Fonterra payout good for country

May 31, 2008

The ODT see more pluses than minuses in the increased Fonterra payout:

The good:

Fonterra announces record payout to farmers of $7.90 kg of milk solids for this season; up from $4.46 last season.

The higher payout increases by $4 billion the cash injection into the economy.

It will be worth an extra $30 million to the Otago economy and an extra $70,000 in gross income to an average Otago farmer.

2008-09 opening forecast payout $7 kg of milk solids.

The bad news: Consumer dairy-product costs will rise, putting pressure on already stretched grocery budgets.

Another plus for the country, which might not be appreciated by farmers, is the increased tax that will be paid. Last season’s payout meant that most farmers made small, if any, profits. Even with the increased costs of fertiliser, feed, fuel, power and wages most farmers will have very healthy taxable profits this season.


The opening forecast of $7 for next season is also very good news – even with the cautionary advice that actual payouts can be higher or lower than initial forecasts and the uncertain international finanancail situation might mean the final payout could drop. Of course it could, but the growing demand for protein makes that unlikely.


Largely overlooked in the excitement over the increased payout was the news  that Fonterra’s fair value share price has dropped from $6.79 to $5.22.

 That’s disappointing for those wanting to get out of the industry or change suppliers – friends who are selling found themselves around $500,000 poorer after the announcement. But it will make it a little easier for people planning to sign up to Fonterra because it reduces the cost of entry. And one reason for the drop in the share price could be competition from other companies which don’t require new suppliers to buy shares, making it much cheaper for them to get in to the industry.


The increased payout and good forecast will make dairying more attractive, but excitement will be tempered by the knowledge that costs will also rise, and most won’t go down if/when the payout does. Fertiliser prices have already risen: superphosphate was $270 a tonne and is now $511; urea has gone from $690 to $948 and the price of DAP has more than doubled from $706 to $1526.



The price rise is being driven by increased international demand. It won’t be welcomed by those in dairying and will be even less welcome for sheep farmers.

Green-Maori deal could falter because of EFA

May 31, 2008

The Greens want to strike a deal  in the Maori seats to maximise the electorate vote for the Maori Party and Party vote for the Greens.

This initiative might be complicated by the Electoral Finance Act because anything which encourages people to vote for or against a party or candidate has to be authorised and accounted for. I think this would mean both parties would have to authorise and account for any spending on material in which either party sought either electorate or party votes for the other.

A post on kiwiblog  noted David Benson-Pope might have similiar problems with the Act if he ran as an independent while seeking party votes for Labour – Mike Smith would have to authorise, and account for the expense of, any material which said vote Labour.

Greens want Fonterra to subsidise consumers

May 31, 2008

Green co-leader Jeannete Fitzsimons has called on Fonterra to drop the price of milk on the domestic market.

“Today I want to issue a challenge to Fonterra. Show us you are a good Kiwi company. “Give something back to the country that has provided you with a great climate, cheap energy and hard working farmers that have allowed you to become so successful.

“Sell your products in New Zealand at a price our people can afford.”

Why just Fonterra, Jeanette? The farmers’ share  is only 35% or about three glasses, of a two litre bottle of milk. If you want consumers to be subsidised by the processor and producer why not the retailers, wholesalers, transporters and everyone else involved in getting the milk from the paddock to the shelf?

  And if you want us to subsidise you when the price is high, are you going to subsidise us when it’s low?

Oh yes, you do want to subsidise growers:

 Ms Fitzsimons also advocated a return to more traditional styles of producing food, including government subsidies for communal vegetable gardens, farmers’ markets and for schools to grow more fruit trees and vegetables.

 Where does the money from these subsidies come from? Ah yes, the tax payers, who just happen to be the same New Zealanders who Jeanette worries can’t afford food. And will this improve productivity and make food more affordable? No.

 Update: No Minister is not impressed by this suggestion either.









Aussie lamb in Gore restaurant

May 30, 2008

What’s the world coming to when a Southland farmer  pops along to his local in Gore and finds he’s chewing on Aussie chops?

Gore was built on the back of sheep farming but chomp on a chop at one of the town’s most popular restaurants and it’s likely to be Australian lamb. That’s what Wendon Valley farmer Mike Joyce discovered last weekend when he ordered rack of lamb at the Mataura Licensing Trust’s flagship restaurant-bar Howl At The Moon. When he asked the chef where it was from he was told Australia — “I was just so wild”. The chef told him New Zealand lamb was too expensive and added that the pork on the menu was from Denmark.

“The Mataura Licensing Trust does a good job but, jeez, why can’t we use our own lamb?” There would be any amount of sheep farmers willing to supply their local restaurants, cutting out the middle men and getting more for their product, Mr Joyce said.

MLT general manager John Wyeth said the trust tried to use local produce whenever possible but could not get a guaranteed supply all year round and at a reasonable price. He could appreciate Mr Joyce’s concern but it came down to cost and supply. Local produce was not necessarily the most cost-effective — “just look at the price of milk and cheese”, Mr Wyeth said.

The year round supply at a reasonable price is the key – lamb is seasonal and the price varies. It’s not hard to supply the right quality and price in the peak of the season but not many farmers are able to supply it all year round.


However, it is difficult to understand why, when the price of lamb at the farm gate is so low it’s so expensive at the butcher or a restaurant. And if Australian lamb is cheaper does that mean farmers across the Tasman get even less for their stock than we do?



You think yours is harder?

May 29, 2008

Under the heading Bleating Farmers Cactus Kate challenges any farmer to prove they actually work harder than any city worker or small business owner.


I could quote Vincent McNabb who said: “There are those who wrest a living from the land and that’s work; there are those who wrest a living from those who wrest a living from the land and that’s trade; and there are those who wrest a living from those who wrest a living from those who wrest a living from the land and that’s finance”.


I might also quote Invercargill MP Eric Roy, who when asked about his early impressions of parliament said, “There are too many people here who’ve never had a bad lambing.”


I could then talk about those weeks in late winter and early spring when you work from before dawn until after dark in the cold and wet, battling the weather, keeping your patience with recalcitrant ewes, persevering gently with lambs when experience and instinct tell you they’re almost certainly beyond help and not giving into despair when the piles of slinks mount in spite of all your efforts. I could talk about the stress of living on credit for months because your bank balance just creeps into the black once or twice a year if any combination of the market and weather and dollar and interest rates and other variables over which you have little or no control are in your favour.


I could mention the long hours, the hard physical work and mental demands of calving, and calf rearing; and how no sooner that’s over than you’re in to mating and irrigating, making silage and hay, while feed budgeting and dealing with staff some of whom don’t care about what they’re doing and how they’re doing it; don’t know how to keep themselves or their houses (which you own and they live in as part of their employment package) clean; and have no respect for their own or other people’s property.


Then there’s paying wages which isn’t just working out what the staff and the IRD are owed, but also what goes in child support, to the Ministry of Justice for overdue fines and the finance company for overdue interest and debts – in spite of them starting with a package including accommodation and wages well north of $30,000.


I could mention droughts, floods, snow and wind, pests and diseases.

I could also argue about the intellectual snobbery in Kate’s comment that farming isn’t rocket science. It’s not but that doesn’t mean a job which requires brawn doesn’t also require brains and that people who get their hands dirty don’t need to think. Farming requries a variety of physical, personal and intellectual skills including but not limited to engineering, mechanics, fencing, animal husbandry, soil, plant and vet science, accounting, budgeting, HR, determination, intuition, patience, charm and a sense of humour.


But there’s no point in the mine’s bigger/harder than yours argument about farming and other work. There is no easy way to earn a good living, wherever you’re trying to do it. Every job has its difficulties and its rewards, and the comment which occasioned Kate’s rant was an observation rather than a complaint.


It came from Charlie Pederson who said:  “When I started farming 31 years ago the average dairy herd size was 125 cows. Today it’s 347 and even at that size you are really just scratching along.”  

That could easily apply to any other small business – urban or rural  – because compliance costs and economies of scale have changed so that what would have been an economic operation, in the city or the country,  three decades ago would not be today.




Who are the Timaru Labour Government MPs?

May 29, 2008

At the left of the masthead for The Courier  is an advertisement for Aoraki MP Jo Goodhew with her contact details and the Parliamentary crest and a small National logo which is the sort of thing an electorate MP routinely does.


At the right of the same masthead is an advertisement in which the Labour logo takes up a third of the space and under this is “Timaru Government MPs’ office, your link to Government” with an address, and both a Timaru and 0800 phone number. It also carries the parliamentary crest.


Trouble is there is no person who is the Government MP for Timaru (and the placement of the apostrophe after the s means it’s referring to more than one Timaru Government MP). This means it can’t be a constituency or list MP’s or MPs’ advertisement so it must be an election advertisement – so why does it have the Parliamentary crest (which means you and I have paid for it) and why doesn’t it have authorisation as required by the EFA?


The central vetting committee which Audrey Young  reports has been set up to inspect every proposed publication by every Labour MP and candidate can’t have seen this, unless they think Labour Government MPs don’t count. Of maybe the law of common sense doesn’t apply here.


For the record, I rang both numbers and got an answer phone telling me I’d phoned the Timaru Labour Government MP’s (or maybe MPs’) office. Just wondering if you and I pay for that too.

Benson-Pope might go independent

May 29, 2008

Just what Labour needs – the ODT reports that Dunedin South MP David Benson-Pope is considering standing as an independent Labour candidate.

Mr Benson-Pope lost the contest to remain the Labour Party candidate on February 2 when he was defeated by Dunedin public relations consultant Clare Curran. Labour Party headquarters staff were on hand to ensure Mr Benson-Pope did not win and some last-minute shifts in support left the MP without the votes to retain the nomination.

This is what happens when the rules enable HQ to out vote the locals.

Mr Benson-Pope has been highly visible in the electorate this year. He has always been regarded as a hard-working and effective MP but seems to be putting an extra effort into his work in recent months.

The Otago Daily Times understands the MP has been telling people in the electorate that, under MMP, they had a choice of voting for Labour with their party vote but that they could vote for any of the candidates.

Inquiries by the newspaper found a high level of discontent in parts of the electorate, particularly centred on the South Dunedin branch, which has the money and the people to mount a campaign in support of Mr Benson-Pope.

A women’s branch has disaffiliated itself from Dunedin South and is considering its options, which include affiliating to the Dunedin North electorate or the party’s Otago regional council.

The South Dunedin branch is now controlled by supporters of the MP, although Labour Electorate Committee chairman Richard Good said yesterday the public comment from the branch was “nothing but 100%” behind Ms Curran.

Public comment might be, but the last thing a new candidate, or the Party, need is the incumbent and his supporters working on a different agenda.


When approached for comment, Mr Benson-Pope was reluctant to make any public statements, but did give a brief response: “My loyalty to the party is beyond question and I don’t intend to change that. I understand what loyalty means.”

However, the ODT was told Mr Benson-Pope seemed out for revenge and a few people were “baying for blood” within the South Dunedin branch.

Progressive Party leader Jim Anderton and United Future leader Peter Dunne have both proved that Labour MPs can leave the party but retain enough local support to win their electorates with handsome margins.

Mr Anderton, now loyally behind the Labour-led Government, despite having major personal and political differences with Prime Minister Helen Clark, left to form New Labour. Mr Dunne resigned to position himself for the introduction of MMP in 1996.

Individuals can go independent and win seats, but it’s almost always better for parties if they don’t.

Mr Dunne said under MMP, loyal Labour supporters could give their party vote to Labour but still vote for Mr Benson-Pope and feel their honour was satisfied.

“Effective local MPs under MMP can stand out against a national trend politically.”

Two examples were Labour MP Harry Duynhoven, in New Plymouth, who held the seat with the largest majority in New Zealand while National took the party vote, and National Party MP Nick Smith, who was popular in Nelson but Labour was often ahead in the party vote, Mr Dunne said.

Or Dunne who wins the electorate but the party vote still goes to Labour or National.

Ms Curran said her campaign committee was working well and she had a team of 60 or 70 volunteers preparing to deliver 25,000 leaflets to every household in the electorate.

“There are some members of the party in Dunedin South who found the selection process painful.”

Full marks for restraint when she must be spitting tacks. Benson-Pope won the seat by around 10,000 votes but National candidate, Conway Powell, knocked his majority, and the all important party vote, back by about 5,000 compared with 2002. I’m not going to predict a National win in a deep red seat, but internal ructions always help the other side so even if Benson-Pope doesn’t stand there is enough bad blood being spilt to do some harm to Labour.

Update 1: Monkeys with Typewriters  notes Benson-Pope’s declaration of loyalty to Labour today which reminded me of this declaration  “I’m a loyal Labour Party person,” when questioned about standing as an independent in November last year.

Update 2: David Farrar  points out that if Benson-Pope won the seat as an independent it might help Labour as he’d vote with them and if he takes the seat they’d get another list MP.


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