Word of the day

November 29, 2013

Symploce –  a rhetorical term for the repetition of words or phrases at both the beginning and end of successive clauses or verses; simultaneous use of anaphora and epistrophe.


Rural round-up

November 29, 2013

Irrigation ‘doesn’t always mean dairying’ – Tim Fulton:

A farm adviser who did financial estimates for the Ruataniwha and Central Plains irrigation schemes says access to irrigation doesn’t lead farmers automatically to dairying.

Hugh Eaton, from Macfarlane Rural Business, outlined the options at an irrigation field day at the Rathgen family’s mixed-farming operation near Timaru.

The Rathgens have a home farm at Esk Valley, a dairy block at St Andrews and another at nearby Otaio, some of which may join the proposed Hunter Downs scheme. . .

Nitrate in Canterbury groundwater – Carl Hanson:

Nitrate concentrations in Canterbury groundwater have been prominent in the media recently. Headlines have included phrases like “ticking time bomb”, “scaremongering” and “freaking out much of Canterbury”.

What I want to do in this article is to present the state of nitrate concentrations in Canterbury groundwater, and the trends we see in those concentrations, as objectively as I can, avoiding any emotive language.

First, the concentrations. Based on the data from our regional long-term monitoring programme, which includes approximately 300 wells distributed across the region, nitrate concentrations in Canterbury groundwater fall into two groups:

Sharing ideas in the global farming village – Sue O’Dowd:

Taranaki sheep and beef farming identity Bryan Hocken loves to play host.

He presents a unique blend of bonhomie, humour, a passion for his industry and a ready-to-share approach to anyone who happens to pop along to his 485 hectare Tarata farm, about 25 kilometres east of Inglewood.

Not that you would just pop along.

The farm seems remote after a picturesque drive over the winding Tarata Saddle and along the 3km Toe Toe Rd beside the Waitara River.

On the journey traffic is scarce so a single traffic light in the middle of nowhere on the road to the farm raises a chuckle – as do a plethora of signs saying things like “Wannabe Dairy Farm” and “High St”. . .

Synlait Farms shareholders keen to cash in – Alan Williams:

Synlait Farms shareholders have raced to cash in on the takeover offer led by China’s Shanghai Pengxin group.

The acceptance level had reached 91.16% by last Tuesday, meeting the 90% minimum level that was a condition of the offer just more than three weeks after the offer was received by shareholders and well inside the original December 6 closing date.

SFL Holdings, the vehicle through which Shanghai Pengxin and partners Juliet Maclean and John Penno are making the offer, has extended the date to December 20. . .

Research into apricots ‘exciting’ – Yvonne O’Hara:

Research being carried out at Plant and Food Research (PFR) in Clyde will contribute to higher-quality and better-tasting apricots that ripen more slowly and reach overseas markets in better condition.

Scientist Jill Stanley, based in Clyde, and Dr Ringo Feng, who is based in Auckland, are looking at fruit respiration and ethylene production, as well as fruit maturity, light levels, wood age and atmospheric modification.

Ethylene is a naturally-occurring gaseous hormone given off by the fruit, which accelerates ripening. A range of seedlings have been bred at the Clyde Research Centre which have characteristics that include low ethylene production. . . .

Research targets women – Yvonne O’Hara:

Dairy Womens’ Network (DWN) has launched Project Pathfinder, a programme designed to encourage more women in the dairy industry to take on leadership roles at community and governance levels.

DWN’s trust board deputy chairwoman Cathy Brown, of Tauranga, said DWN had received $180,000 from the Sustainable Farming Fund to develop the three-year project in association with DairyNZ and AgResearch.

”We are at the beginning [of the project] and most of the research will be done in year one,” Mrs Brown said.

One of the first steps was to carry out a survey about dairying women in business and in leadership roles. It finished this month. . .

Angus farmers get lesson from NZ – Tim Cronshaw:

Scottish angus breeder James Playfair-Hannay would like to take New Zealand bloodlines back with him to the home of the breed, after judging the angus fields in the cattle ring at the Canterbury A&P Show.

However, the high praise from the owner of Tofts Pedigree Livestock in Kelso does not extend to every angus entry.

“There are some wonderful functional animals which look to be pretty proficient, and we could use the genetics back home. Then there are some other animals that are not what we are looking for.

“We are looking to produce a 300 to 350-kilogram carcass off grass at 18 months, or earlier if we can.” . . .


Friday’s answers

November 29, 2013

As you read this I’m having lunch with the Prime Minister – just the two of us and a hundredish others.

 Andrei and Gravedodger provided the questions and  as I write this no-one has got all the answers.

An electronic batch of shortbread is theirs if either or both of them managed to stump us all.

It can be collected by leaving the answers here.


Changes in household spending over 40 years

November 29, 2013

The three-year Household Economic Survey (HES) released by Statistics NZ shows incomes increased a bit more than expenditure.

. . . Results from the latest three-yearly Household Economic Survey (HES) show that average weekly household expenditure  increased 9.1 percent, to $1,111, between 30 June 2010 and 30 June 2013. 

Over this three-year period, there was an 11.5 percent rise in average annual household income, up from $76,733 to reach $85,588 in 2013.

“Both income and spending have risen over the last three years, and Kiwi households continue to spend most on food, and housing and household utilities,” standard of living acting manager Ian McGregor said.

The results released today show that average weekly household expenditure on:

  • transport rose – from $131 to $158, with higher spending on petrol 
  • housing and household utilities rose – from $252 to $273, including an increase in spending on rates 
  • food rose – from $178 to $193, including more spending on fruit and vegetables.

This is the 40th year of the HES. Collection began in 1973, and since then the HES has been measuring how the spending habits of New Zealanders have shifted.

Stats NZ has analysed changes in spending between 1973 and 2013.

On average, Kiwi households spend over twice as much of their total expenditure on rent now, compared with 40 years ago, according to the latest Household Economic Survey (HES).
In 1974, on average, 3.3 percent of a household’s total expenditure was spent on rent, compared with 8.6 percent in 2013.

Back then, on average we spent over three times as much of our total expenditure on clothing and footwear as we do today, according to HES.
Our households spent an average 9 percent of their total expenditure on clothing and footwear in 1974, compared with 2.8 percent in 2013, according to the latest results.

Can we credit the removal of tariffs for this?

And 40 years ago, our households spent, on average, almost a third more of their total expenditure on fruit and vegetables, and over twice as much on meat, fish, and poultry compared with today.
Kiwi households are spending almost the same proportion of our total expenditure on food now (17.3 percent) as 40 years ago (17.6 percent), according to HES results. However, on average, 2.9 percent of a household’s total spending was on fruit and vegetables in 1974, compared with 2 percent in 2013. Additionally, 5.5 percent of a household’s total spending was on meat, fish, and poultry in 1974, compared with 2.5 percent in 2013.

Spending less on food now? That’s contrary to the perception .

Food costs more but it takes less of our total income to buy it .

We’ve also got a much greater variety of food available now than there was in the 1970s.

I don’t remember eating pizza until 1975 – and then it was scone dough topped with tinned spaghetti and grated cheese. Yuk!

Households spent over twice as much of their total expenditure on cigarettes and tobacco 40 years ago as we do today, according to 2013 HES results. The proportion we spend on alcohol has also decreased, by a fifth since the 1970s.
In 1974, on average, our Kiwi households were spending 1.6 percent of total expenditure on cigarettes and tobacco, compared with 0.7 percent in 2013. Similarly, we see a fall from spending 2.4 percent of total expenditure on alcohol in 1974, compared with 1.9 percent in 2013.

This is in spite of increased taxes. I suspect fewer people are smoking but are we drinking less or is alcohol less expensive now?

Whatever the answer to that question, someone’s still smoking all my tobacco and drinking most of my alcohol.

40years-hes-infographic-jpg


NZ First needs a headline

November 29, 2013

Colin Craig is a younger, fresher option for people who might have been attracted to Winston Peters.

Craig’s Conservative Party has been getting headlines and that’s bestirred a New Zealand First MP to go in search of one too.

He found it in NZ First will stop farm sales to foreigners:

. . . New Zealand First is calling for a complete halt to sales of farmland to non resident foreign buyers, its primary industries spokesman Richard Prosser says.

“Under a New Zealand First-influenced government there will be no more sales of farmland to non resident foreigners, full stop.

“This road leads to peasantry and New Zealanders being tenants in our own country,” Prosser said.

Not surprisingly the rhetoric isn’t supported by the facts:

Though there is no formal record of how much land is owned by offshore investors Overseas Investment Office land information manager Annelies McClure said “Current best estimates are that between 1% and 2% of New Zealand farmland is held by overseas interests.”

That figure excludes forestry and land, such as areas of native bush, not in productive use. . .

Prosser’s rant has been prompted by plans for Synlait Milk to sell to the Pengxin Group.

He doesn’t factor in the foreign exchange this will bring into the country and what those who sell their shares might do with the money they’ll get for them.

But then that wouldn’t get the attention-grabbing negative headline he wanted.

It might not do him and his party any good though because the Conservatives are not keen on foreign ownership either.


Yealands SI Farmer of Year

November 29, 2013

Marlborough entrepreneur and winemaker Peter Yealands has won the prestigious Lincoln University Foundation South Island Farmer of the Year award for 2013.

The finals were held at Lincoln University with Chief Judge Nicky Hyslop saying the Yealands entry stood out for its innovation, entrepreneurship and vision.

The winner’s prize is a $20,000 grant toward overseas travel for study, research, marketing, or a combination of these.

The Yealands entry, one of six finalists from throughout the South Island, also won the Silver Fern Farms ‘Plate to Pasture’ award for consumer awareness, and the Lincoln University award for best use of technology and innovation, receiving $5000 for each.

“Peter impressed us with his philosophy of ‘think boldly and never say it can’t be done’,” Hyslop says. “He also demonstrated outstanding innovation inside and outside of the winery business. That was backed up by sound business practices integrated into every aspect of the operation, and a holistic ‘vine to bottle’ approach. Peter showed he was a visionary and had the will and the tenacity to convert that into a successful farm business enterprise.”

Andrew, Karen and Sam Simpson from Lake Tekapo were runners up with their high country merino sheep station, Balmoral, that has diversified into forestry, deer, cropping, property development, conservation recreation, value-added processing of their wool and meat. Hyslop says this entry was also notable for its vision and entrepreneurship, the extensive skill set within the family operation, its business and governance structures, and international networking.

The BNZ award for best human resource management, and the award for resource use efficiency were both taken out by North Canterbury dairy farmers Alan and Sharron Davie-Martin, winning $5000 for each.

“We had an outstanding group of finalists this year, all of a very high calibre,” says Lincoln University Foundation Chair Ben Todhunter. “They each in their way represented some of the best examples of the high performing, innovative, leading edge farming that is coming out of the South Island. This very high standard of entry represents not only a strong future for this competition, but for New Zealand, as we seek to encourage, promote and reward farming excellence.”

The six finalists were:

Neil and Philippa Gardyne from Otama, near Gore, who operate a sheep, beef and cropping enterprise. They are passionate about the sheep and beef industry and focus on innovative, efficient systems.

Trevor and Karen Peters from Roxburgh operate a large scale sheep and beef hill country enterprise built on strong succession planning and a real passion for farming, with low cost development contributing to outstanding farm management.

Andrew, Karen and Sam Simpson from Lake Tekapo run a high country Merino sheep station with diversification in forestry, deer, cropping, property development, conservation recreation, wool on-processing, and meat on-processing. Other commercial activities include a helicopter pad and golf course.

Alan and Sharron Davie-Martin from Culverden operate a highly productive dairy farming operation and continually explore technology to improve systems and production in all aspects of their business.

Simon and Pip Todhunter from Blenheim intensively farm Marlborough East Coast hill country with developed and native tussock hills, carrying ewes, cows and trading cattle. They continually explore technology to improve systems and production in all aspects of their business.

Peter Yealands from Seddon operates a large viticulture business, focused on innovation and business excellence. The business is hugely integrated with outstanding environmental balance.


Farmers subsidisng NZ consumers

November 29, 2013

The question of why milk isn’t less expensive here when we produce so much is often asked.

What most people don’t know is  the retail price is well below the real cost.

. . . Chief executive Theo Spierings said the downside of strong demand for dairy commodities was increasing pressure on Fonterra’s NZ Milk Products division where profit margin remained under pressure.

To illustrate his point, Spierings said if the division were to pass on to consumers of a two litre bottle of milk in New Zealand the full price paid to farmers for their milk, the retail price would need to increase from $4 to $6 and the co-operative would be facing a media storm.

“And that would not be the worst of it…we would see the volume of dairy consumption in NZ going down very fast.”. . .

Fonterra and ultimately the farmers which supply it are subsidising consumers.

One reason for the higher cost is that we’re no longer low-cost producers.

The traditionally low-cost pasture-based dairying regions, such as New Zealand, have lost their cost advantage as input prices have risen, and now compete on the global market with a similar cost of production to producers with more intensive farming systems, according to a recently-released industry report.

In the report, No longer low-cost milk ‘down under’, agricultural banking specialist Rabobank says global milk production costs have converged between dairy-exporting countries, as the traditionally low-cost milk producers have seen their production costs rise, off the back of volatile global feed prices and the increasing use of feed in traditional pasture-based regions.

Report author, Rabobank director of dairy research, New Zealand and Asia Hayley Moynihan says New Zealand milk producers will need to structure their businesses and production systems to withstand ongoing high price volatility – for both dairy commodity prices and inputs.

Higher costs can be absorbed when the payout is higher but costs rarely drop quickly when the payout falls.

Ms Moynihan says lower-cost regions, like New Zealand, have already “largely capitalised their efficiency gains in a high milk-price environment into the price of land and other assets”.

Therefore there is a need to adapt to this loss of absolute competitive advantage in milk production as efficiency gains become more difficult to obtain.

“It is likely that optimal supply chain efficiency could at least partially mitigate this loss,” she says.

“Efficiencies achieved downstream in milk processing and marketing via a strong route to market and established supply chain relationships will likely play a greater role in differentiating competitive export companies and industries into the future.”

Ms Moynihan says to ensure that competitiveness is based on more than just the cost of producing milk, the New Zealand dairy industry will need to work hard to ensure that it stays ahead of the pack in supply chain efficiency, market access, marketing and sensible regulation. . .

We also have to safeguard our reputation for high quality, safe food.

The New Zealand dairy industry, most well-known for its low-cost production, has moved, perhaps irrevocably, to a higher cost farming system, the Rabobank report says.

Ms Moynihan says the structural increase in milk prices globally and locally has driven the quest for increased production, almost at any cost.

“The first signs were there in 2002 when , on the back of milk prices increasing 42 per cent over two seasons, farm working expenses surged 33 per cent per kilogramme of milk solids produced,” she says.

“The reality check of a 32 per cent lower milk price in 2003, which remained at a similar level over subsequent years soon saw expenses fall back into line.”

However, Ms Moynihan says the 72 per cent lift in milk prices in 2007/08, and higher prices on average in the years following, brought a steep increase in production costs Media Release November 27, 2013

that show little sign of abating without a significant change in farming systems or an economic crisis.

Farm working expenses increased 72 per cent in 2007/08 on the prior season and interest cost rose 29 per cent with both expenditure categories oscillating around these higher levels ever since, she says.

Additionally, higher interest costs per kgMS have been driven by New Zealand dairy farmers’ increased debt, not higher interest rates, Ms Moynihan says.

“The significant increase in dairy land values over the past decade combined with an increased focus on land acquisition resulted in aggregate farm debt across the dairy industry more than doubling since 2002 to almost NZD 20 per kgMS produced,” she says.

New Zealand producers are likely to experience upward pressure on milk production costs over the coming years as they are confronted by a rising interest rate market and the likely impact of future environmental regulations on farming systems and milk production levels.

“Tackling environmental issues is likely to result in a variety of measures that may include increased infrastructure on-farm, altering pasture management or decreased intensity of farming systems which all impact production cost dynamics”.

Ms Moynihan says milk producers in New Zealand should consider where the competitive advantage lies for their own operations.

“Increased exposure to the global dairy market for some milk producers and greater intensification on-farm for others has added complexity to many dairy farm businesses,” she says.

“A flexible production system at a higher average cost may still be competitive if it provides resilience during a downturn.”

With high volatility expected to continue for both milk prices and production costs, the ability to lower inputs and/or costs during periods of abundant global supply would be a distinct advantage, Ms Moynihan says.

“Southern Hemisphere producers previously survived global market downturns for prolonged periods due to the size of their absolute comparative cost advantage,” she says.

“With this cost advantage now minimal to non-existent, other strategies to survive the inevitable downturns – albeit likely short-term – will be required.”

Any dairy farmer not doing well with this season’s forecast record payout shouldn’t be in the business.

But next season’s payout will almost certainly be lower and even the best farmers have to keep a rein on costs to ensure they can cope with less money.

Businesses which service and supply farms also have to be aware that while they might be making hay under this year’s sun, next season could be cloudier.


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