Rural round-up

May 9, 2014

Solid Energy sells farms - Collette Devlin:

Solid Energy has sold its Southland dairy farms, but the state-owned company is yet to release the price it got.

About 2,000 hectares of the Eastern Southland rural property was sold by tender.

The properties included three dairy farms, two dairy support or conversion farms, and four properties considered as dairy support farms.

The farms, ranging from 33ha to 399ha, were within a 5-kilometre radius between Mataura and Gore.
Solid Energy bought the properties to secure access to the large lignite coal resource in the district, but no longer required the land. . .

Robo cows ready for milking – Diane Joyce:

Robots will be milking cows in Havelock North by early next year, and everyone will be able to stop in and see for themselves how it works.

Dairy farming could become a substantial earner for Hawke’s Bay if the latest robot technology is taken up by farmers, says the man behind the plan, Michael Whittaker.

A state-of-the-art 3500 square metre dairy barn is being built, in which the cows will decide how often they want to be milked and how often they want to head outside into the sunshine. For the 120 cows there will be two “self-milking” bays, to which the cows can wander whenever they chose. . .

Steady rise in milk prices over 50 years – Andrea Fox:

The milk price paid to dairy farmers has increased by an average of 11c a kilogram of milksolids a year over the past 50 years, new analysis by DairyNZ shows.

For DairyNZ senior economist Matthew Newman that was one of most interesting findings of the industry organisation’s economic survey for 2012-13, which also marked 50 years of economic analysis of key financial data from dairy farmers.

“That the milk price has continued to increase is not a recent phenomenon, although in the last 25 years it has shown more volatility and even increased volatility in the past six or seven years,” Newman said.

The trend had implications for farmers around risk management and how to manage changing prices, he said.  . .

MBIE’s dairy farm employee position statement positive:

With the employment practices of dairy farmers in the media spotlight, the Ministry for Business, Innovation and Employment’s (MBIE) Labour Inspectorate’s newly released position statement, is to be followed up by both Federated Farmers and DairyNZ.

“Dairy farmers can expect a joint Industry Best Practice Guidance note next week,” says Katie Milne, Federated Farmers employment spokesperson.

“Both Federated Farmers and DairyNZ endorses MBIE’s common sense position statement, which not only reminds employers about the Minimum Wage Act 1983, but reminds them ‘seasonal averaging’ has gone the same way as 245-T. . . .

Scales’ target continued growth - Alan Williams:

Apple grower Scales Corporation expects to lift production every year until about 2020 to take advantage of increasing demand in Asian and Middle East markets.

Apple consumption was growing strongly in big-population markets such as Thailand, China, Taiwan, and the United Arab Emirates, and was growing in India, chief executive Andy Borland said.

Scales subsidiary Mr Apple had been steadily replanting its Hawke’s Bay orchards with redder, sweet varieties such as Gala, NZ Queen, and Fuji, Borland said.

It was getting the increased production now and that would continue, because apples took 5-7 years to reach production peak, he said. . .

Tasked to wake sleeping giant – Alan Williams:

Nick Berry is off to work for the opposition, but he has never seen it that way.

In his 30 years in Fonterra’s retail store business RD1, it was always RD1 as a dairy specialist and PGG Wrightson a sheep-and-beef farm supplier.

“We didn’t see Wrightson as a real competitor. It was more CRT and Farmlands as the competitors,” Berry said.

Because of that background it isn’t such a big wrench that he’s going now to help Wrightson build its supply network to dairy farmers.

“We spoke of it as more of a sleeping giant, with its 100-plus stores, and I’ll be happy to help it grow,” he said. . .


Rural round-up

May 5, 2014

Luxury lifestyle pays milksolids dividend - Heather Chalmers:

The middle of the Mid-Canterbury plains is an unlikely place to find two massive barns housing milking cows.

Unlike New Zealand’s typical outdoors pastoral grazing system, the 950 cows from Pannetts Dairies’ herd at Mitcham, near Rakaia, spend most of their milking season inside the purpose-built barns.

While cows are free to wander out to paddocks if they wish, it is no wonder they prefer the indoors life, where their every need is catered for. As well as having a nutritionally complete feed available at all times, cows can rest on one of the 940 individual beds lined with rubber mats and make use of an automated back scratcher resembling a carwash brush. Using the barn system, cows will be milked and calve year round, rather than the more typical spring-calving seasonal production. . .

Living at the mercy of milk prices – Lyn Webster:

Being a non-shareholding supplier, my only vested interest in Fonterra is my cows and machinery.

In the perfect world I should be raking in enough cash to pay my lease, increase production and start buying my own shares.

But at the rate I’m going with drought and drying off early and doing eff-all production, it seems like a bad joke and I continue to rely on the farm owners’ shareholding to supply milk.

I am in a strange position as most dairy farmers own both cows and company shares, but I am also not alone because I bet there are many sharemilkers out there whose contracts changed after TAF and they are receiving milk price only and no dividend. . .

 Truffle season ready to delight – Ashley Walmsley:

THEY probably aren’t going to fill the winter fruit bowl of most kitchens but Australian black truffles are now in season.

One truffle expert is doing her best to educate Australians on exactly what to do with the highly prized delicacy.

Sara Hinchey of Melbourne’s Truffle Hound said even those without royal (French or Italian) blood can revel in the rich yield of black truffles from the colder regions of the nation.

Ms Hinchey’s expertise has led her to team up with several leading Melbourne restaurateurs in a series of special dinners and workshops to showcase a range of ways to prepare and consume this extraordinary and little understood subterranean mushroom. . .

An affinity for the rural sector – Sally Rae:

When David Paterson started work as a rural valuer more than 30 years ago, things were very different.

A day could be spent walking over a farm using rudimentary equipment, as there was no such thing as digital cameras or GPS units.

”When I started in 1981, you’d sit on top of a hill and look down and try and draw on the map where a gully was. Nowadays, of course, technology really has taken control,” Mr Paterson, the Dunedin-based national manager for Rural Value, said. . .

Interest in 9 dairy farms ‘positive‘ – Simon Hartley:

The likely multimillion-dollar sale of nine Southland farms owned by debt-ridden state-owned enterprise Solid Energy appear set to be concluded.

In what was considered one of the largest multi-farm offerings in the country, tenders closed a month ago on the more than 2000ha of the combined nine farms, which covered millions of tonnes of low-grade lignite coal.

PGG Wrightson real estate general manager Peter Newbold had been confident of interest in the farms, given recent demand for dairy land had exceeded supply. . . .

Budget 2014: New funding for rural and Māori housing:

The Government has announced new funding of $16 million over four years to support the repair and rebuild of rural housing, the improvement of housing on the Chatham Islands and the development of Māori social housing providers.

“New Zealanders living in remote rural areas face a number of unique and often difficult challenges, including the cost and availability of decent housing,” Associate Housing Minister Tariana Turia says.

“That is why the Government has allocated funding to improve housing in rural New Zealand, including the Chatham Islands. Compared to the rest of the population, significantly more Māori are experiencing housing deprivation and are more likely to be state tenants or renters than home owners.

“Iwi are incorporating housing into their long-term planning and the Government currently has accords with at least five iwi. Budget 2014 will take major steps to help iwi and the Crown achieve these housing aspirations. . . .


Rural round-up

February 13, 2014

Farming confidence bodes well for Southern Field Days – Diane Bishop:

Southern Field Days is the place to be.

That’s according to 789 exhibitors who will showcase their wares at the South Island’s largest rural expo – the Southern Field Days – which starts at Waimumu near Gore today and continues tomorrow and Friday.

Schouten Machines managing director Marcel van Hazendonk said it was his second time exhibiting at the field days.

“You’ve got to be here. It’s important for exhibitors because if you’re not here you could be missing out on business,” Mr van Hazendonk said.

Southern Field Days chairman Mark Dillon expected there would be a “mad rush” this morning as exhibitors completed their sites in readiness for the crowds. “As long as the weather stays like this it will be fantastic,” he said. . .

Not much in farming qualifies as natural - Doug Edmeades:

The word “natural” and its derivatives such as “nature’s way”, “nature’s own”, “grown naturally”, a “product of nature” and “naturally organic” are tossed into product advertising like minties at a lolly scramble.

They convey a feeling that something, a product or a process, is honest and true, as in the way Mother Nature intended, and not artificial or false, in the sense of being man- made.

The implication is always that nature’s way is better than man’s way or more specifically, mankind has screwed nature and we must now bow our heads in penitential shame.

I thought it was time to play with this idea. Is our clover-based pastoral system natural? . . .

LIC’s half-year profit dips - Alan Williams:

Sales were higher but costs of a rebuild of the database and technology platform bit into LIC’s half-year profits.

The dairy genetics company reported today an after-tax profit of $26.9 million for the six months ended November 30 on sales of $135m.

In the same period a year earlier the profit was $30m on sales of $131.2m. Earnings per investment share slipped to 91.3c from $1.01.

High milk prices and stable weather had encouraged farmers to increase investment in a range of information management tools, chairman Murray King said. . . .

 

Solid Energy farm blocks for sale – Lauren Hayes:

More than 2000 hectares of farmland has been put on the market in Eastern Southland.

The land is owned by Solid Energy and is being sold, as one of the largest offerings of New Zealand dairy land, through PGG Wrightson Real Estate.

PGG Wrightson Real Estate general manager Peter Newbold said the block was made up of nine farms, three of which were dairy farms and six of which could be dairy support properties or dairy conversions. . .

 

Progress For Wool:

Over 100 New Zealand wool industry members gathered in late January to listen to international wool leaders discuss the significant progress being made on a global scale by both the Campaign for Wool and International Wool and Textile Organisation (IWTO).

Peter Ackroyd the President of the International Wool and Textile Organisation (IWTO) and Chief Operating Officer of the Campaign for Wool and Ian Hartley, the Chief Executive of the British Wool Marketing Board shared the stage.

Ackroyd shared the background and benefits of the International Wool and Textile Organisation including internationally recognised procedures which are fundamental to trade and manufacturing, coordinated environmental standards, and standardising environmental “foot printing”. . .

February 2014 – Rabobank Agribusiness Monthly & Rural Economics Monthly:

The Rabobank Agribusiness Monthly provides timely information and analysis on agricultural conditions, commodity price updates and commentary on the latest sectoral trends and developments. In conjunction, the Rural Economics Monthly provides a useful overview of the key macro developments in the local and global economies while also covering specific economic developments relevant to New Zealand and Australian agricultural sectors.

Key highlights
Agribusiness Monthly

• Beef – Strong Chinese demand drives growth in beef exports

• Dairy – Chinese supply issues to drive commodity markets in 2014

• Other costs – Baltic Dry Index weak as global economy takes wrong turn

• Fertilizer – All eyes on demand fundamentals in 2014

• Climate – Mostly normal outlook for New Zealand

• Currency – New Zealand dollar supported by solid economic growth . . .

The full report is here.

Nitrogen management made easy by new farming app:

A next-generation product for nitrogen management on-farm will be launched by the innovative Kiwi start-up company, Regen, at the Southern Field Days in Waimumu beginning this Wednesday the12th of February.

Regen, who successfully launched “ReGen Effluent” are now bringing to market “ReGen Nitrogen” – a powerful yet simple product that assists farmers make real-time decisions about fertiliser application.

“ReGen Nitrogen uses on-farm data such as climate and soil information. It calculates the expected response from nitrogen application on any given day and advises the farmer for or against application and the reasons why. The product calculates the kilograms of dry matter likely to be achieved from each kilogram of nitrogen, given the prevailing climate and soil conditions. It also calculates how many cents per kilogram of dry matter that response rate would equate to,” says Bridgit Hawkins, Chief Executive Officer & Director at Regen. . . .


If question is wrong how can any answer be valid?

November 27, 2013

The question on the politicians’ initiated referendum asks: do you support the Government selling up to 49% of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand.

Several people have pointed out that those who want more than 49% sold could vote no.

That would be taken as opposition to any sale when that’s the opposite of their view which favours total sales.

Then there’s the name of one of the companies – if Google is to be believed Genesis Energy is an SOE but I couldn’t find a Genesis Power.

There is another even more fundamental flaw in the question – the Government hasn’t sold and isn’t planning to sell up to 49% of Air New Zealand.

It didn’t own 100% of the shares in the first place and sold only 20% of the total, retaining 53%.

If the question is wrong, how can any answer be valid?


A big loss is a good deal?

October 6, 2013

Quote of the day:

. . .In terms of repayment, the banks’ “equity” stands somewhere near the contractor who cleans the windows at company headquarters.

If the Green Party really believes that kind of ownership is a kind worth buying, then heaven help the taxpayer when it gets near the purse strings of the Treasury. . . Hamish Rutherford

He was writing about Gareth Hughes’s view that banks taking a huge loss with Solid Energy was somehow privatisation by stealth.

Does he really believe that accepting a big loss in the hope that it will prevent an even bigger one makes it a good deal for the banks?

If so he merely confirms that he and his party don’t understand finance and business.


335.4m plus reasons for privatisation

October 6, 2013

Solid Energy has declared a $335.4m loss for the year to the end of June.

The Labour Party wants an investigation.

But they won’t want an answer to the most important question – why is the state involved in this business at all?

Coal isn’t a strategic asset. There is a good number of people who would prefer it was left in the ground.

There is no logical reason for the state to own the company and the loss, added to the cost of the rescue plan agreed between the government and banks this week, provides 335.4m plus reasons why it should be sold as soon as it’s in a fit state to be floated.


Banks will be more cautious with SOEs after Solid Energy bail out

October 2, 2013

The government and banks have agreed to a proposal to financially restructure Solid Energy Finance Minister Bill English and Minister for State Owned Enterprises Tony Ryall announced.

“As we have said previously, ministers were not prepared to expose taxpayers to on-going losses if Solid Energy’s core business was not considered viable,” Mr English says.

“However, we also said that we were prepared to provide support for the company if there was a reasonable chance it could be made viable, and we expected the lenders to also contribute to that recovery,” he says.

Mr Ryall says that although the company still has a lot of work to do, and market conditions remain challenging, the point has now been reached where a financial restructuring proposal can be formalised with Solid Energy’s key lenders.

“The proposed restructuring will give the company more time to work through the issues it faces, as it continues to focus on its core coal business,” Mr Ryall says.

The proposal includes:

  • A restructuring of the bulk of the company’s bank facilities.
  • The company issuing $100 million in non-voting redeemable preference shares – $75 million to key lenders in exchange for part of the debt owed to them, and $25 million to the Crown in exchange for cash.
  • A secured working capital loan of $50 million provided by the Crown, repayable within three years.
  • A secured land mortgage of $50 million provided by the Crown, repayable within three years.

Ministers have also agreed to a secured standby facility of up to $30 million, provided by the Crown, if required.

“Holders of the company’s medium term notes are being asked to agree to waive some of their rights to enable the company to put the financial restructuring proposal forward to lenders,” Mr Ryall says.

“The process to formally adopt the proposal is now underway and is expected to be complete by the end of the month.”

Mr English says the Government’s financial statements for the year to June 30 2013, to be issued next Monday, will include the financial impact of the proposed agreement, including the $25 million cash injection and $100 million of loan facilities and the $30 million standby facility.

“After many months of complex discussions between the Crown, the company and its key lenders we welcome this next step to move the company forward,” Mr English says.

The Green Party shows its idealogical blindness by calling this privatisation by stealth.

Four foreign-owned banks – ANZ, BNZ, ASB and Westpac – will take a $75 million ownership stake in Solid Energy in return for writing off debt. . .

Banks are in fact are taking an expensive haircut.

Banks that lent unsustainable amounts of debt to state-owned coal miner Solid Energy are taking a $75 million “hair-cut”, dressed up as an issue of redeemable preference shares that may never be repaid. . .

English signalled in February, when the problems were announced, that the government expected the banks to take a share of the burden of adjustment created by Solid Energy investing too heavily in experimental new energy forms.

Had the company not been an SOE banks would have been a lot more wary about lending so much to it.

Now they know the government isn’t going to be prepared to carry the full costs of an SOE’s losses they will be more cautious about lending to them in future.

Rather than complaining that this is privatisation by stealth we should be grateful banks are sharing the loss and questioning why the government owned a company like this in the first place.

It’s evidence in the case for privatisation not against it.


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