Word of the day

May 29, 2013

Mumpsimus – adherence to or persistence in an erroneous use of language, memorization, practice, belief, etc., out of habit or obstinacy;  a traditional custom or notion adhered to although shown to be unreasonable; someone person who obstinately adheres to such a custom or notion; an ignorant and bigoted opponent of reform.


Rural round-up

May 29, 2013

Farms’ history recognised – Helena de Reus:

Long-term farmers were praised for their resilience and hard work, at the New Zealand Century Farm and Station Awards in Lawrence on Saturday.

Guest speaker Primary Industries Minister Nathan Guy said his dairy farm at Levin had been in the family for 80 years, and he hoped to return to Lawrence in 20 years to receive a century farm award.

”Our country isn’t that old, and history is important. Tonight is an opportunity to look back at our pioneer farmers.”

The resilience of farming communities and family was on display at the awards, he said. . .

Federated Farmers’ youngest provincial president elected this year:

Federated Farmers Hawke’s Bay has elected 36-year old Will Foley as its new Hawke’s Bay provincial president, replacing Bruce Wills, who will now focus on his role as National President. Will Foley is the youngest provincial president elected in Federated Farmers’ class of 2013.

“I must pay tribute to Bruce Wills, who has positively led Federated Farmers in the Hawke’s Bay,” says Will Foley, Federated Farmers Hawke’s Bay provincial president.

“I guess my election means Bruce will be able to focus on his national role. After being elected Bruce quipped about me, “he is about half my age and with a lot more hair”.

“As a sheep and beef farmer in Waipukurau, you can say I have a strong interest in water given the effect of the current drought has had upon us. . .

It’s time to move – James Houghton:

They say moving house is one of life’s most stressful events, but for sharemilkers it can be an annual occurrence. Not only do they pack up their homes; they move hundreds of animals and farm equipment.

May 31 and/or June 1 are often called “Gypsy Day”, but actually, it is a chaotic week as moving sharemilkers get everything ready to go to a new farm, which could be down the road or in a different part of the country.

Anyone on the move this weekend needs to keep in mind the need to keep stock off greenfeed before transporting to lessen the chance of spilling effluent on the roads, a potential hazard for other motorists and environmental pollutant. . .

Ballance Agri-Nutrients to sponsor Dairy Women’s Network:

Fertiliser company Ballance Agri-Nutrients has confirmed it will be the new prime sponsor of the Dairy Women’s Network from 1 June 2013. The new partnership will significantly boost the Network’s ability to provide more opportunities for dairy farming women to improve their skills and leadership in the business of dairying.

Ballance general manager agro-science and marketing, Liz Muller, said that in farm ownership and partnerships, women are involved in many of the key business decisions.

“It is often women who take the lead role in areas such as farm finances, staff management, animal welfare, safety and on-farm compliance, yet they are under-represented on farmer co-operative boards of directors and industry agencies. Ballance is taking an active role in helping dairying women develop their leadership skills by supporting organisations such as the Dairy Women’s Network, which is focused on developing female leaders. We want to see more women in influential roles contributing to the success and direction of the industry.” . . .

Launch of Seafood New Zealand at Parliament:

New Zealand’s seafood industry body, Seafood New Zealand, will be officially launched at a function, hosted by the Minister for Primary Industries, at Parliament tonight.

“Seafood New Zealand was set up late last year to be more responsive to market and industry changes, following significant consultation with wider industry,” says Eric Barratt, Chair of Seafood New Zealand.

“Less than ten years ago our main export market was the US. Today the focus is on China and north Asian markets that are growing much faster, with the other markets relatively stable. . . .

Children’s Honey From NZ Becoming a Global Success Story:

New Zealand’s oldest honey brand says parents across the world are recognising the health and quality benefits of feeding New Zealand honey to their children.

According to Airborne Honey, New Zealand’s oldest and most trusted honey brand, and one of the country’s largest honey exporters, children’s honey products are becoming increasingly popular both in New Zealand and further afield.

John Smart, Airborne Honey Sales and Marketing Manager, explains that this is largely due to improved education around the health benefits of honey, as well as international confidence in the safety and quality of honey produced in New Zealand. . .


We can get $7

May 29, 2013

Fonterra has announced an opening forecast Farmgate Milk Price of $7.00 per kgMS for the 2013/14 season – up $1.20 on the current season.

In addition, the Co-operative confirmed a higher Advance Rate schedule, with an opening rate of $5.00 per kgMS, reflecting the higher forecast Farmgate Milk Price for 2013/14.

This payout with a relatively high dollar reflects an expectation that the demand for milk will hold up.

The Board will announce its forecast Cash Payout – which comprises the Forecast Farmgate Milk Price and dividend for the 2013/14 season – in July when Fonterra’s budget is completed and approved.

Chairman John Wilson said the higher forecast Milk Price for the new season reflected continuing strong international prices for dairy.

“The general consensus is that dairy commodity prices have peaked but will continue at or near current levels until the fourth quarter of 2013. Most external forecasts point to prices remaining relatively strong through 2014.”

Commenting on the Advance Rate increase Mr Wilson said: “A stronger forecast Farmgate Milk Price, supported by our improving cash flows and strong balance sheet, means we are able to lift the Advance Rate for the new season to ensure farmers receive higher payments for their milk early in the season.

“A large proportion of our farmer shareholders have experienced drought conditions, which have had a significant impact on feed costs and production, resulting in early drying off of their herds.

A higher Advance Rate at the start of the new season will help our shareholders in managing their farming businesses to ensure an ongoing supply of high quality milk to the Co-operative,” said Mr Wilson.

Market Factors Influencing the Milk Price

Chief Executive Theo Spierings said the fundamental supply and demand balance has shifted: “Global milk production growth is slowing as a result of unfavourable weather conditions in many key milk production regions.

“Although we are seeing modest production growth in the USA, recent cold conditions in Europe have had a negative impact on crops and dairy, and the outlook remains mixed.

“Milk production growth in 2013 for the top 15 exporting countries is projected at 0.5 per cent or 1.2 billion litres – well below the 1.8 per cent (4.5 billion litres) growth levels we saw in 2012.

“In general, the global economic outlook remains steady but with some downside risk. In the USA modest growth continues, while China has managed a soft landing with the consensus on growth at around 7.8 per cent.

“While we expect most farmer shareholders will welcome a higher Milk Price, we will continue to closely monitor these key factors contributing to Fonterra’s opening forecast for the 2013/14 season.”

Mr Spierings said Fonterra was currently preparing its budgets for 2014, however, shareholders and unit holders should expect the strong uplift in international dairy powder prices to create a more challenging environment for Fonterra’s earnings in the first half of the 2014 financial year.

2012/13 Forecast

The Co-operative also confirmed today that it is holding its current forecast Farmgate Milk Price for the 2012/13 season at $5.80 per kgMS, and a forecast dividend of 32 cents per share, amounting to a cash Payout of $6.12 for a fully shared-up farmer.

“We are maintaining our current season forecast but advising farmers to be cautious in managing their budgets as we have seen a sharp drop in milk volumes as a result of the drought, and recent declines in GlobalDairyTrade auction results,” said Mr Wilson.

Raw Milk Regulation Change

Fonterra welcomed changes to Raw Milk Regulations that will apply from June 1.

“This season is the last when competitors can cherry pick when they get milk during the season, and it has coincided with the drought and the recent higher export prices.

“This meant Fonterra was required to supply large volumes of milk to competitors when milk flows were very low because of the drought, reducing the utilisation of our factories.

“At current prices, we estimate that the milk we have supplied our export competitors from March to May will cost our shareholders about $25 million in lost earnings, amounting to 1.5 cents per share in lost earnings.

“At the same time we estimate that due to the drought the benefit to our competitors is far greater, with the potential to add between 5 – 30 cents per kgMS to their performance.

“As this year’s drought has shown us, the Government did the right thing in changing the Raw Milk Regulations last year,” said Mr Wilson.

A forecast payout is just a forecast, it can change. But the board and management do their best to neither over nor under promise so suppliers have reasonable certainty when budgeting.


NZ scores well on Better Life Index

May 29, 2013

New Zealand scores well on the OCED’s Better Life Index which ranks countries on quality of life factors including education, health, housing and income.

The commentary for New Zealand says:

New Zealand performs exceptionally well in overall well-being, as shown by the fact that it ranks among the top countries in a large number of topics in the Better Life Index.

Money, while it cannot buy happiness, is an important means to achieving higher living standards. In New-Zealand, the average household net-adjusted disposable income is 21 892 USD a year, less than the OECD average of 23 047 USD a year. But there is a considerable gap between the richest and poorest – the top 20% of the population earn five times as much as the bottom 20%.

In terms of employment, 73% of people aged 15 to 64 in New-Zealand have a paid job, above the OECD employment average of 66%. Some 78% of men are in paid work, compared with 67% of women. People in New-Zealand work 1 762 hours a year, slightly less than the OECD average of 1 776 hours. Around 13% of employees work very long hours, more than the OECD average of 9%, with 20% of men working very long hours compared with 6% for women.

Having a good education is an important requisite for finding a job. In New-Zealand, 73% of adults aged 25-64 have earned the equivalent of a high-school degree, close to the OECD average of 74%. This is slightly truer of men than women, as 74% of men have successfully completed high-school compared with 72% of women. New-Zealand is a top-performing country in terms of the quality of its educational system. The average student scored 524 in reading literacy, maths and science in the OECD’s Programme for International Student Assessment (PISA). This score is higher than the OECD average of 497, making New-Zealand one of the strongest OECD countries in students’ skills. On average in New-Zealand, girls outperformed boys by 15 points, higher than the average OECD gap of 9 points. 

In terms of health, life expectancy at birth in New-Zealand is 81 years, one year higher than the OECD average of 80 years. Life expectancy for women is 83 years, compared with 79 for men. The level of atmospheric PM10 – tiny air pollutant particles small enough to enter and cause damage to the lungs –is 12 micrograms per cubic meter, considerably lower than the OECD average of 21 micrograms per cubic meter. New-Zealand also does well in terms of water quality, as 88% of people say they are satisfied with the quality of their water, higher than the 84% OECD average.

Concerning the public sphere, there is a strong sense of community and high levels of civic participation in New-Zealand, where 93% of people believe that they know someone they could rely on in time of need, higher than the OECD average of 90%. Voter turnout, a measure of public trust in government and of citizens’ participation in the political process, was 74% during recent elections, higher than the OECD average of 72%. Voter turnout for the top 20% of the population is an estimated 81%, whereas the participation rate of the bottom 20% is an estimated 75%. This 6 percentage point difference is lower than the OECD average difference of 12 percentage points, and suggests there is broad social inclusion in New Zealand’s democratic institutions.

In general, 83% of people in New-Zealand say they have more positive experiences in an average day (feelings of rest, pride in accomplishment, enjoyment, etc) than negative ones (pain, worry, sadness, boredom, etc), more than OECD average of 80%.


Who should feed the children?

May 29, 2013

In an ideal world all parents would take responsibility for looking after their children.

In a less than ideal world, there are times someone else has to help, for the children’s sakes.

The KickStart breakfast programme is a partnership between government, business and charity which is a good mix.

Prime Minister John Key today announced Government funding to expand Fonterra and Sanitarium’s KickStart Breakfast programme, and a grant to KidsCan to boost a variety of the charity’s initiatives.

“By teaming up with Fonterra and Sanitarium, and deepening our support for KidsCan, we are building on the existing strengths of these organisations, while keeping the costs to taxpayers down,” says Mr Key.

“The most enduring solutions to help vulnerable children and families happen when communities are stepping up – not just government.” . . .

The government should be the last resort, and initiatives like this usually work best when they start with communities helping themselves.

It would however, be better if there was no need for this sort of assistance.

“I’d like to make one thing clear – the Government believes parents have the primary responsibility for providing their kids with the basics, including a decent breakfast and a pair of shoes.

“But the fact remains that some children are going to school hungry and therefore not in good shape to learn.” . . .

Social Development Minister Paula Bennett reinforces that point:

“Parents are responsible for feeding their children. But we can’t ignore the fact that some children turn up hungry and can’t learn on an empty stomach.”

“We don’t want to replace parental responsibility, but the Government,  community, non-government organisations and business partners all have a shared responsibility for children,” says Mrs Bennett. . .

The policy has been criticised from the right for going too far and from the left for not going far enough.

John Banks says the food in schools programme is a band-aid that won’t fix the problem.

. . . “Rather than create a new welfare scheme, we should be looking at why kids are going to school hungry. We should then look closely at the assistance already in place.

“What we shouldn’t do is shift responsibility away from parents to government. This will only have negative and unintended consequences, and evidence has shown that food in school programmes are not effective.” . . .

I have some sympathy with that view but if parents let their children down, do we turn a blind eye?

Children are going to school hungry, people understandably don’t think this is acceptable and even though research shows it might not make a difference, they want action.

At least this initiative is voluntary – schools can opt in or not, and children can choose to eat the food which is offered, or not.

That should minimise waste and ensure the children whose parents let them down can have breakfast if they want it.


Will we get $7?

May 29, 2013

The latest BNZ Market Outlook * is optimistic about the price of milk:

The new season’s payout forecast should be well above
the current estimate ($6.25 to $6.30) for the season just
ending. We have long had $6.60 (milk plus profit) on the
board as an initial pick for the new season. But the upside
risks have grown considerably with world prices holding
up a little better than expected and particularly with the
decent dip in the NZD over recent weeks. We would not
be that surprised to see $7.00. That would be a positive
signal of global dairy market confidence from Fonterra.

Fonterra will announce the new season’s forecast today.

If it’s anywhere near $7 it would make farmers, their staff, suppliers and bankers very happy.

The wider economy would also get a boost.

To put some perspective on the importance of dairy
sector returns, it is worth remembering that dairy
products account for more than a quarter of New
Zealand’s merchandise exports. A total (milk plus profit)
payout forecast of $7.00 along with our assumed 6% lift
in next season’s milk production is indicative of total dairy
industry revenue being almost $2 billion higher than that
of the previous season. Such an outcome would be a cash
injection to the economy in the order of 1% of GDP over
the coming 18 months, a clear strong support to growth.

* This week’s Market Outlook isn’t online yet but will be here.


Real seasons

May 29, 2013

“I like the idea of real seasons,” he said, ” but  I’m not so keen on the reality of winter temperatures.”

“I understand why,” she said, “but if it’s not hot enough to swim it might as well be cold enough to ski.”


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