years and it was a “logical step” to be involved with improving deer genetics as well.

DEERSelect runs a system to evaluate the genetic worth of stags which then allows breeders and finishers to select for desirable traits in their deer herds. . .

Rural round-up

Landcorp pursues dairy growth:

 

Landcorp Farming expects substantial further growth in last year’s record dairy production, through the joint venture with Shanghai Pengxin of China and enlargement of established dairy complexes including Wairakei Estate in the central North Island.

Subject to the outcome of legal proceedings in the Supreme Court, Landcorp and Shanghai Pengxin intend forming a joint venture company, Milk New Zealand Farm Management Ltd, to operate the farms and explore other opportunities for growth in dairy production in this country. . .

BNZ Appointment Reflects Growing Importance of Irrigation Projects:

 

Guy Ensor is on a mission to support some of the most critical infrastructure developments New Zealand will see this decade. He has been appointed BNZ’s first national manager, water and irrigation. The position has been established in recognition of the growing significance of the national freshwater resource.“Our long-standing relationship with the agricultural sector has made us acutely aware that the sustainable management of New Zealand’s freshwater resource is absolutely critical to New Zealand’s future,” says head of agribusiness, Richard Bowman.

“All New Zealanders have a common interest in ensuring the country’s freshwater lakes, rivers, aquifers and wetlands are managed wisely. Guy’s specific combination of experience will ensure BNZ contributes to that,” he says. . .

 

Research unit going 50 years: Annette Scott:

The Lincoln University-based Agribusiness and Economics Research Unit (AERU) was established in 1962. Its key objective was to better integrate research in respect to the place of agriculture in New Zealand. The core mission of the AERU is to exercise leadership in research for sustainable well-being with researchers working together to produce and deliver new knowledge.AERU operates as a semi-autonomous research centre at Lincoln University providing research expertise to a wide range of organisations in the public and private sectors.

Research is focused on economic, resource, environmental and social issues with the unit also co-ordinating some of the external research undertaken by academic staff from other Lincoln University faculties. . .

 

A country a day for Peterson:

 

BLNZ CHAIRMAN Mike Petersen is in Europe this week on a whistle-stop visit to farming leaders in seven countries in just eight days.

It’s an annual event, meeting officials from the European Commission in Brussels, and farming leaders in Ireland, England, Scotland, Wales, France and Germany.

“Europe is such an important market for sheepmeat and increasingly for beef. I will meet EU officials to talk about our expectations of the sheepmeat quota. It’s no secret we’ll be well under with quota – about the 80% mark – well below where were three years ago when we were 98%,” he says.

 

Woman survives ramming by 650kg steer: Caroline King:

 

A woman repeatedly rammed by a 650-kilogram steer walked away from the attack with no broken bones after the heroic actions of her boss.Tania Kiely was tagging steers at a farm at Decanter Bay, Banks Peninsula, about 12.30pm on Monday when the steer attacked.

Kiely, 40, was only a couple of metres away from the animal when it charged.

“I was pushing them up into the race at the time.

“I remember it looking at me,” she said.

“It put its head down and ran at me. . .

 

The social impacts on snow on farmers – Terri Russell:

Making new friends is one way Southland farmers can cope with the stress of snowstorms, new research says.

Farmers were hit hard during the September 2010 snowstorm when about one million lambs died in the south and milk production was disrupted.

A research team from the University of Canterbury and Lincoln University have looked at ways that Southland farmers can better prepare for a similar event.

Lead researcher Zachary Whitman said findings so far showed a significant social impact on farmers. . .

Landcorp: $27m net operating profit from $1.6b of assets

Landcorp operates 122 farms, covering an area of 376,156 hectares (owned and leased). It runs 1.5 millions stock units, has a permanent staff of 599, 77 of whom are in its Wellington head office.

It’s last annual report showed it had total assets of $1.6b.

That is a lot of capital tied up and its return on that capital continues to be dismal:

The state-owned farmer said its ‘net operating profit’ fell to $27 million in the 12 months ended June 30, from a record $42 million on the same basis a year earlier. Sales fell 4 percent to $210.5 million.

The decline in operating profit mainly reflected the impact of “significant reductions”in prices for milk and timber in a year when sales fell even as the volumes produced rose. The company will pay the government a dividend of $20 million, down from $27.5 million in the previous year.

Landcorp said net operating profit for 2013 will be about $13 million, based on current product prices. 

The current year’s product prices are expected to be “more volatile and generally lower” than in 2012, Landcorp said.

“This will reflect the continued negative impact of the global financial crisis on demand in European, North American and Asia economies, and particular supply and demand factors in markets for wholesale milk products,” it said.

The high kiwi dollar continues to have a major impact on income from exporting, the company said.

Net profit, the earnings measure required to be disclosed by listed companies, was a loss of $9.4 million from a year-earlier profit of $114.6 million, reflecting changes in unrealised revaluations on livestock, derivatives and land.

Like many other New Zealand companies, Landcorp downplayed the net profit figure as being “not a meaningful indicator” of its operating performance. Since New Zealand adopted the International Financial Reporting Standards there has been a proliferation of non-standardised earnings measures, where companies back out items that aren’t directly to do with operations. . .

Landcorp first flagged the $20 million dividend and $27 million operating profit at the start of the month, when it reported record annual milk production of 13.3 million kilograms of milk solids. It had previously forecast profit on that basis of $16.3 million.

Even given that proviso, which isn’t unreasonable, keeping so much capital tied up in a company which makes such a poor return on it wouldn’t make sense in good times. It certainly can’t be justified when debt is such a concern in the face of continuing financial woes in most parts of the world.

The company should not be sold as a whole but the gradual and orderly sale of individual farms ought to be at least a medium term goal.

“Live it and love it” x factor in farm success

Opponents to foreign investment in farmland are concerned that too few farms will be left in New Zealand ownership.

No-one has defined how much is too much and for some any farm land in foreign ownership is too much.

But Finance Minister Bill English says the owner-operator model is likely to be the one which continues to succeed here:

Large-scale local and foreign corporate farm owners soon realised they had to ‘live it and love it’ in order to make any money out of farming in New Zealand, English told the Victoria University-Peking University Conference on Contemporary China in Wellington. . .

. . . Speaking to media after his speech, English said New Zealand had experienced waves of anxiety about foreign ownership of Kiwi farms.

“They come and go. At one stage the Japanese were going to buy all our farms, then the Indonesians were going to buy all our farms, and both overseas and local corporate owners have never really succeeded in making very large farm operations viable,” English said.

“So while the Crafar farms have been high profile, if you look back over thirty or forty years, large scale farm ownership often fixes itself because the owners find that they can’t do as well as the owner-operator model,” he said.

“I think the owner-operator [model] is how New Zealanders see their agricultural industry based.”

Rabobank in Australia found that $10 to $13 million dollar farms were the most profitable and I wouldn’t be surprised if the same applied here.

These are larger family farms. Smaller ones lack economies of scale and bigger corporate ones tend to have problems over governance and management and/or take a lot of money to make money.

Landcorp is an example of the latter. It has a good record for animal welfare, environmental practices, staff training and retention but it makes a very small – about 2% – return on capital.

We’ve got several dairy syndicates in our area in which investors have made little money and some in which they’ve lost lots.

Family farms aren’t all successful, the Bell curve operates in farming too, there are good, bad and in between ones for all models. But most farms in this country are still owner-operator ones.

It’s the model which works well here and that live-it-and-love-it factor is a very important ingredient in their success which no amount of outside investment or expertise can replace.

Shanghai Pengxin has nous to run farms – court

The Court of Appeal is satisfied that Shanghai Pengxin has the nous to run what were the Crafar farms.

The Court of Appeal has turned down a bid by merchant banker Michael Fay and two Maori trusts to stop the sale of 16 Central North Island farms, saying it was satisfied with the general business acumen and experience of the Chinese buyer.

Judges Mark O’Regan, Terence Arnold and Douglas White dismissed the judicial review, saying Jiang Zhaobai’s ability to bring himself from humble beginnings to become “a person of some stature in the Chinese commercial world,” would satisfy the minister making the decision in approving the sale of the Crafar family farms.

“The information provided to the ministers was sufficient to enable them to determine that he and the other controlling individuals had generic business skills and acumen relevant to the Crafar farms investment,” Judge Arnold said in delivering the judgment.

“We see nothing in the language, taken in context, to indicate that Parliament had in mind that an investor must have any particular combination of the requisite skills and experience,” the judgment said.

Agri-business experience was only one factor which needed to be taken into consideration.

 ”While apparently important, it did not lead to a conclusion that was insupportable or unreasonable in the absence of that experience.”

The judges said even if the ministers erred in accepting Pengxin’s agribusiness investments, “it is unlikely that we would have exercised our discretion to grant a remedy.”

That’s because the ministers decided the foreign investment would have a substantial benefit to New Zealand, the deal hasn’t been settled and creditors are still waiting on repayments, and that the farms are being operated by the receiver in a manner than presumably “involves minimal further investment.”

Those who oppose the purchase forget about the creditors who are owed millions of dollars. The higher the purchase price, the more the creditors will recover.

I don’t think the state should be farming but Landcorp farms are generally well managed. Their experience and Shanghai Pengxin’s money should be good for the farms and the stringent conditions imposed by the Overseas Investment Office will result in benefits for the country too.

Bigger dividend still poor return on capital

Record milk production will enable Landcorp to boost its dividend to the government:

 

Landcorp will increase the full-year dividend to $20 million from the $15 million payment budgeted for, after “strong production and livestock product prices” boosted operating earnings, the company said in a statement yesterday. The improvement included record milk production of 13.3 million kilograms of milk solids.

The state-owned enterprise’s operating earnings were about $27 million in the year ended June 30, “greatly improved” from the $16.3 million forecast, but down from $42.2 million a year earlier.

The dividend will be higher but income, while higher than expected, is lower than last year and shareholder return is dismal.

The state-owned enterprise’s operating earnings were about $27 million in the year ended June 30, “greatly improved” from the $16.3 million forecast, but down from $42.2 million a year earlier.

Landcorp will deliver total shareholder return of about $8.1 million, some $85.3 million below budget.

“This largely reflects static farmland values over the year and a decline in livestock values,” it said.

The half-year report to December 2011  shows the company has about 90% equity which is a permission most other farmers would envy.

But it still makes a very poor return on capital.

That once more raises the question: why is far state in farming when there are so many areas where the money would be better invested?

Wild threats no response to wilding threat

Forest Owners are justifiably dismayed at the suggestion Sir Alan Mark might assemble a group of activists to rip out forest seedlings on a farm near Dunedin.

Forest Owners are justifiably dismayed at the suggestion Sir Alan Mark might assemble a group of activists to rip out forest seedlings on a farm near Dunedin.

“It’s one thing for the professor to be a passionate advocate for environmental causes. It’s quite another to threaten vigilante action and to incite trespass,” says FOA Environment Committee chair Peter Weir.

The farm, Waipori Station, is owned by Landcorp. Sir Alan’s concern is Douglas-firs planted as a carbon forest on a 189 block neighbouring Te Papanui Conservation Park and the Stony Creek Scenic Reserve.

Sir Alan is fearful that wilding Douglas-fir will spread through these important tussock land reserves from seeds blown from the plantation. It is an issue he is passionate about. Sir Alan led a major campaign to remove wildling pines from thousands of hectares at Mid-Dome in Southland and has previously helped Landcorp remove wildling pines from Waipori Station.

He told Radio New Zealand yesterday that he might lead a group to the site to remove the trees if Landcorp will not.

Mr Weir says higher rainfall areas of the South Island high country are very good for growing Douglas-fir. It produces high value timber, much preferred for building in Otago and Southland, and is ideal for carbon sequestration.

“It is unfortunate that Landcorp is being criticised for addressing their on-farm greenhouse gas emissions in such a productive way. It’s also unfortunate that the proposed National Environmental Standard (NES) for Plantation Forestry has yet to get approval from government, because it includes a wilding risk calculator that drives rules for afforestation,” he says

“If the NES were in effect then the rules around afforestation would be much clearer for all land owners.

“Yes, there is a risk of wildling spread. But this can be mitigated by planting a Ponderosa pine buffer zone around the Douglas-fir, surrounded in turn by grazing land. Any seeds that do escape and grow into young trees are then easily controlled before they start producing cones. There is a 10 year window to eradicate any escapees before they produce fertile seeds.”

He says these form a suite of good forest management practices for forestry in the high country and have been adopted by Landcorp.

“Land owners have the right to plant forests, so long as they manage them responsibly,” Mr Weir says

“For a respected person like Sir Alan to suggest a planted forest be ripped out fills us with dismay. It’s not as if high country forestry is a new issue, or that he has exhausted all his legal options … not that this would justify vigilante action anyway.”

Wilding trees are a significant concern in the South Island high country but the risk of them spreading from forests is one that can be managed.

The threat of vigilante action at any time is unacceptable. In this case it is even more extreme when Landcorp appears to have a management plan which will ensure there isn’t a problem with the spread of wilding firs.

Radio NZ has more here.

New chair, directors for Landcorp

Bill Baylis has been appointed chair of Landcorp on the retirement of Jim Sutton:

He is a director on the boards of Dunedin City Holdings Ltd, Helicopters NZ Ltd, Port of Tauranga Ltd and Carisbrook Stadium Trust. His other chair positions are with Blackhead Quarries Ltd, Dairy Holdings Ltd and Real Journeys Ltd. He has extensive governance experience, with previous chair experience on a number of private sector company boards such as Anderson Lloyd Lawyers and Australasian Food Holdings (Australia) Ltd’s subsidiaries including Huttons Kiwi Ltd, Tip Top NZ Ltd and Mainland Products Ltd. He is also the former chair of PGG Wrightson Ltd and United Electricity Ltd.

The company has two new directors too:

Chris Day (former CFO of AXA Insurance), Nikki Davies-Colley (cattle and sheep farmer and company director) and Pauline Lockett (chartered accountant and New Plymouth District Councillor).

I wish them well. I don’t think the state should own farms, but given that it does the SOE should be run as well as possible.

 

Landcorp’s profit up but still poor return on assets

Landcorp reports a net operating profit of  $11.0 million for the first half of the financial year to the end of December.

This is up from $3.2 million in the corresponding period of 2010/11 due to strong growth in revenues, particularly on the sale of livestock. The latest half years aw total farm product revenues rise to $104.0 million (2010/11: $91.6 million). Livestock revenue was up 27.0 per cent to $46.3 million, reflecting higher prices for meat and for store animals, and also higher livestock numbers. Dairy revenue improved 2.5 per cent to $53.0 million on growth in milk volume during the latest half year.

The company expects a net operating profit for the year of $20 million and to pay a $15 million dividend.

These are impressive numbers until you factor in assets valued at $1,754,207,000.

Rural round-up

All hands on deck to restore the waterway -

The Waihopai River is suffering from severe sedimentation. What is being done to bring the Southland waterway back to better health? Shawn McAvinue reports.

Eels and freshwater crayfish from the Waihopai River in Woodlands were fair game for Mike Knight when he was 12.

Now 33, he wants the river to remain a happy hunting ground for his three children.

So 11 days ago, the former Woodlands School pupil rallied the whole school to plant 230 trees across half a hectare of the 256ha of dairy farm where he and his wife Vicki contract milk 700 cows. . .

‘Scary’ One Plan faces appeal - Jill Galloway:

Federated Farmers national dairy vice-chairman and Manawatu dairy farmer Andrew Hoggard says the One Plan has been “scary” for dairy farmers.

Federated Farmers is appealing parts of the One Plan to the Environment Court.

The plan is an environmental blueprint for water, land, biodiversity and air, with all consents for farmers rolled into one.

Horizons Regional Council said most of the outstanding issues were resolved at mediation. But in regards to water, there were still outstanding nutrient management problems and land management issues, such as the regulation of dairy farming and intensive farming activities, which were going to the Environment Court.

Mr Hoggard said when the One Plan was first discussed in 2005, dairy farmers thought it would be a non-regulatory approach, so they were “OK” about it. . . .

Migrants guides soften shock – Sally Rae:

Two new guides to help migrant dairy workers and their employers work together more successfully have been launched.   

 There are now about 1500 migrant dairy workers in the country, making up 6% of the workforce, with the majority from the Philippines.   

Demand had increased in recent years, as it had proved difficult to attract and retain local workers in some parts      of rural New Zealand, Immigration and Associate Primary Industries Minister Nathan Guy said .   . .

1986 winner says contest fantastic – Sally Rae:

Russell Whyte knows exactly the pressure the seven grand    finalists in the National Bank Young Farmer Contest will be    feeling when they arrive in Dunedin this month.   

Mr Whyte, now living in Christchurch, won the Young Farmer of      the Year title back in 1986 – the last time Dunedin hosted      the grand final.   

He described it as a “fantastic” experience, which was  followed by an “amazing opportunity” to travel to the UK, as      part of the prize package, which also included a tractor and  motorbike.   . .

Mill links paddock, plate – Gerald Piddock:

Plans for a new flour mill in Washdyke will give Canterbury grain growers control and opportunities to add value to their product.

The mill is being built by Farmers Mill, a new company set up by South Canterbury grain storage company Grainstor.

General manager Dave Howell said it was thought to be the first new mill built in New Zealand in 25 years.

It will be a showcase with state-of-the-art equipment not seen before in New Zealand, designed to mill soft wheat to a higher standard than some older equipment.

It will produce premium biscuit, baking and bread flours to the specifications of high-end customers.

“There are no New Zealand-owned mills and we wanted to have some control and add value over our own product that we grow,” Mr Howell said. . .

Shrek: the next generation – Matthew Littlewood:

WOOLLY WANDERERS: This merino pair, dubbed “Shrek’s cousins”, were discovered near the bottom of Ferintosh Station about a fortnight ago. While one has since been shorn, the other will be losing his fleece at the Mackenzie Highland Show on Easter Monday.

Ferintosh Station are making sure that two of their residents do not have the wool pulled over their eyes.

Pastoral lease-holders Marion and Gilbert Seymour spotted two wandering merinos near the bottom of the station about a fortnight ago.

It appeared that neither of them had been shorn in nearly seven years.

“We knew they were around somewhere, but we managed to capture them only recently,” Mrs Seymour said.

“They were quite docile, and couldn’t move very fast, because they were carrying a lot of wool.”

Mr Seymour, who is in his 80s, has already given one of the pair a decent haircut, but its mate will go under the clippers at the Mackenzie Highland Show in Fairlie on Easter Monday. . .

Argentines embrace change – Shawn McAvinue:

Are success and happiness possible in the Southland dairy industry? Shawn McAvinue talks to a 2012 Dairy New Zealand Dairy Awards finalist who’s working hard to achieve both.

When Argentine Leo Pekar and his partner Maricel Prado arrived in Southland 10 years ago to work on a dairy farm, they were welcomed with two months of solid rain. But the New Zealand Dairy Awards regional finalist wouldn’t want to be anywhere else.

When they arrived in March 2002, they had little money and only thin PVC jackets to protect them from the heavy rain.

“I would get up at 4.30[am] and think, `what am I doing here’?”

The 35-year-old admitted he was not a morning person but his goals got him out of bed. . .

Grape crop down but hopes high – Gerald Piddock:

Waitaki winemakers will have a later than usual harvest this year after enduring a cold wet summer.

From late January in the Waitaki, it turned into a cold summer, making it a very difficult season for wine growers within the region, Waitaki Valley Wine Growers Association chairman Jim Jerram said.

It was a late harvest in wine producing regions across the country and the Waitaki was no exception.

“It was one of the coldest February’s on record and there was not a lot of sun.

“That has been the case for the whole eastern side of the country.”

Grape harvesting usually takes place in late April-mid May in the Waitaki. . .

Leadership lessons - Shawn McAvinue:

A free rural leadership course is set to give priceless results to the future leaders of the Southland rural sector.

Farmers Mutual Group Gore rural manager Sharon Paterson said she enrolled in the 2011 Generate rural leadership course to gain confidence.

She sells insurance for FMG in Gore and lacked confidence when cold-calling potential customers.

“Although I looked confident, I lacked a lot underneath. Now I just waltz up anyone’s drive to talk about insurance.” . . .

Onion harvest hit hard - Gerald Piddock:

Central Canterbury onion growers will have one of the worst harvests in 10 years.

The cold wet summer has slashed yields and delayed getting the crop off the ground.

Levels potato and onion grower Tony Howey said the poor crop along with the falling international markets made it a season for him to forget.

“About three years out of five you have a bad year, about two years out of five you might have a good year and probably once every 10 years you have a disaster, and this is that year.”

Trees on farms – exploring hill country options:

Following successful workshops in Gisborne and Hawke’s Bay, the next Trees on Farms workshop will be held on the King Country property of Barrie and Jude Tatham, and will explore the role of trees in hill country farm management, particularly in marginal or less productive areas.

Barrie and Jude own a 500 ha drystock farm near Piopio, which they operate in a share-farming arrangement with Kieran and Shona Bradley, running cattle, dairy grazers and sheep. The Tathams are previous Waikato Farm Environment Award winners, and their farm is notable for the diversity of species they have planted for nutrient buffering, stock shade and beautification. . .

Farmers getting better at growing meatier lambs:

Initial results from a large-scale meat testing programme show New Zealand farmers are getting better at producing the sorts of lambs that overseas customers are looking for.

The testing programme is part of the Farm IQ project, a joint venture involving Silver Fern Farms, Landcorp and PGG Wrightson.

The seven year sheep, cattle and deer research programme aims to turn the red meat industry’s traditional production-led approach into one that is market-led and focused on consumer needs.

DairyNZ urges farmers to prepare for animal tracing scheme:

Dairy farmers are being urged to prepare early for the introduction of a new animal identification and tracing scheme, especially if they’re planning stock movements over the winter period.

The recently adopted NAIT legislation (National Animal Identification and Tracing) introduces new obligations for farmers under the scheme from July 1 this year.

After this date, all cattle being moved will need to be wearing a NAIT approved electronic tag. Anyone in charge of animals and animal movements will need to be registered with NAIT.  . .

Primary industry training organisations to merge:

The Seafood ITO and the NZITO (meat and dairy sector) have today signed a Memorandum of Intent to investigate a full merger of the two organizations.

The merged entity will service a workforce of over 60,000 people nationally, covering three key export industries – meat, dairy and seafood.

These are all strategically important export industries.  The idea of an integrated primary sector ITO has been in the minds of both organisations for some time, and this is a significant step on the way. . .

T&G appoints new senior management team, directors:

Turners & Growers, the local fruit marketer, has announced new senior management and directors from new majority parent BayWa Aktiengesellschaft, and tapped local boardroom heavyweight John Anderson as an independent director.

The company confirmed the intended appointments of BayWa representatives Klaus Josef Lutz and Andreas Helber as directors, with Lutz taking up the role of chairman. Former National Bank head Anderson and Fonterra Cooperative Group director John Wilson have also been appointed independent directors. Jeff Wesley, Brian D’Ath and Christina Symmans resigned from the board on March 7.

T&G also announced plans to review the fruit marketer’s operation, which will be conducted by senior management. . .

The people’s champion retired:

The curtains have come down on the career of one of the most admired horses seen in New Zealand in recent years, the people’s champion Sir Slick (NZ), who had his final race in Awapuni at the weekend.

Now ten years old, Sir Slick (Volksraad x Miss Opera) showed that he was ready to settle into the green pastures of retirement when he ran home at the tail of the field in the Group 3 Awapuni Gold Cup.

Few would disagree there was a more fitting race for Sir Slick to finish his career on, having contested the Awapuni Gold Cup six times and winning it on three occasions: in 2007 (by 4.5 lengths), 2008 and 2010, and running second in 2009. . .

Landcorp farm sell-off

Landcorp has announced it will slowly sell-off all its farms with the eventual goal of disestablishing itself.

Company media liaison officer Gladly Gumboot said the company had realised that its dismal return on assets wasn’t acceptable and the best thing the company could do for the nation was put its farms on the market in a measured and orderly way until they were all gone.

“It’s no use selling the company, no-one would want it,” she said with refreshing honesty. “But given the urgent need to reduce the burden of state we decided the best way for us to do our bit was to quietly sell-up and disappear.

“We asked ourselves what’s the best use of more than a billion dollars of public money and the answer wasn’t state-owned farms.”

“The plan is to sell farms individually, one by one so as not to flood the market. the money received could be used to reduce debt and invest in agricultural education and research and irrigation infrastructure.”

 

 

Triple profit still not good return

Landcorp has tripled its first half operating profit, largely due to improvement in livestock prices:

Net operating profit was about $11 million in the six months ended Dec. 31, up from $3.2 million a year earlier, the company said in a statement. Sales climbed 13 percent to $103 million.

Sales growth at New Zealand’s largest farming company was led by a 27 percent increase in revenue from livestock to $46.3 million, reflecting higher prices for meat and store animals. Dairy revenue rose 2.5 percent to $53 million on higher milk sales. Total expenses rose to $87 million from about $80 million, largely due to the rising cost of fuel.

“In the North Island, Landcorp operations were not constrained by weather extremes as they have been during each of the previous four springs,” the company said in its half year report. “Grass growth was strong in both islands, and reproductive performance unhindered by storms or exceptional dry conditions. These results were positive for the continued rebuilding of flock and herd sizes following the severe droughts of 2007 and 2008.”

Landcorp expects a positive outcome for 2011/2012, with a net operating profit above $20 million and a $15 million dividend payment for the year.

First-half net profit, which includes changes in the value of livestock required by NZ IFRS accounting standards, rose 73 percent to $71.95 million.

That last sum is an accounting entry which reflects the increase in the value of capital stock rather than revenue.

It all sounds very impressive but the expected $15 million dividend doesn’t look nearly as good as a percentage return on the value of its assets – $1.6b last year and given the increase in the value of land and stock it will be higher now.

Among the arguments against allowing the sale of farmland to foreigners advanced in the last couple of weeks is that it provides unfair competition for local buyers.

Is competition from an SOE any fairer?