Farmers bracing for bad news from Fonterra

Fonterra have announced they’re making a payout announcement at noon on Friday. It’s outside the usual cycle of board meanings so farmers are braced for bad news.

Fonterra had already carved nearly 6 percent off its initial forecast for this season’s payout to farmers, trimming it on September 24 from $7/kg of milksolids to $6.60/kg.

It blamed a downturn in international prices and demand.

Since then, milkpowder prices on Fonterra’s regular internet auctions have slumped a further 24 percent.

In September, Fonterra chairman Henry van der Heyden said high prices had dampened global consumer demand and encouraged production increases in rival exporting nations.

Today, he warned volatility in global dairy prices was likely to be the norm, rather than the exception, in the medium-term.

“With global financial confidence tenuous at best and the inevitable lag between price signals guiding farmer decisions around production, there is every possibility of an imbalance between demand and supply influencing prices,” he said.

Established farmers with reasonable equity in their farms won’t like a lower payout but won’t be too worried by it. But those who bought established farms or undertook conversions at the top of the market and are fully geared will have more cause for concern.

Bankers have said that as long as people can service their mortgages they won’t be worried, but anyone fully stretched at the current payout of $6.60 will be very concerned at a drop, especially if as rumours suggest, it goes below $6.

Budgets can be reassessed and some costs will be reduced to take account of a lower income but costs seldom if ever go down as far or as fast as returns and the impact of a lower payout won’t be confined to farms.

The dairy boom has kept rural communities bouyant with good returns flowing through to provincial towns and cities and into the national accounts. But farmers concerned by gloomy economic forecasts have already been keeping a tighter rein on expenditure and a lower payout will make them pull back further. That will affect the people and businesses that contract to and supply them and the impact of that will filter through to the rest of the economy.

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RIP Rural Affairs Ministry

Rural Women president Margaret Chapman is upset that the Ministry of Rural Affairs is to be axed.

Rural issues extend well beyond agriculture, and in the past the Minister of Rural Affairs has had an important role to play in monitoring and overseeing a wide range of policies affecting rural communities.

 

“The Minister of Rural Affairs has had an over-arching role, ensuring the rural perspective was factored into health, education, transport, power and land access policies, to name a few,” says RWNZ National President, Margaret Chapman.  “Rural Women New Zealand has also worked with the Ministry to develop a rural impact assessment tool to ‘rural-proof’ government policy.”

 

Absorbing the Rural Affairs role into the Ministry of Agriculture threatens to dilute its effectiveness and lead to policies that fail to take into account broader rural needs at a time when vibrant agricultural businesses and service industries rely on strong communities to support them.

 

“It is vital to provide for the needs of the rural workforce to continue to grow this important sector in the New Zealand economy,” says Ms Chapman.

I agree that rural issues extend well beyond agriculture but we don’t need a separate Ministry with all the associated costs to recognise that.

The Ministry may have ensured the rural perspective was factored into many policies. But that doesn’t mean they wouldn’t have been anyway or that the Ministry of Agriculture won’t be at least as effective an advocate on rural issues.

And the rationalisation needn’t stop with Rural Affairs.

Kiwi Polemicist has a list of 60 Ministries. That seems excessive so given the dire economic outlook a cull would be in order.

Women’s Affairs, Senior Citizens and Youth Affairs would be good places to start, not because there aren’t issues which affect people in these groups, but I don’t believe they need separate ministries to address them.

I’d also be tempted to axe the Ministry of Disability Issues or merge it with Health.

The then Minister of Social Welfare, Roger Sowrey, was asked about a separate ministry of disabilities at an IHC conference in the late 1980s. He replied that while a dedicated Ministry ensured that an area received attention it also provided other Ministries with an excuse to ignore the issues because they were another Ministry’s business.

That’s a valid point. All Ministries should have regard for the affect their policies on everyone and if they did we’d get better policy at a lower cost.

NZ led with first ETS

Farmers are relieved the Emissions Trading Scheme is to be reviewed and Federated Farmers is continuing to lobby for the exclusion of animal emissions.

Feds’ President Don Nicolson has just returned from a meeting of the International Federation of Agricultural Producers and said:

They too asked us why New Zealand is going down this track when Kyoto doesn’t ask for it, doesn’t require it and doesn’t expect it.  They are shocked and concerned. 

In an address to Feds national council today he pointed out that New Zealand led the world with one ETS  but no-one else followed.

In 1985 New Zealand agriculture went cold turkey on subsidies and embraced the original ETS, an Efficiency Trading Scheme.  Aside from your Federation, no one recognised this in the lead up to the emissions trading farce. 

At the time we were told the world would follow. 

23-years later we are still waiting.  New Zealand remains the western world’s only beacon of unsubsidised agriculture.

Our mission as your Federation is to ensure the new ETS does not replicate the same mistakes of the one rushed through Parliament with indecent haste in the lead up to the general election. 

A root and branch review is one thing. 

Ensuring it does what it is meant to do is another.  A badly constructed emissions scheme will be the death knell for agriculture in New Zealand.  This is not melodrama but fact. 

There is no room in any way, shape or form for farm animals in any Emissions Trading Scheme.  

To gauge how wrong the last government got it, speak with your colleagues from Europe, the Americas, Asia and Africa.  Last week, in Canberra, they shook their heads in utter disbelief at why farm animals were included in our ETS.  

Our efficiency as farmers means we farm with the lowest carbon footprint in the world.  

New Zealand’s farmers act globally by farming locally.  I’ll repeat that, New Zealand’s farmers act globally by farming locally. 

I have a loud message for the incoming Government and for the Opposition.  Do not include or advocate for farm animals in any emissions scheme.  

Including animal emissions won’t do anything for the environment and it will come at a huge economic and social cost. That would be bad enough at the best of times let alone now when we’re facing recession and agriculture is the best means of getting the economy growing again.

If there’s a silver lining to that recession it’s that other signatories to the Kyoto Protocol might realise the stupidity of a system which imposes huge economic and social costs with little or no environmental benefit.

Even if they don’t, we have to find a way to meet our international commitments without sabotaging our economy which is what including animal emissions will do.

Noddy rides again

It’s so much easier to bring up other people’s children than your own but in spite of that I do try to restrain myself from offering new parents advice unless it’s sought – with one exception.

When I give a book to a new baby I always suggest the parents read it themselves before reading it to their offspring. That way if they don’t like it they can put it away until the baby is old enough to read it her/himself, because if they don’t like it at first reading it won’t improve with the many repeats children demand of their favourite stories.

I agree with whoever (and it may have been Tolkein but I’m not sure) said there are no good children’s books there are just good books.

When our daughter was younger I used to get as much enjoyment out of some of her favourites as she did, not just for the story they told but the way they told it.

They included Jane and the Dragon by Martin Baynton, which doesn’t let its follow your dream and girls can do anything themes get in the way of the story; Dear Zoo by Rod Campbell (which I can still recite although the toddler to whom I used to read it is now in her 20s); Babette Cole’s The Trouble with Mum, Jill Mruphy’s Five Minutes Peace (oh, how I empathised with Mrs Large’s desire for just a few child-free moments); and anything by Joy Cowley, Lynley Dodd or Pauline Cartwright.

Although if I had to choose a favourite from the latter it would be Do you know what I think?  (Do you know what I think? I think rabbits should have to clean their ears. I think giraffes should have to wash their necks . . . I have to! Every day!)

With so many wonderful books to choose from it pained me that sometimes my “You choose a story” would be rewarded with a Noddy book which had belonged to her father.

Noddy went out of fashion, at least in part because there were concerns over racism and homsexual overtures. I didn’t care about the gollywogs or Noddy’s relationship with Big Ears, I just got no pleasure in reading the stories because the language and plots were boring.

However, thanks to the pc ban at least a generation of parents and their children were safe from Enid Blyton. But parents should beware because Noddy’s making a come back.

The popular children’s character was created by English author Enid Blyton in the late 1940s. Now her granddaughter, Sophie Smallwood, is preparing to write a new Noddy adventure.

Chorion, which owns the rights to Noddy, has commissioned the new book to mark 60 years since his first adventure was published.

Smallwood could well be able to bring Noddy from the 1950s to the noughties and make the story more readable while doing so, but I won’t be rushing out to buy a copy.

Reducing distance via Skype

Getting round the country’s largest general electorate is no easy job but it becomes even more demanding for the local MP when he’s also Deputy Prime Minsiter, Finance Minsiter and Infrastructure Minister.

However, Bill English plans to use technology  to help him keep in touch with his constituents in Clutha Southland which covers 38,247 square kilometres.

Being in charge of two plum ministerial portfolios will mean more time in the Beehive for Mr English, who said he would be calling on internet video technology to make sure his face was still seen regularly in his electorate.

“It’s going to be a challenge, but I’m hoping to try a few experiments, like using Skype so that I can still do face-to-face meetings, even when I’m in Wellington,” he said.

Mr English expressed little concern over taking on the demanding position of Finance Minister at a time of international economic turmoil.

“It’s going to be a hard job with things the way they are now, but if there’s one thing I learned from my time farming in the south it’s how to be resilient.”

When Eric Roy was asked his opinion of parliament in his earlyd ays as an MP he said there were too many people up there  who’d never had a bad lambing.

Bill’s had more than his share bad lambings, literally and politically. Those experiences and the skills he used to deal with them will be invaluable in handling his demanding new responsibilities in very challenging times.

Fonterra to build on F&P site

Fonterra’s plan  to build a new hub on the former Fisehr and Paykal site at Mosgiel will create more jobs and reduce truck movements.

Fonterra says it plans to build a new 45,000 tonne drystore and a 17,000 tonne coolstore on the former 16.45ha Fisher and Paykel site at Mosgiel.

“This will mean significantly fewer truck movements on roads between the site, Port Otago and Southland,” said Fonterra’s director of group manufacturing and supply chain Gary Romano said.

“It will also achieve a further reduction in the carbon footprint of our transportation operations.”

. . . Mr Romano said the new Mosgiel site gave Fonterra a greater opportunity to use rail.

“For Fonterra, the development will mean a much simpler supply chain network in the South Island,” he said. “It will consolidate the company’s cool store operations in Dunedin – currently spread across a number of sites in the region. “It will also meet the additional storage requirements stemming from the construction of a fourth powder plant at the company’s Edendale site”.

There would be benefit for customers through improved service from a more efficient network. . .

Construction of the new store will start in July 2009, in addition to the building work, the operation will create more than 30 new jobs.