Rural round-up

April 7, 2014

Understanding Fonterra gets even harder – Pattrick Smellie:

Ask anyone with half an eye on the New Zealand economy what’s leading its current recovery and they’ll tell you two things.

First: the Canterbury rebuild.

And second: the extraordinary boom in both the price and volume of dairy industry exports.

The dairy boom being what it is, you’d think the country’s only multi-national company with global scale, Fonterra, would have produced a stonking half-year profit result last week.

Not so.. .

Pukeuri meatworks still waiting for China go-ahead - Daniel Birchfield:

A resolution to the ongoing certification issue surrounding Alliance Group’s Pukeuri plant looks no closer to being resolved.

The plant’s certification for China was suspended by the Ministry for Primary Industries (MPI) in July, after incorrectly labelled product was shipped to China.

Alliance Group general manager of processing, Kerry Stevens, said at this stage there was “no change” to the current situation.

Stevens declined to comment on how the issue at Pukeuri was affecting Timaru’s Smithfield plant in terms of staffing. . .

Farmers walk the environmental talk – Alan Wills:

. . . In a nut shell farming has a great future in New Zealand. We have our challenges but the long term future in my opinion is better than just good.

Why? We are naturally good farmers.  We have the climate and water availability in some areas to take the vagrancies out of seasonal production.  Globally this is called the ‘pastoral sweet spot’ and there aren’t too many countries in the world in it.

We have very good infrastructure here and abroad to effectively market what we produce. We have very focused research and development supporting us to stay on the front foot.  Politically, our Westminister type democracy provides stability and stability begets confidence.  I can think of one country that is like our twin except for politics and policies that shoots its economy in the foot.  Here, nothing is going to fall over by revolution or in a coup. 

Finally, we can produce food products in particular that the rest of developing world wants.

All of these attributes are vital in any successful production and marketing process. . .

If the IPCC backs adaptation, political parties should too:

The release of Intergovernmental Panel on Climate Change (IPCC) assessment report’s chapter on Australasia, reinforces science, research and water storage are fundamental to New Zealand’s adaptive response.

“The IPCC report contains both good and bad news for the New Zealand farm system and New Zealand as a whole,” says Dr William Rolleston, Federated Farmers Vice-President, who has recently returned from the World Farmers Organisation’s General-Assembly.

“The report predicts that New Zealand will likely become drier in the northeast of the South Island as well as the east and north of the North Island.  On the other side of the ledger, it will likely become wetter in the south of the South Island. 

“This will change pest pressure and biosecurity risks and the effectiveness of biocontrols. . .

Tikorangi dairy farm takes top Taranaki award:

A TIKORANGI dairy farming operation is the inaugural winner of the 2014 Taranaki Ballance Farm Environment Awards.

It was described by judges as an outstanding example of best dairying practise.

The region’s first Supreme title was presented to Gavin and Oliver Faull, Faull Farms, and their sharemilkers, Tony and Loie Penwarden, at a special Ballance Farm Environment Awards ceremony on April 3. . .

Precision farmers feature of Fert and Lime Conference:

THE WORD improvisation can conjure images of ad hoc solutions and a slightly less than professional approach, but when it comes to precision agriculture, it’s not a dirty word: in fact, it’s exactly what’s needed, says one of New Zealand’s leading academics on the subject.

 Out of necessity, New Zealand farmers have become inherently good at improvising over the years and that background will stand them in good stead with the growing array of precision farming techniques becoming available, says Professor of Precision Agriculture at Massey University Ian Yule. . .

 

 

 


Rural round-up

March 30, 2014

Deutsche Bank keeps ‘sell’ rating on Fonterra, seeks more transparency – Pattrick Smellie:

(BusinessDesk) – Fonterra Cooperative Group needs to make it far clearer to farmers and other investors how its business model operates, says Deutsche Bank after the dairy exporter shored up a slump in half-year profits by intervening in the regulated price it pays for milk at the farm gate.

Deutsche Bank retains its ‘sell’ rating on Fonterra Shareholders Fund units, with a 12-month target price of $5.64. The units slipped 0.2 percent by mid-afternoon to $6.08, and have fallen from a closing price of $6.15 on March 26, when the result for the six months to Jan. 31 was declared.

Fonterra posted a 53 percent fall in first-half net profit to $217 million, a result that would have been far worse if the cooperative had not taken the unprecedented action last December of deciding to reduce the regulated Farm Gate Milk Price (FGMP) to farmer-shareholders by 70 cents per kilogram of milk solids. . . .

New Zealand dairy farmers are responding to high prices by cranking the handle on their production to cash in on record payout – Jeff Smith:

Our dairy farmers are “cranking the handle” on production in response to high prices they are receiving for their milk.

As a result nationwide dairy production is expected to be up by 11% this current season.

Strong dairy prices have “handed the baton” to strong dairy volumes, ASB says in its economic update released today.

Volumes would be higher than normal this year as farmers had bought extra feed to increase milk production in anticipation of higher prices, ASB Bank rural economist Nathan Penny told interest.co.nz today. . . .

Farmer lands $30,000 in prizes - Elliot Parker:

Hard work has its merits.

Hinakura farmer Donald McCreary can attest to this after winning the award for the Beef and Lamb Wairarapa Farm Business of the Year and in the process scoring himself $30,000 in prizes.

McCleary has been farming in Hinakura, east of Martinborough, since 2004 on a 1375 ha property which is predominantly steep, hill country.

The property contains 6700 ewes and 225 breeding cattle.

McCreary says his approach to good farming is to be well versed in all areas of farm management. . .

Meat industry on the rise - Carmen Hall:

Higher lambing percentages and export carcass weights are helping offset a dramatic drop in sheep numbers.

Numbers have almost halved since 1991, but the amount of product being exported has remained stable as farmers focus on improving their systems.

Negative publicity has overshadowed the fact farmers have made significant gains in productivity and the industry has the potential to cash in on future growth, industry leaders are saying. Beef and Lamb New Zealand chief executive Scott Champion says the organisation focused on “best practice behind the farm gate”. . .

Finance support adds up for farmers :

Tauranga HR company Teaming Up hopes to connect accountancy firms with farmers in an economic development project that could generate millions of dollars.

The company spearheaded the Beyond Reasonable Drought inaugural road shows in the Bay of Plenty and East Coast last month, which attracted nearly 1000 people.

Marlborough sheep and beef farmer Doug Avery, who was on the brink of disaster 15 years ago after consecutive droughts, presented the seminars. He overcame adversity by adopting a scientific approach to agriculture and introducing deep-rooted, drought-tolerant lucerne. He employs six full-time staff, including son Frazer, and his business is a profitable operation that promotes high-reward, low-impact farming. . .

Honey lovers could get stung:

Honey prices could rise as much as 20 percent due to one of the worst seasons in decades.

Beekeepers say lower than usual temperatures in January meant the insects stayed inside their hives during the peak season and produced less honey. . .


Protection costs

February 17, 2014

An educational story about the costs of protection:

In 1990, Brach’s Confections Inc. threatened to close a West Side factory that employed 1,100 people. The candy maker said it would move abroad unless the federal government acted to reduce the artificially inflated cost of sugar. Washington ignored the threat, and Brach’s found ways to keep the plant going. But in 2003, it closed the factory and sent much of the work to Mexico.

The reason for the move was a federal undertaking whose entire purpose is to prop up the price of sugar for the benefit of a small number of growers. It does so by restricting imports, limiting how much farmers can plant and guaranteeing them a certain price. These methods work: The price of sugar in this country is usually double or triple the price in the rest of the world.

That enduring accomplishment comes at a cost to companies that buy sugar, like Brach’s. It also burdens a larger group of people: those who eat. In a typical year, the average American consumes nearly 100 pounds of sugar and other high-calorie sweeteners. The total cost to consumers amounts to as much as $3.5 billion a year.

That doesn’t count the jobs shipped to Mexico or Canada. Defenders claim the program saves American jobs in sugar production. But a 2006 study by the U.S. Department of Commerce found that for each job it saves in those sectors, it destroys three jobs in candy making.

It’s not just that protection costs consumers and taxpayers, it costs jobs as well.

But there is an alternative:

For decades, Life Savers were made at a facility in Holland, Mich. But in 2003, Kraft Foods shut it and moved the production to a plant near Montreal.

What does Quebec have to offer that Michigan doesn’t? The Canadian Sugar Institute is happy to explain: “The Canadian sugar industry is internationally unique in that it does not depend on government subsidies. Basing its prices on world raw sugar markets, it sells sugar at prices that are among the lowest in the world.”

Some companies can afford to eat the extra cost of operating in the U.S. But when the composition of your product is 99 percent sugar, it’s not so easy. . .

Given that sugar is now regarded as a harmful substance this might not cause much concern, but it’s not just sugar producers who are protected in the USA and elsewhere.

Growers have been protected by import barriers since 1789, and the current complicated system dates back to the Great Depression.

The country was a very different place then. In 1930, one of every four Americans lived on a farm. Today, it’s one in 50. But the farm bill passed by Congress and signed by the president this month was a missed opportunity to enact changes that would reflect the vast changes over the past 80 years.

The politicians could have started with this system, which bleeds the many to enrich the few. “No industry is as coddled as farming, and no industry as centrally planned from Washington,” writes Cato Institute policy analyst Chris Edwards. “The federal sugar program is perhaps the most Soviet of all.”  . .

New Zealand farming used to be very heavily protected and subsidised.

Producers responded to the dictates of politicians and bureaucrats rather than the market and as a result we produced food no-one wanted to buy.

Farming became very difficult when we were forced into the real world in the mid-1980s but we got through that and now the industry and the country are far better for it.

If the Trans Pacific Partnership succeeds, farmers in the USA and other countries which sign up to it will go through some short-term pain as we did but they and their countries will benefit in the medium to longer term as we did.

Apropos of the TPP – Pattrick Smellie explains 10 things its opponents don’t want you to grasp.


TPP not plaything of corporates

February 9, 2014

Pattrick Smellie writes on the TPP:

. . . The way the story’s told here, the TPP is a plaything of US corporate interests hell-bent on imposing the very worst of American imperialist views on such important principles as the ownership of patents and copyright, at the expense of supposedly “weak” negotiators like New Zealand.

The implication is that the US political-industrial machine is driving this outcome not just inexorably, but inevitably to a conclusion that will only benefit existing corporate power.

Well, maybe.

But if that’s really the case, why is it that hardly a day passes without coverage in the US media of the mounting trouble that US President Barack Obama faces in getting the permission he needs from Congress and the Senate to agree to a TPP-style deal?

If anything, the political dynamic in the US indicates that vast economy is becoming more instinctively protectionist and unwilling to grant the “fast-track” legislation required to allow the US to be a nimble participant in the TPP negotiations. They now involve 13 trading nations around the Pacific Rim, and perhaps a 14th if South Korea is allowed to join too.

In the last fortnight, Obama has lost support for fast-track legislation from the Democrat Leader of the Senate Majority, Harry Reid, but a swathe of other leading Democrats. On the Republican side, where liberal sentiment towards global trade might have been expected to reign, hard-right Tea Party-ites have further eroded support for free trade.

Indeed, no US President has managed to secure fast-track legislation since 2002. Efforts since 2007 by both the George W Bush and Obama administrations to renew fast-track authority have foundered to date.

So if TPP’s most ardent critic in New Zealand, University of Auckland law professor Jane Kelsey, is right and the Pacific Rim trade deal is a stitch-up between evil US corporate interests and its puppets on Capitol Hill, then clearly the puppet-masters are doing a pretty crappy job.

The recent Wiki-Leaked documents from TPP negotiations suggest much the same thing. They show the US on the backfoot on many of the most contentious intellectual property and environmental issues.

Recent US media reporting suggests the US is facing opposition to proposed environmental safeguards that developing economies regard as trade barriers dressed up as principle.

If anyone is succeeding on Capitol Hill at present, it would seem to be American trade unions, who would much rather kick TPP negotiations beyond the 2014 mid-term US elections later this year because they fear trade liberalisation will cost the Democrats votes. . .

New Zealand has much to gain and little to lose from the TPP thanks to already being an open economy with few restrictions on trade.

Heavily protected sectors in other countries will have to undergo the adjustment to a more liberal trading environment. But any short-term pain will be worth the long term gains for producers, consumers and taxpayers who pay a high price for tariffs and other trade barriers.


Rural round-up

August 21, 2013

NZ reputation will bounce back -  Pattrick Smellie:

Honest disclosure of the Fonterra infant milk botulism scare will stand New Zealand’s reputation as a food producer in good stead in the long run, although the country’s reputation for safe food has taken a short term hit, says ANZ Bank’s chief economist for Greater China.

Speaking to BusinessDesk in Hong Kong, Li-Gang Liu described the impact of the incident, and the subsequent discovery of raised nitrate levels in lactoferrin produced by Westland Milk, as “a temporary scare.”

“Most Chinese consumers still trust the goods provided by New Zealand producers,” he said. “I don’t think that has changed fundamentally, especially how this case was handled. . .

NZ scientist wants ploughing outlawed:

A New Zealand soil scientist is campaigning to outlaw the plough and to have a warning on it.

Dr John Baker said ploughing or conventional tillage contributed to global warming, crop failure, soil erosion and eventually famine.

He said the single greatest challenge facing the world was feeding the extra 50 per cent population by the year 2050.

“We can get away with conventional methods in New Zealand because we have rich soil and rotating pasture, but other countries don’t have that luxury. Instead they’re turning their backs on ploughing and adopting no tillage as the only way to feed the population.” . .

Reduced volatility critical for long-term sheepmeat sector viability:

Representatives of the sheepmeat sectors from the United Kingdom, France and New Zealand met last week and have agreed that the volatility of returns is negatively impacting the long term viability of their respective sheepmeat sectors.

They agreed that the roller coaster ride of good years followed by poor years saps the confidence of sheepmeat producers, resulting in a decline in production in most sheep producing countries and a sector that has difficulty attracting and retaining good young people.

A cross-sector group from the UK and France came to New Zealand on a fact-finding mission to better understand the current outlook for New Zealand sheep farmers and to identify and discuss common challenges. They met with representatives from key industry organisations, farming groups and the meat processing and exporting companies. . .

Views differ on effluent threat to marine farms - Peter Watson:

Farmers and the Tasman District Council are confident increased monitoring and a lot of on-farm work have reduced the risk of dairy pollution again threatening marine farms off the Collingwood coast, but marine farmers say more still needs to be done.

In November, 2011 and May last year high E coli readings in marine farms near the mouth of the Aorere River caused alarm within the export industry, sparking fears the spikes may halt harvesting and prompting complaints to the council about outdated dairy practices, weak rules and a lack of oversight.

It sparked tension in Golden Bay as one heavyweight export industry was seen to take on another. . .

Wineries suffer further damage from latest quake:

Marlborough wineries have suffered more losses and damage from Friday’s magnitude 6.6 earthquake than they did from the 21 July event.

Wine Marlborough general manager Marcus Pickens says a number of wineries in the region closed after the big quake struck on Friday afternoon and structural engineers will be assessing the damage during the week.

He says there has probably been some wine loss, although how much is not really known at this stage.

“I think a number of the tanks, the way they behave would have spilt wine out the top … and those wine losses are financial losses as well.”

Mr Pickens says wineries are reporting minimal damage to bottled wine stocks. . .

Dairy Awards Plan 25th Anniversary Celebrations:

The 2014 New Zealand Dairy Industry Awards will celebrate the 25th anniversary of the sharemilker competition with a special launch event and celebration ball at its annual awards dinner.

National convenor Chris Keeping says the milestone anniversary creates an opportunity to delve into the sharemilker competition history and to celebrate its success.

“It’s pretty amazing to think that over those years thousands of sharemilkers have participated in the competition, relishing the opportunity to have their business analysed and enhance their progress in the industry while having some fun and meeting lots of people.” . . .


Rural round-up

November 16, 2012

Chinese interest in Fonterra fund ‘predictable’ Feds say:

Chinese interest in investing in Fonterra’s Cooperative Group’s shareholder fund was predictable once the scheme was approved and underlines the need for constitutional protections for the Trading Among Farmers scheme, says the main farm lobby group.

China’s sovereign wealth fund, the US$400 billion China Investment Corp, is in talks to buy units in the $525 million fund with an investment smaller than US$100 million, the Wall Street Journal reported yesterday, citing people with direct knowledge of the plans.

The Fonterra Shareholders’ Fund aims to raise as much as $525 million selling shares in an indicative price range of $4.60 to $5.50 apiece, giving outside investors exposure to up to 7 percent of the dairy cooperative’s equity. The final price will be set by a bookbuild among institutions and NZX firms on about Nov. 27. . .

Huge bio-fuels opportunity for NZ from forestry: Pure Advantage -  Pattrick Smellie:

New Zealand’s plantation forestry estate represents a major opportunity for New Zealand to become more self-sufficient in transport fuels, says the latest report from the Pure Advantage business lobby group seeking support for a “green growth” push in New Zealand.

However, a “crisis of faith” in the forestry industry could stymie the newly emerging potential of forestry – a sector that has long confounded attempts to add value beyond the export of raw logs, mainly to Asian markets.

Pure Advantage trust chairman Rob Morrison told BusinessDesk the fragile state of the forestry industry is a major issue for realising the largest economic opportunity identified by a study conducted by London economic consultancy Vivid Economics and the Business School at the University of Auckland. . .

Icebreaker launches online shopping:

Icebreaker, the iconic merino clothing brand, will launch an online store in New Zealand today, at icebreaker.comin time for Christmas shopping.

“It’s no secret that online shopping is the fastest growing channel in retail today, with clothing showing some of the highest growth,” says Jeremy Moon, Icebreaker CEO and founder.

“We’re a multi-channel business, and our new eCommerce site in New Zealand will complement our presence in retailers throughout the country and in our Icebreaker TouchLab retail stores in Wellington and Auckland. Our customers are increasingly demanding choice – they want to be able to choose to shop either directly from a brand, or from a retailer with a wide variety of brands.” . . .

Prince Charles inspects the Glacial Wool rug bearing his coat of arms:

New Zealand Wool Services International is pleased to make available the attached photographs of the Prince of Wales inspecting a unique six square metre Glacial wool rug bearing his coat of arms during his visit to the New Zealand Shear Brilliance wool exhibition at The Could in Auckland on 12 November. The rug has been commissioned by New Zealand Wool Services International to honour the Prince and recognise his role as a champion and patron of the global Campaign for Wool.


Golden rule

May 21, 2012

Quote of the day:

While it rankles to be beholden to the opinion of the same financial markets as caused the global financial crisis, the fact remains that we’re debtors, and the rules about what happens to those who don’t pay their debts haven’t changed. Pattrick Smellie

The golden rule still applies – those with the gold make the rules.

As long as we’re heavily indebted we’re at the mercy of those to whom we owe money.


The real threat

April 21, 2012

Quote of the day from Pattrick Smellie:

To the Greens and an increasingly hysterical band of Labour MPs with economic portfolios, this will be evidence of our capitulation to the wily Orientals. 

Sorry guys. The real threat is that China has plenty of other options.  It’s a big world out there, and Beijing is the most powerful economic force in the world today. 

As the Chinese Embassy’s urbane political counsellor, Cheng Lei, put it at a press briefing timed just before the Crafar announcement this morning, Fonterra is a big investor in China and is welcome.

The two countries could even grow two-way trade to $20 billion before the 2015 target formally set this week during the visit of fourth-ranked Communist Party official Jia Qinglin.

But only if we want to.

Trade is a two-way street. If we expect the Chinese to take from us we must also be prepared to give a little.

There are advantages to China in dealing with us. It enables them to dip their toe in the water of free trade with a country which doesn’t offer any threat to them.

But there are plenty of other countries they could buy from, it would take a lot of other countries willing to buy from us to replace the exports we send there.


Is Key a Level 5 leader?

January 10, 2010

. . .  there is in Key’s style – humble, gentle, willing to be wrong, but absolutely certain that New Zealand is a country that, in Jim Collins’s words, “deserves to last” because of all that it has built already – something of the Level 5 leader lurking.

This comes from Pattrick Smellie, you can read the rest of his column at Scoop.

My blue bias provides plenty of reasons for wanting Key to be a great leader.

But the benefits to New Zealand from great leadership are far more important than politics.


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