The Commerce Commission today released its draft report on Fonterra’s base milk price calculation for the 2013/14 dairy season. The base milk price is the price Fonterra pays to farmers for raw milk.
The Commission is required to review Fonterra’s calculation of the base milk price each year as part of the Dairy Industry Restructuring Act’s milk price monitoring regime. The review assesses if Fonterra’s calculation approach provides incentives for it to operate efficiently and provides for contestability in the market for purchasing farmers’ milk.
The scope of the Commission’s review is only to look at the base milk price, not the retail price that consumers pay for processed milk. . . .
Fonterra’s farmgate milk price out of step with efficiency – Pattrick Smellie:
(BusinessDesk) – The Commerce Commission says Fonterra Cooperative Group’s decision to cut the last season’s forecast payout to farmer shareholders by 55 cents per kilogram of milksolids below the result produced by its Farm Gate Milk Price calculation is not consistent with the milk price regime’s intention to make Fonterra operate efficiently.
However, it says the decision – the first ever taken to vary the payout from the calculated level since the Farm Gate Milk Price regime came into force in 2009 – was consistent with ensuring competitive provision of milk to alternative suppliers, the commission concluded in its annual review of the regime.
Under the Dairy Industry Restructuring Act, which allowed a merger to create Fonterra despite creating a dominant local market player, the commission must monitor how Fonterra sets the price it pays farmers for milk as part of efforts to ensure it’s possible for local dairy market competitors, such as Synlait or Westland Milk, to emerge.
Under the monitoring and reporting regime, the commission has no ability to force any change on Fonterra. . .
The Ministry of Business, Innovation and Employment’s Labour Inspectorate has released the results of the third phase of its national dairy strategy, which involved visits to farms that employ migrant workers.
The findings show that while no exploitative conduct was found, a quarter of the farms visited were in breach of employment laws for poor record keeping.
Senior Labour Inspector Kris Metcalf says the visits were part of a long-term operation to check compliance with minimum employment obligations at dairy farms across the country.
“The majority of the 42 dairy farms visited in this phase were meeting minimum employment standards,” says Kris Metcalf.
“However, 11 farms were found to be in breach of their minimum employment obligations which is disappointing. . .
Following the third phase of the Ministry of Business Innovation and Employment’s (MBIE) dairy strategy, focussed on migrant workers, Federated Farmers knows a sizable minority of farmers still need to meet basic employment law and the Federation is offering to help.
“The latest information from MBIE shows that there has been a significant improvement in the performance of dairy farmers, but far too many are failing to take accurate time sheets seriously enough,” says Andrew Hoggard, Federated Farmers Employment Spokesperson.
“We are pleased MBIE inspectors did not find any exploitative behaviour of migrant workers on the 42 farms they visited. That said we’ve still got a bit of work to do with our guys on record keeping and basic employment practices. . . .
• NZ dollar is under pressure
• Interest rate predictions delayed
• Meat sector outlook remains bullish
While eleven of the last twelve dairy auctions have recorded price falls, the sheer magnitude of the falls is bringing other factors in to play, according to the latest ASB Farmshed Economics Report.
“With dairy prices down by 37 percent on a year ago, the NZD has finally come under some pressure” says Nathan Penny, ASB Rural Economist.
“The NZD has passed its peak. We expect the NZD to trade at around 85 US cents for the rest of the year.”
“The dairy price falls are also a major reason why we’ve pushed back our interest rate call.” ASB Economics now expects the next OCR increase in March 2014 rather than their previous call for a December 2014 hike. . .
Primary Industries Minister Nathan Guy has announced the establishment of a working group to develop a ‘roadmap’ on how to meet the future capability needs of the dairy processing sector.
“This was a recommendation of the independent Government Inquiry into the Whey Protein Concentrate (WPC) Contamination Incident last year. It found that our food safety regulatory model for dairy is among the best in the world, but also recommended improving people capability to strengthen the food safety system.
“The inquiry highlighted the shortage of experienced people with processing expertise across the industry’s regulatory sector, and at all levels of the system. . .
Does Australia want to compete? – Jo Bills :
Recently the Business Council of Australia released a report it commissioned from McKinsey & Co – Compete to Prosper: Improving Australia’s global competitiveness.
It was fascinating reading – taking a helicopter view of the Australian economy and the global competitiveness of industry sectors.
Most of us probably regard Australia as a trading nation, but the McKinsey analysis highlights the fact that our economy remains quite inwardly focussed – while we are the world’s 12th largest economy, we rank 21st in terms of global trade – well behind some that you might assume we should be ahead of.
As part of the study, the McKinsey number-crunchers developed a Relative Competitiveness Score, applied it to all sectors of the Australian economy and found that only one sector – agriculture – stood out as truly competitive. . .
A group of volunteers dedicated to clearing wilding trees around Flock Hill in upper Waimakariri is to receive a major funding boost, Associate Conservation Minister Nicky Wagner announced today.
Waimakariri Ecological and Landscape Restoration Alliance will receive $309,000 over the next three years from the Department of Conservation’s Community Conservation Partnership Fund.
“Wilding trees are now the most significant threat to biodiversity and infrastructure in the 60,000 hectares of public and privately owned lands in the upper Waimakariri Basin. . .
Today the government’s safety agency for forestry, WorkSafe NZ, has publicly released its submission to the panel of the Independent Forest Safety Review. The Forest Industry Contractors Association (FICA), the industry group that originally initiated the review, has welcomed the comments from the regulator.
“We’re pleased that some vital issues have been highlighted by Gordon MacDonald’s WorkSafe NZ team,” says spokesman John Stulen of the Forest Industry Contractors Association, “They’ve made some very practical observations vital to making change in our industry.”
Stulen says WorkSafe NZ has been open and frank in their criticism of some shortcomings, yet has also been constructive at the same time. . .
South Island dairy farmers can now reap the rewards of a revolutionary new Magnesium product, which is transforming Magnesium use in dairying.
Animal feed ingredient supplier, BEC Feed Solutions, is partnering with South Island animal feed manufacturer and blender, James & Son (NZ) Pty Ltd, to give the region’s dairy farmers convenient access to its Bolifor® MGP+ product.
Bolifor® MGP+ is a unique alternative to messy pasture dusting and laborious daily drenching, and contains the essential minerals Magnesium and Phosphorus in the one product. It’s anticipated thatBolifor® MGP+ will be well received in the South Island, given that farmers, vets and animal nutritionists are observing an increase in Phosphorus deficiency due to the region’s dependency on fodder beet crops and changing land use. . .