Rural round-up

March 27, 2014

Guy prepared to help, but unwilling to interfere - Allan Barber:

Nathan Guy gave a very positive speech to Beef + Lamb NZ’s AGM on Saturday which covered three major points: what the government is doing for farmers, his vision for the red meat sector and thoughts on the discussions about industry structure.

Obviously, given MPI’s bullish view of agricultural exports, the Minister was extremely positive about economic performance. However he was at pains to point out the government’s role as an enabler, citing his focus on biosecurity resources, trade negotiations for market access, and investment in research.

He began by referring to his intention to strengthen resources at the border and to establish Government Industry Agreements (GIA) with various sectors which will ultimately involve the private sector in sharing the costs of biosecurity; different sectors are at various stages of negotiation on this issue. . . .

Project explores the potential of EID:

Warren Ayers farms 890ha of rolling country near Wyndham. The property runs 600 Perendale stud ewes and another 5,700 commercial ewes.

Lambing averages 135 per cent and lambs are finished to 17kg. Two-year-old replacement heifers are bought in annually for the 120-head Angus cow herd. Every year, all but the lightest 10 calves are sold at weaning. The policy is simple to manage and keeps the genetics of the herd diversified sufficiently that the same bull can be used for several years. For the past five years, the property has also wintered 650 dairy cows.

Warren has EID tagged his stud animals since 2006 and the commercial two-tooths have been tagged since 2009. . .

Fonterra begins construction on new IDR357 billion plant in Indonesia:

Fonterra today commenced construction on its first blending and packing plant in Indonesia, which will support the growth of its market leading consumer brands Anlene, Anmum and Anchor Boneeto.

Located in West Java, the plant is Fonterra’s first manufacturing facility in the country and its largest investment in a new manufacturing facility in ASEAN in the last 10 years.

Director General of Agro Industry at the Ministry of Industry, Panggah Susanto, joined Fonterra at an event in Jakarta to mark the official start of construction today.

Pascal De Petrini, Managing Director of Fonterra Asia Pacific, Middle East & Africa (APMEA), said that Fonterra Brands Manufacturing Indonesia Cikarang Plant will allow Fonterra to meet the ever-growing demand for dairy nutrition in Indonesia. . .

Dry conditions in Northland and Waikato remain a big concern:

Primary Industries Minister Nathan Guy says dry conditions in parts of Waikato and Northland remain a serious concern.

“Local authorities in Northland have announced the western parts of their region are in drought. This reflects the tough few months they’ve had as pasture has browned off.

“Cyclone Lusi has helped green tinges appear in some places, but the rainfall was erratic and insufficient. Western Northland and large parts of the Waikato remain very dry.

“The Ministry for Primary Industries is keeping a close eye on conditions here and elsewhere. I’ve seen for myself how dry things are on two trips to the Waikato in the last two weeks. . .

West Coast Northland drought declaration a relief:

The adverse event declaration covering drought in Northland’s West Coast the declaration will not provide a lot of direct financial assistance but will provide huge psychological relief.

“New Zealanders will get an inkling of what the guys on Northland’s West Coast have been going through. Not just since November, but since 2012 and even before that,” says Roger Ludbrook, Federated Farmers Northland provincial president.

“The big thing a declaration triggers is the Northland Rural Support Trust, so any farmer can approach the RST for free advice on farm management, or just someone to have a decent chinwag with.

“Beyond this, it doesn’t mean much financially unless the absolute worst happens. There is a safety net, but it is exactly the same as for any other New Zealander and carries the same eligibility rules.

“Then there is Inland Revenue and to be fair to them they aren’t unapproachable. . .

Drought-affected farmers encouraged to talk to their banks

Drought-affected farmers should talk to their banks said the New Zealand Bankers’ Association in response to increasingly dry conditions in parts of Northland and Waikato.

“We encourage any farmers facing hardship as a result of the lack of rain to contact their bank to discuss options for assistance and how they can work through these challenging conditions,” said New Zealand Bankers’ Association chief executive Kirk Hope. . . .

Fonterra profit down but revenue on track to break $20 billion:

Fonterra Cooperative Group’s half year results means it could be back on track to break the $20 billion revenue barrier; corporate New Zealand’s ‘four minute mile.’

“I think the fall in operating profit will grab attention instead of where it ought to be focussed, on revenue,” says Willy Leferink, Federated Farmers Dairy chairperson.

“This is real money coming into the New Zealand economy.  I mean revenue for the half-year is up 21 percent to $11.3 billion.  While we’ve got close to the $20 billion barrier in the past, this time, we’ve got a real chance of breaking it.

“That said, the declared drought in Northland along with drought-like conditions in the upper North Island could act like a brake.  We’ve also seen GlobalDairyTrade retreat in recent trading events due in part to increased volume. . .

Pengxin picks up former Fonterra executive Romanos for NZ Milk role, report says:

(BusinessDesk) – Shanghai Pengxin has hired Gary Romano, who resigned from Fonterra Cooperative Group last year during the botulism scare, to oversee the Chinese company’s overseas operations including its New Zealand farms, the NZ Herald reports.

Romano’s Linked In profile says he is “currently on the beach before becoming active again in 2014.” He resigned as head of NZ Milk Products at Fonterra last August as the company embarked on a global recall of whey protein concentrate. The bacterium was eventually shown to be harmless.

He will become chief executive of NZ Milk Management and a director of Pengxin’s two farm groups in the North Island and South Island, according to the Herald. Terry Lee, managing director of Pengxin’s Milk New Zealand unit, didn’t immediately return calls. . .

Samoa sheep farming increasing:

Sheep farming in Samoa is growing through a programme funded by the World Bank.

Under the Samoa Agriculture Competitiveness Enhancement Project, the World Bank is helping develop livestock, fruits and vegetable farming.

Sheep were introduced in Samoa in 2004, with the flock now grown to 700. . .

Macca’s hits milestone of three million kilos of Angus

AngusPure recognises programme as instrumental to success of Angus demand

McDonald’s New Zealand today announced it has sold a whopping three million kilograms of New Zealand Angus beef since 2009. With today’s launch of the promotional Angus the Great burger, the company expects to continue its contribution to the success of local Angus beef sales

This milestone is acknowledged by AngusPure’s chairman Tim Brittain, who says the ‘McAngus’ programme has been instrumental in helping grow the demand for Angus cattle, and that Kiwi farmers have been well rewarded since the original launch of the Angus burger range in 2009. . .


Less than 2% of land foreign owned

February 16, 2014

The sale of Synlait farms to a Chinese controlled company brought the usual xenophobic response.

However, OIO approval for the sale of three North Otago farms to Cragimore Investments went unremarked.

That adds credence to the belief that at least some of the opposition is racially motivated.

Whatever, the motivation, a lot of it is based on the erroneous belief that we’re in danger of becoming tenants in our own country when in fact only 2% of land is foreign owned.

The sale of Synlait Farms to a Chinese-controlled buyer is part of a process ensuring New Zealand grows the right products to meet world demand, NZ Institute of Economic Research (NZIER) economist Chris Nixon says.

“That’s the fundamental point – land must reflect world prices because that’s how we decide what to grow on the type of land we’ve got,” Nixon said.

NZIER didn’t comment on the merits of individual deals but the trend was important for NZ to be a successful part of an international world, he said.

Nixon, who has written research papers on foreign direct investment, said the level of overseas ownership of land in this country was low by world standards and wasn’t growing quickly.

 “We’ve missed out really. The land is seen as relatively expensive and we are a long way from world markets.

“The deals we see are high profile but they are small and it tends to be spiky – it happens now and then.”

NZIER studies showed less than 2% of NZ land was owned by foreigners. The exact level of farmland ownership by foreigners wasn’t known but it would be within that range, Nixon said.

Most of the acreage was expected to be in forestry.

Less than 2% is a very small amount and that inwards investment brings benefits.

Waikato University professor of agri-business Jacqueline Rowarth said overseas investment helped maintain farm values and protect the high debt levels held in the dairy sector.

Restricting sales would make many current farmers “green round the gills” because of the impact on their farm values and debt they had taken on.

“Treasury says we haven’t got enough money coming in as a country to make investments and the Reserve Bank says that dairying debt is a major issue if things go wrong.

“Without the interest shown by overseas buyers the value of farms would drop.” . . .

The benefits aren’t just to those who sell the land.

          SFL will invest $20 million to develop the Synlait farms and Pengxin is spending about $18m on development in the North Island.

The multiplier effect of that level of investment in infrastructure and services in a regional economy meant everyone would benefit, Rowarth said.

The proof was in the Southland economy, which was booming because of dairy conversions. Dairy investment involved huge expenditure.

Rowarth also counters the myth that foreign owners compete unfairly with locals.

While overseas investment would maintain farm values, it wasn’t pushing prices out of the reach of New Zealanders as long as milk prices and operating costs were at levels to make the farm business profitable, she said. . . .

While foreign direct investment was important for the economy, it was also important for New Zealanders to capture the foreign trade benefits through ownership of the processing and marketing companies, Rowarth said.

“I’m less worried about the foreign ownership of land than I am about the companies, because that is where the brands and the value is.

“We’ve got companies like (PGG) Wrightson and now Synlait Milk majority overseas owned and the questions are where are the profits going? Are they coming back to NZ?”

It’s not the profits but the loss of  intellectual property a company like PGGW has in seed development which might be of concern. But there’s not the emotional attachment to IP the way there is to land.

Synlait Milk had said it was not paying dividends but would invest in its assets and the risk was  NZ investors would sell out if they weren’t getting an income from it.

Nixon has also noted greater reaction to farm acquisition than to foreigners buying agri-businesses, saying that was surprising when agri-business had more impact on the daily lives of New Zealanders.

Having open markets that encouraged overseas investment was important for credit rating agencies, he said.

Without that NZ would face greater interest costs on overseas borrowing.

Higher interest rates, and the inevitable increase in the value of our dollar that would follow, would be a very high cost for banning sales to overseas interests when such a small amount of land is owned by foreigners.


Rural round-up

February 8, 2014

Waikato fast turning waste into wealth:

The Waikato is fast turning waste into wealth, thanks to New Zealand’s first and only independent product development spray dryer and a collection of the country’s world-class researchers.

Waikato Innovation Park is the first organisation in the region to receive funding from Bio-Resource Processing Alliance (BPA). The $28,000 is helping it develop a way to scale up commercial production of pure avocado powder – a project that was started on a small scale in 2013.

The BPA is a government funded initiative that helps New Zealand’s biological-based manufacturing businesses gain maximum value from waste and by-products, while reducing environmental impacts from primary production and manufacturing activities.

According to BPA general manager Trevor Stuthridge, the initiative has $2.5 million per year on offer to New Zealand companies and their research providers over the next five years. . .

Benefits tipped from Synlait takeover - Alan Williams:

New jobs and $6 million coming from overseas for farm development spending are among the benefits of the latest Shanghai Pengxin investment in New Zealand, Cabinet ministers say.

Chinese company Shanghai Pengxin’s majority shareholding in the company that is taking over Synlait Farms in Canterbury was approved by State Services Minister Jonathon Coleman and Land Information Minister Maurice Williamson.

In their decision released by the Overseas Investment Office (OIO), they also referred to the benefits to NZ of the Shanghai Pengxin investment in 16 former Crafar farms in the North Island and the advancement of New Zealand’s “China strategy”. . .

Controls on fruit and vegetable movement lifted:

The Ministry for Primary Industries (MPI) confirms that all restrictions on the movement of fruit and vegetables in Whangarei have been lifted as of yesterday evening, Friday 7 February.

MPI Deputy Director General, Compliance and Response, Andrew Coleman, says this marks the milestone where two weeks of trapping, fruit sampling and testing is completed.

“We have received our final results from trapping and fruit examination and I am delighted to say that our rigorous checks found no further sign of the Queensland fruit fly in the Whangarei area. New Zealand’s fruit fly-free status remains intact, as it has throughout this response. There is no longer any need for residents in the area to be restricted in their movements of produce.” . . .

Whangarei fruit fly operation comes to an end:

Primary Industries Minister Nathan Guy has thanked the people of Whangarei for their cooperation over the last two weeks in responding to the find of a single male Queensland fruit fly.



“It’s very pleasing that no other fruit fly has been found and that this appears to be a solitary insect.



“This detection is a very rare event and shows we have a high performing biosecurity system.



“I want to thank the people of Whangarei for their support and patience over the last two weeks.



“Locals have been very supportive of this operation. They realise how important it is to treat this response seriously, and their cooperation has been great,” says Mr Guy. . . .

Good news in seed export growth:

Federated Farmers is pleased to see exports of vegetable and herbage seeds still rising.

“To see total seed exports rise by 14 percent from 2012 levels shows arable farmers in New Zealand are doing their fair share for the economy,” says Ian Mackenzie, the Grain & Seed Chairman of Federated Farmers.

“What makes the $192 million contribution to the economy so good is that this contribution is heavily concentrated in mid and North Canterbury region, with almost all the production done between the Rakaia and Waimakariri Rivers.

“Dairy is not the only land use that is driving economic activity in Canterbury, and that deserves to be celebrated” . .

Rabobank Wine Quarterly Q4: Challenges remain for global industry:

• New Zealand harvest yet to commence, but favourable growing conditions indicate positive signs for the coming vintage.

• New Zealand wine exports are firmly back in growth given the higher supply available from the record 2013 vintage, and the share of bulk wine in the ‘product mix’ is rising.

• Australian harvest underway, expectations of a slightly smaller crop, with the recent severe heatwave potentially impacting yields. . . .

The full report is here.


Foreign investment isn’t easy here

November 9, 2013

The New Zealand Initiative is researching foreign direct investment and is seeking information:

The $200 million sale of the Crafar farms to Shanghai Pengxin generated a storm of controversy last year, as well as massive legal fees as teams of lawyers waded through rivers of red tape to get the deal across the line.

Yet if the same deal were proposed in Australia, it would apparently have passed with barely a squeak of protest under their Foreign Direct Investment rules, while in Canada it is a more complicated “maybe”.

It seems not all FDI regimes are created equal, particularly as inbound investment is often subject to grey-area factors that are not captured in the black ink of the rules.

We would like to tap into the knowledge of our international friends and followers, so perhaps you can help us:

In what international jurisdictions would the purchase of $200 million (US$165 million) of productive farmland by a Chinese conglomerate have gone through smoothly, and in what countries would it have been red-flagged, as it was in New Zealand?

Your input will be included in our second FDI report, which compares New Zealand’s inbound investment policy framework to other international jurisdictions. All submissions will be published anonymously.

If you would like to help us, please do so in email form to khyaati.acharya@nzinitiative.org.nz by 18 November 2013.

The NZI has comparisons with other countries:

Australia: A $200 million investment would appear to be able to sail through because it is below the investment threshold of A$244 million that triggers Australia’s FDI rules.

Canada: A $200 million investment would appear to sail through at the Federal level because it would be under the threshold level of C$344 million that applies to Chinese investor as China is a WTO-member. However, perhaps it would trigger FDI scrutiny at the provisional level, perhaps most particularly in Alberta, Quebec, Saskatchewan and Manitoba, all of which restrict significant investments by overseas persons in productive farmland.

Hong Kong: Presumably, no FDI restrictions would apply to a $200 million purchase in Hong Kong.  But does Hong Kong have $200 million of dairy farmland to purchase?

Korea: We understand that South Korea does limit investment in arable farmland given its limited availability and national significance, but we don’t have any details.

Singapore: We understand that Taiwan does not consider productive land to be a sensitive national asset and applies no monetary threshold to inwards FDI. If so the investment should sail through.

UK: We understand that the United Kingdom would impose no screening requirement on such a transaction and has no monetary threshold for triggering scrutiny, nor is farmland regarded as a ‘sensitive area’.  Presumptively, the purchase would sail through.

USA: At the Federal level the purchase would sail through since all a foreign purchaser of US farmland is required to do is to disclose the purchase to the Secretary for Agriculture.

Foreign investment in farms isn’t easy here.

A New Zealander who manages a farming business for an international company tells me that going through the Overseas Investment Office was a long and difficult process.

It took ages, and was expensive, even when the company was selling a farm it already owned here to buy another and had a good record of employment, development, and responsible stewardship of and best environmental practice on its properties.


Rural round-up

November 4, 2013

Few farms in foreign hands says English – Alan Wood:

Foreign investment in New Zealand farmland, including dairy farms, remains relatively low and has significant safeguards, Finance Minister Bill English says.

Some investment, including that in the Crafar farms in the North Island by the Chinese, has raised the hackles of some Kiwis.

For example, Campaign Against Foreign Control of Aotearoa spokesman Murray Horton says he is firmly against ownership of New Zealand land by foreigners, whether they be Chinese, American, Australian or British.

Last month the China-based Shanghai Pengxin Group announced a takeover bid for Synlait Farms, in association with two of Synlait’s founders, John Penno and Juliet Maclean. . .

The Industrialisation of American Dairying and the Implications for New Zealand: Keith Woodford:

The ‘handout notes’ that follow were written  for a Lincoln University Dairy Farm Focus Day on 10 October 2013. These focus days are held every two months. This one was attended by about 200 farmers and rural professionals. I gave the presentation as Lincoln’s Professor of Farm Management and Agribusiness, standing on a trailer out in the paddock – so basically it was all ad libbed without visual aids. Actually,  sometimes it is fun to talk without the distraction of powerpoints!

Background

  • The American dairy industry is rapidly transforming to an industrial model based on large scale (>2000 cow) mega farms.
  • As of 2013, approximately 40% of American production comes from 800 mega farms.
  • Another 30% comes from a further 2500 farms, each with between 500 and 2,000 cows.
  • The final 30% comes from more than 50,000 farms with less than 500 cows
  • The mega farms have costs of production that are much lower than the smaller farms. . .

 

Farming robot could bring the cows in – Jill Galloway:

“Like a four-wheel-drive wheelchair on steroids” is how Andrew Manderson describes his Agri-Rover.

He designed the prototype farm robot which was built by a team from AgResearch and Lincoln University, using industrial parts and costing $4000.

It was a robust machine and had a powerful engine, said Dr Manderson.

It would comfortably trundle around a paddock, so long as it didn’t encounter a gradient of more than 20 degrees.

He said it had a top speed of 5kmh, but with a few adjustments it could really motor.

(Click on the link above to see a video of the robot in action)

Winning the battle against boxthorn pest – Ruth Grundy:

Graeme Loh is the first to admit he is more ”exterminator” than ”nurturer”.

He is the Department of Conservation (Doc) ranger who oversees one of the country’s newest reserves, a prominent and ancient limestone outcrop at Gards Rd, between Duntroon and Kurow.

He said his main focus was to eradicate an aggressive exotic invader – boxthorn – which threatened to appropriate this national treasure.

”People don’t realise how bad a weed it is and how difficult it is to remove.” . . .

Farmsafe says quad bike research backs roll bars – Anna Vidot:

Farm safety advocates say the science is in, and now is the time to start encouraging people to use quad bikes with roll bars.

Manufacturers of the vehicles have long argued that crush protection bars cause more injuries than they prevent, and take the focus away from other safety measures like helmets and proper training.

But Farmsafe Australia says there’s mounting evidence that crush protection bars are more likely to save a life than not, if a quad bike rolls. . . .

Dogs queue up for aversion training -

Kiwi advocate Lesley Baigent  was  gratified by the response  to Saturday’s kiwi aversion  training session for dogs at the
Raetea reserve, at the northern foot of the Mangamuka  Gorge.

Dogs were literally queuing  up to undergo the training,  which involves a special collar  delivering an electric shock at  the appropriate moment to  persuade the dogs that kiwi  are best left alone. Success rates varied, Lesley said, and there were certainly  no expectations of 100 per  cent. . . .


Rural round-up

October 28, 2013

Industry award like winning ‘ham Lotto’ – Sally Rae:

Sue Morton describes winning gold in the 100% New Zealand Bacon and Ham Competition as like winning ”ham Lotto”.

Mrs Morton and her husband Gus, from Waitaki Bacon and Ham, won the gold award for their Hampshire Champagne sliced ham in the recent competition.

Retail meat industry specialist Matt Grimes, who has been a judge since the competition’s inception in 2008, described the entry as a ”standout”. . . .

Otago couple among six in award finals - Sally Rae:

Otago farmers Trevor and Karen Peters are among the six finalists in the Lincoln University Foundation South Island Farmer of the Year competition.

The Peters family operates a sheep and beef hill country farming enterprise across six properties. Nominees noted their commitment to the farming industry and their focus on succession planning.

Farming was a very high-cost business to get into but one with a low cash return, Mr Peters said.

”We have focused on a process for succession planning to ensure that business decisions on the property can focus on the long term, knowing that there will be a continuity of investment,” he said. . . .

Synlait Farms had five offers – Alan Williams:

Synlait Farms chief executive Juliet Maclean will increase her investment in the company as part of the planned takeover joint venture with Shanghai Pengxin.

If the takeover proceeds Maclean will receive just over $15 million for her 17.55% stake in the corporate dairy farmer but is required to invest $17m directly into her new 16.1% shareholding in the takeover vehicle SFL Holdings (SFLH). She will remain as chief executive and director of Synlait Farms. . . .

Taking Jersey butter to the top - Richard Rennie:

A small dairy company has tipped the usual processing model on its head, aiming to produce crafted, niche butter from one breed of cow, for the top-end food and restaurant trade. Richard Rennie investigates.

A couple of years ago Lewis Road Creamery founder Peter Cullinane had an epiphany in the most ordinary of places.

While trawling the dairy aisle of his Auckland supermarket for Danish Lurpak butter he wondered why he had to buy butter that had travelled 20,000km to get a brand that tasted good? . . .

Fury over eartag ‘spying’:

FARMERS are outraged at proposals by Meat and Livestock Australia to covertly sell to banks and rural lending institutions private information.

The farmer’s private information has been about the income they derive from the sale of their cattle and sheep.

A consultant’s report commissioned by the MLA – and leaked to the Australian Beef Association – says 10 financial institutions are keen to pay to automatically receive emails informing them every time a farmer who has a mortgage or debt sells his stock through the saleyards or to an abattoir.

The scheme, which the ABA likens to “spying for profit”, is made possible by the tracking of electronic eartags, which are now mandatory from birth for all cattle in all states, from farm to meatworks, under a scheme administered by the MLA. . .  Hat tip: Interest.co.nz

Focus on heat on livestock  – Nicloa Bell:

HOW livestock will react to warming global temperatures is the focus of a new study.

While it is commonly known that livestock production can be affected by exposure to heat, researchers from the University of Western Australia’s Institute of Agriculture and India’s Kerala Veterinary and Animal Sciences University are working to determine the physiological and genetic basis for adaptation in animals as a response to increasing global temperatures.

Physiology professor Shane Maloney from UWA’s School of Anatomy, Physiology and Human Biology is leading the project and said they hoped the research might help in the selection of livestock to improve production. . .


Who invests most in NZ?

June 18, 2013

People from which country invest most in New Zealand?

The xenophobes will say it doesn’t matter, foreigners are foreigners and should go home and take their money with them.

Then there’s a group whose opposition to foreign investment is targeted at Asians in general and Chinese in particular.

But a survey by KPMG shows that they have only a small stake here:

It found Asian investors as a whole accounted for just 16% of total approvals during that period and of that, China accounted for just 33%.

That even includes high-profile purchases such as Chinese whiteware manufacturer Haier becoming a cornerstone shareholder in Fisher & Paykel Appliances and the acquisition of the Crafar farms by Shanghai Pengxin.

So people from which country invest most here? Australia – which accounts for about 45% of direct foreign investment.


Risk good reason for sale

April 10, 2013

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

April 9, 2013

Nine possible water storage sites identified – Rebecca Harper:

Nine potential dam sites have been identified in a preliminary study of water storage options in Wairarapa.

The “whole of the valley” approach could result in up to 60,000 hectares of Wairarapa Valley being irrigated if the scheme goes ahead. This would require 250-300 million cubic metres of water a year and the dams would be designed to re-fill before summer each year. 

Only 10,000ha in the valley is irrigated now. So far 201 farmers, representing 269 properties covering 51,000ha, have been surveyed. . .

Dairy company signs deal with Chinese:

New Zealand’s only Maori owned and controlled dairy company is signing a deal with Shanghai Pengxin on Tuesday to process milk from the former Crafar Farms into UHT products for export to China.

Miraka Ltd, which operates a big factory near Mokai northwest of Taupo, is in Shanghai with iwi who historically affiliate with the Crafar Farms to initial the lucrative venture. . .

The status quo leads to peasantry -  Conor English:

Recently about 1000 meat and beef farmers met in Gore. This meeting highlighted the concern that these farmers have about the profitability and sustainability of their farming businesses.

There are questions about the ability of the current supply chain arrangements to deliver appropriate returns to farmers so that they and their families can get ahead while New Zealand as a country can take advantage of the increasing market opportunities there are in a world of more people, protein and wealth. 

About three years ago Federated Farmers launched a T150 campaign, which set the aspiration of farmers receiving $150 for a mid-season lamb. It’s a simple idea. Right now this seems a pipe dream, but it is actually critical to New Zealand that this target is reached sooner rather than later.  . .

Farmers support Auckland Plan having Immediate Legal Effect:

Farmers have swung in behind Auckland’s Unitary Plan having immediate legal effect and Federated Farmers is to tell Parliament’s Local Government and Environment Committee Select Committee that tonight, when the Committee meets in Auckland to hear submissions on the Resource Management Reform Bill.

“Metropolitan Auckland’s past failures to address growth issues properly has resulted in flow-on effects for rural Auckland,” says Wendy Clark, Federated Farmers Auckland provincial president.

“Delaying the implementation of Auckland’s Unitary Plan for as much as three or four years will result in added costs for Auckland’s rural ratepayers. It will also hinder the resolution of metropolitan Auckland’s all too obvious housing issues. . .

Poor judgement quota full for now – Steve Wyn-Harris:

Good judgement, as they say, arises from previous bad judgement.

You can’t beat experience.

When I started farming about 30 years ago, I would make a bad judgement call or poor decision probably once a week and time elapsed might mean I am now being generous to my past self.

But slowly and steadily over time that interval extended.

The times I would get a motorbike in an awkward and potentially dangerous situation became less frequent. Instead of deciding to leave the ewes in a paddock for another couple of days, I learnt to shift more frequently. . .

Drought Shout 2013: Farmers woes to take a back seat for a day:

When farmers from all over the North Island attend this week’s Drought Shout in Mangatainoka, work is expected to be the last thing on their minds.

Daniel Absolom, from Focus Genetics is travelling from Hawke’s Bay with a ute load of others to attend Thursday’s Drought at Tui Brewery and says it will be an opportunity to catch up with old friends and colleagues and have a good time.

“This will provide a much needed tonic for drought affected farmers and an opportunity for them to get off the land for a few hours and catch up with their mates,” he says. “It’s been an incredibly tough year thus far and I’m a firm believer in a problem shared is a problem halved.” . .


Rural round-up

November 10, 2012

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

October 23, 2012

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. . .


Criticised for following law?

August 16, 2012

What is David Parker saying? (starts at 1:01)

. . . it was that it was a legal decision not the right decision. The Court found that the Minister acted within his powers to approve the sale of the Crafar Farms to the Pengxin Shanghai syndicate but not that he acted reasonably because that’s not their mandate?

Is he criticising Land Information Minister Maurice Williamson for following the law?

If he had acted illegally would that have been reasonable?

It might be on Planet Labour. But in New Zealand under National the government follows the law.


Ministers can use judgement

August 12, 2012

Quote of the day:

 . . .   the court’s robust decision restores much-needed clarity to New Zealand’s foreign investment regime.

The upshot of the Fay-led challenges is that the bar has been raised for foreign buyers of farms or businesses worth more than $100 million. But Cabinet ministers are entitled to rely on their judgment when it comes to assessing the additional value to New Zealand that a foreign bidder brings when acquiring assets.

Critically, the court has shot a massive hole in the notion that a foreign buyer must have direct industry experience if they are to buy local farms or $100 million-plus Kiwi businesses. Fran O’Sullivan

Some legislation allows Ministers no latitude at all, the law is the law in those cases and Ministers have no discretion over its application. But other legislation, among which is that governing overseas investment, allows them to exercise their judgement.

In this case, the sale of the former Crafar Farms to Shanghai Pengxin, they decided that the company could add value to New Zealand, and imposed very strict conditions on the purchase to ensure it would.

The opposition to the sale is almost all based on emotion.

Now the Court has ruled in the purchaser’s favour the company and Landcorp will be able to get on with running the farms and the sooner they do that the sooner they’ll prove the doubters wrong.


Rural round-up

August 11, 2012

Shanghai Pengxin finally able to get on with its dairy investment – Allan Barber:

After one of the most drawn out sagas of recent times, the Court of Appeal’s ruling at last looks as if Shanghai Pengxin can complete its takeover of the Crafar farms.

The Fay/Maori Purchase Group has announced it will not make any further appeal, but, in Sir Michael Fay’s case, it will go back to business as usual and, in the case of the two Maori trusts, continue to negotiate the acquisition of two farms. However the iwi are still considering an appeal against the latest decision, while negotiations continue.

This sale process has caused much debate and involved very costly court cases which in the end have merely served to review and confirm the original decision and it’s hard to see on what basis a further appeal could expect to succeed. . .

Wintering barns ‘good idea’ not obligatory - Shawn McAvinue:

Wintering barns are a good idea but shouldn’t be made mandatory, says a Western Southland dairy farmer. 

    Dairy farmer Philip van der Bijl said the new winter shed on his Broad Acres farm, near Mossburn, was worth the investment. 

    If Environment Southland forced farmers to build sheds that would take money out of the farming community and only make Australian banks wealthier, he said. . .

Red cattle light up Shannon farm - Jon Morgan:

The late afternoon rain clouds have fled to the Tararua Range and a watery sun casts a soft light across the rolling pastures. In this light, a mob of cattle take on an exotic hue, their velvety, chocolate-red coats radiating a warm, lustrous glow. 

    It would be wrong to say farmer Kelvin Lane is unmoved, but he’s showing off his cows and his eyes are on their straight backs, muscled bodies and calf-bearing hips. 

    It is the dark red colour that first attracted him to the cattle, which are of the uncommon red poll breed. “They’re different, aren’t they?” he says. . .

A Hereford fan for life – Sue O’Dowd:

North Taranaki beef breeder Rodney Jupp is on a mission to introduce “Hereford Prime” beef to the region’s palates. 

    Right now he’s negotiating a deal with a Taranaki butchery, and hopes the meat will be on sale in the province within the next month. 

    “I’m working really hard to get Hereford Prime launched in Taranaki,” he said. . .

Pipfruit Growers Expect Slightly Improved Profitability

Pipfruit growers are expecting a small improvement in profitability this year, due to a lift in prices.

The Ministry for Primary Industries has released an analysis of pipfruit production and profitability as part of its annual Farm Monitoring Report series. The report is based on models of a Hawke’s Bay and a Nelson orchard and an overview of the financial performance of typical orchards, based on information gathered from a sample of growers and industry stakeholders.

A cool spring delayed flowering and harvest by around two weeks this season. Hawke’s Bay also had below-average temperatures and lack of sunny weather over summer. . .

Anti-GM campaigners warn of dangers – Gerald Piddock:

Two Australian farmers are warning New Zealanders to make sure their country remains free of genetically engineered and modified organisms. 

    Allowing GM products to be produced would put at risk New Zealand’s clean green brand, they say. 

    Western Australian farmer Bob Mackley and Victorian farmer and anti-GM advocate Julie Newman are touring New Zealand to deliver their message. With them is Green Party primary industries spokesman Steffan Browning. They were in Ashburton last week. . .

Entries open for 2013 Ballance Farm Awards:

Entries are now open for the 2013 Canterbury Ballance Environment Farm Awards.

The Awards, which have been running in the region for 10 years, celebrate responsible land stewardship and sustainable farm management practices.

Jocelyn Muller, the Canterbury Regional Coordinator for the Ballance Awards, said the awards continue to go from strength – to – strength in Canterbury.

“The Awards recognise and celebrate that best practice on-farm management is good for business and good for the environment.   . .


Shanghai Pengxin has nous to run farms – court

August 8, 2012

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.


Do we need a race relations commissioner?

June 13, 2012

Like Inventory 2 at Keeping Stock, I’m not sorry that Race Relations Comissioner Joris de Bres is coming to the end of his term.

Sometimes his pronouncements, or lack of them suggested he thought some races were more equal than others.

The Justice Ministry is inviting applications for a replacement..

It comes as an amendment to the Human Rights Act has been introduced to Parliament that could see the position abolished. Mr de Bres, 65, had “some concerns” about the possibility, but the amendment had not yet passed its first reading.

I have just read Alison Wong’s book As The Earth Turns Silver.

The plot is fiction but based on facts about discrimination against Chinese immigrants.  The book also depicts discrimination against women. It was less violent but still harmful.

Recent reaction to the sale of farms to Shanghai Pengxin,  shows that race relations haven’t progressed nearly as far as they need to.

But discrimination isn’t confined to race and I’m not convinced singling it out for special treatment is necessary when similar ignorance is directed at people for other reasons including, but not confined to, gender and disability.

All such discrimination is wrong and I think the Human Rights Commission ought to be able to counter it without the need for individual commissioners.


Whose money is it?

April 22, 2012

Opponents to the sale of the Crafar farms to Shanghai Pengxin, and other foreign investment, talk about the owners taking money out of New Zealand.

But whose money is it?

Anti-Dismal clearly explains it’s ours and it’s useless anywhere else:

. . . Let us assume for a moment that these evil foreigners make a NZ$1 profit which, in an effort to piss-off Michael Fay, they wish to take it back to China. How do they do it? Clearly a New Zealand dollar isn’t worth anything in China so the Chinese holder of NZ currency will have to sell their NZ$1 to buy Yuan. But why would anyone want to buy said NZ$1? The only use for a NZ$s is to buy something made in NZ. Thus the buyer of the NZ$s must want it to buy a NZ export of some kind. What is Michael Fay’s problem with this? The NZ$1 doesn’t go overseas in any meaningful way, it gets spent on New Zealand produced goods and services no matter who gets the profits from the ownership of the farms. If a New Zealander gets the profits they spend them on New Zealand made goods and services, if a foreigners gets the profits they sell the NZ$s to someone who wants to buy New Zealand made goods and services.

In short New Zealand will not lose “around $15 million in earnings every year” if the Crafar farms are sold to the Chinese. For New Zealand’s wealth and prosperity, it does not matter where the profits  from New Zealand businesses end up. All that matters for the New Zealand  economy is that New Zealand remains a place where business transactions  take place – irrespective of who owns the business. New Zealand’s (real) wealth is the amount of goods and services produced each year, no matter who owns the business that do the producing. What we want is for firms to be owned by whoever will use those resources most efficiency, no matter what their nationality. Any investment that moves resources towards a more efficient use is a good investment for New Zealand, again no matter what the nationality of the investor . . .

The farms in question are already owned by foreigners – the banks which put the business into receivership.

If they were bought by New Zealanders, they’d be funded, at least in part by foreign debt, adding to our already heavily indebted state and paying interest to foreign-owned banks.

Why is paying interest to  foreign lenders not regarded as a problem if letting a foreign owner take some of the profit from their investment is so bad?


Ministers follow OIO law

April 20, 2012

Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman have approved the new recommendation of the Overseas Investment Office (OIO) to grant consent to Milk New Zealand Holding Limited to acquire the 16 Crafar farms.

“New Zealand has a transparent set of laws and regulations around overseas investment,” Mr Williamson says.

“Those rules recognise the benefits that appropriate overseas investment can bring, while providing a range of safeguards to protect New Zealanders’ interests. They are applied evenly to all applications, regardless of where they are from.

“We have sought to apply the law in accordance with the provisions of the Overseas Investment Act and the guidance of the High Court.

“We have carefully considered the OIO’s new recommendation. The OIO sought advice from Crown Law and independent legal advice from David Goddard QC. The Ministers also sought advice and clarification from Mr Goddard.

“We are satisfied that on even the most conservative approach this application meets the criteria set out in the Act and is consistent with the High Court’s judgment.”

The Ministers have followed the law, and the High Court’s stricter definition of it, as they are bound to do.

Opponents of land sale to foreigners won’t like it but the correct way to deal with that is to change the law, not to go against it.

Former Minister Chris Carter tried that with the Whangamata marina, was taken to court and lost.

Dr Coleman said the consent came with stringent conditions.

“These 27 conditions have been imposed to ensure Milk New Zealand’s investment delivers substantial and identifiable benefits to New Zealand,” Dr Coleman says.

The conditions require Milk New Zealand to invest $16 million into the farms and to protect and enhance heritage sites.

“The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial.”

The land is already in foreign hands – that of the banks and the receivers are bound to get the best price for it.

I’m not convinced they went about that the best way – the farms were offered for sale individually or as a package but I don’t know if they actively tried to market them to locals.

Whether or not they did, the best offer on the table now is the one approved today.

If the land was sold to New Zealanders they would not be required to do anything with it at all, they would not have 27 conditions imposed on them nor be required to make any further investment as the purchasers, Shanghai Pengxin, are.

A copy of the OIO’s new recommendation is here.

A copy of the OIO’s decision summary is here.


Certainty and predictability needed

April 12, 2012

Sir Graeme Harrison, chair of the  NZ International Business Forum, wants the Cabinet ministers considering the Crafar farm sale to Shanghai Pengxin to give a clear signal foreign investment is welcome here:

NZIBF chairman Sir Graeme Harrison makes the point that foreign investors are prepared to respect the rules but they need predictability and certainty that when conditions are complied with the investment will be able to proceed.

“That is why the current uncertain situation with regard to the Crafar Farms is so negative for New Zealand’s interests. It risks detracting from New Zealand’s attractiveness as an investment destination at a time when there is strong competition for foreign investment from other countries.”

Sir Graeme’s determined push follows a strong statement by Auckland Regional Chamber of Commerce chief executive Michael Barnett who railed against the way the Shanghai Pengxin bid had been demonised by late-comer bidders in an appearance on Q&A at the weekend.

Fran O’Sullivan has added Sir Graeme to her unofficial roll-call of business people who are finally stepping up and saying this country needs to protect its reputation as a fair regime for foreign investors.

But the big question is why is that only Sir Graeme, Barnett, BusinessNZ’s Phil O’Reilly and George Gould have been prepared to openly speak up for what matters in this area. The paucity of open debate on the pros of foreign investment is astounding and business does need to step up here.

One of the glaring omissions from the list is anyone from Fonterra.

I can’t understand why the company which sells most of its produce overseas and which itself owns farms in other countries, is opposed to foreign ownership here.

As Sir Graeme says, we need foreign investment to make up for our own lack of savings:

“Foreign investment is what plugs the gap in our low domestic savings rates. Without it, ratings agencies could react by increasing New Zealand’s (already high) credit risk rating and interest rates will rise.”

Would the people so strongly opposed to foreign investment be quite so sure of their stand if their mortgages increased without it?


Would they pay the creditors?

March 22, 2012

A UMR surveys shows 70% of New Zealanders oppose the sale of the Crafar Farms to overseas investors, regardless of the buyers’ nationalities.

The poll (with a sample size of 750) was commissioned by the Crafar Farms Purchase Group and was carried out the weekend before the Labour Party unveiled its revamped overseas investment policy on March 11.

Purchase Group spokesman Alan McDonald said the poll reflected the consistent view that New Zealanders oppose the sale of productive farm land to overseas investors of any nationality.

Shanghia Pengxin has offered to pay $210 million for the farms. The Crafar Farms purchase group has offered only $171.5m.

I wonder what those surveyed would think about some $40 million in debts going unpaid if the farms weren’t sold to the people who have made the only offer acceptable to the receivers so far?

Do they realise that most, if not all, of that debt is owed to unsecured creditors, most of whom will be local people and small businesses who supplied and serviced the farms?

Do they feel so strongly opposed to the sale of the farms to foreigners that they would be prepared to pay those creditors?


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