Cunliffe warned re tweet

December 20, 2013

Labour leader David Cunliffe has received a police warning for a tweet he made on the day of the Christchurch East by-election.

“It was an inadvertent mistake which I regret. I took steps to rectify the error by immediately deleting the tweet and Labour also notified the Returning Officer as soon as possible,” David Cunliffe says.

“I have taken the warning on board and will not repeat the error.

“I would like to acknowledge my mistake by doing something to help the people of Christchurch. I intend to make a $1000 donation to the Stepping Stone Foundation which provides counselling services to earthquake-affected children. . . .

The greater punishment is that he looked so stupid for breaching election day protocols when he’s been through more than enough campaigns to know better.


Word of the day

December 20, 2013

Metanoia – the journey of changing one’s heart, mind, self or way of life; change in one’s way of life resulting from penitence or spiritual conversion; a profound, usually spiritual, transformation; a rhetorical term for the act of self-correction in speech or writing.


Rural round-up

December 20, 2013

Red meat is worth 35 annual Avatars and could be much more:

Federated Farmers has started consultation among its membership covering reform of New Zealand’s $6 billion Red Meat industry.  The red-meat industry is currently worth around 35 annual Avatar movies to the New Zealand economy.

“Given Avatar Director James Cameron is also a Wairarapa farmer, reform of New Zealand’s red meat industry represents our economic blockbuster if we can pull it off,” says Jeanette Maxwell, Federated Farmers Meat & Fibre spokesperson.

“From the number of calls I have already received, I know both the media and our meat processors are very keen to see a copy of our paper. . .

Feds’ members only meat report:

FEDERATED FARMERS has put “three broad options” to its members on meat industry reform in a paper to be publicly released in the New Year.

Meat & Fibre section national chair Jeanette Maxwell says the solutions within the options are “more like a pick a mix” and suggests the processor focussed option will generate much discussion.
“There is a push by some in the industry to merge the cooperatives, something that’s much easier said than done. If the thinking is ‘just copy Fonterra’ then it will not succeed. To work, any merger needs a reassessment of the entire industry but especially its capital structures.” . . .

Alliance group’s Blue Sky Meat takeover talks fail – Tina Morrison:

(BusinessDesk) Meat co-operative Alliance Group’s talks about a potential takeover of rival South Island processor Blue Sky Meats have ended when Blue Sky withdrew after a failure to agree on key terms.

Blue Sky withdrew from the “respectful and amicable” talks early this month after being approached by Alliance a couple of months ago, Blue Sky chairman Graham Cooney said.

Both processing companies were based in Invercargill.

The farmer-led Meat Industry Excellence group had this year been pushing for closer integration of meat companies in an attempt to improve efficiency and boost profits.  . .

Farmers’ dairying halt boosts river

Dairy farmers are adapting to the massive pressures of farming under the close scrutiny of the public eye, but one farmer on the outskirts of Palmerston township in East Otago has more at stake than most.

For a start, Alan and Iain Ford’s 100ha Glenlurgan dairy farm on fertile river terraces is neatly split in two by the Shag River.

To complicate matters further, the townships of Palmerston, Dunback and Goodwood all draw their water from a pumping station intake at the lower end of the farm. . .

A timely reminder:

Fonterra dropped a bombshell last week when it announced its latest consideration on its farmgate milk price.

For farmer shareholders in New Zealand’s largest company, it had been shaping up to be a particularly merry Christmas, with economists suggesting the milk price could be lifted as much as 40c.

Elevated prices, which have defied predictions and remained at very high levels – the GlobalDairyTrade price index was just 7% below its April high and about 50% higher than a year ago – raised expectations for the forecast to rise. . .

Christmas comes early for Westland dairy farmers:

Federated Farmers is thrilled about the latest announcement from Westland Milk Products regarding their milk pay-out forecast of $8.30 per kilogram of milk solids.

“Dairy farmers have had Christmas early this year with this pay-out announcement,” says Richard Reynolds, Federated Farmers West Coast Dairy chair.

“This is a huge difference from last years pay-out and I know a lot of dairy farmers on the West Coast will be ecstatic at this announcement. . .

Taranaki provincial president hands over the reins:

Federated Farmers is saddened to lose its Taranaki provincial president, Harvey Leach, following his resignation this week.

“Harvey has been a huge influence and a game changer in the Taranaki region, and we will all be sad to see him go,” says Bruce Wills, Federated Farmers President.

“The role of provincial president is voluntary and takes a lot of time and dedication.Our provincial presidents do a lot of great work that does not get a lot of coverage, but Harvey has always been one of life’s true gentlemen. He will be missed but he leaves his province in great shape. . .

Bloodstock – setting up to succeed:

The New Zealand’s bloodstock sector is more than just an agribusiness niche and is attracting renewed interest from investors, says Geoff Roan, Senior Manager, Bloodstock, for Crowe Horwath.

While sometimes seen as a high risk investment, if structured correctly and professionally managed as a business, the bloodstock sector can be both profitable and fun, says Mr Roan.

The bloodstock sector was valued at $1.6 bn in NZ by New Zealand Racing Board in 2010, which compares favourably with viticulture ($1.5 bn) and aquaculture ($1.7 bn).

Contribution to GDP $1.64 billion $1.5 billion $1.7 billion Direct employment impact FTE $8,877 $5,940 $10,520 Total employment impact FTE $17,000 $16,500 $26,600 . . .

2013 Waipara Hills Sauvignon Blanc textural and bursting with flavour:

Waipara Hills release their 2013 Waipara Hills Marlborough Sauvignon Blanc, just in time for what is predicted to be a hot summer. The new release Sauvignon Blanc is the perfect partner on a balmy summer evening, with its fresh flavours of guava, melon, nettles and flint that flow from the nose into the mouth.

Waipara Hills Winemaker, Simon McGeorge, is really looking forward to showing off the 2013 Waipara Hills Sauvignon Blanc in the coming year. “I love the rich burst of fruit on the first sip, but it’s the texture and structure that I think are exciting. A grapefruit pith character, along with a nice rich mid-palate, gives this wine vibrancy and complexity which I believe will really have broad appeal.” Simon said. . .


Thursday’s questions . . .

December 20, 2013

. . .  on Friday (because the week ran away with me).

1. From which book by which author does this quote come: “It is a fair, even-handed, noble adjustment of things, that while there is infection in disease and sorrow, there is nothing in the world so irresistibly contagious as laughter and good humour.”?

2.  Which carol begins Not on a starry night/By star of candle light/But on a sunny day . . . ?

3. It’s merveille in French; too easy in Italian,  milagro in Spanish and merekara in Maori, what is it in English?

4. What’s the last line of this chorus? : Lots of toys for girls and boys load the Christmas sleigh
He will take the starlight trail along the Milky Way.
Hear the laughing children as they shout aloud with glee:

5. Do you have a real Christmas tree, a fake one or  . . . ?


This can’t be your best

December 20, 2013

Dear Auckland,

You’re our biggest city.

You’ve got more than a million people to choose from and you got a mayor like this?

This can’t be your best.

He’s determined to stay which means you’ve got a couple of years in which to come up with someone better.

That shouldn’t be hard.

But you owe it to yourselves, and the rest of the country, to make sure it’s not just someone who’s better than what you’ve got, but someone who’s a good mayor and a good person.


Paying our way again

December 20, 2013

New Zealand’s GDP increased 1.4% in the September quarter on the back of dairying.

The strong increase in dairy production was the main contributor to a 17.0 percent rise in agriculture, which makes up about 5 percent of the New Zealand economy.

“Dairy farming has really bounced back from the drought this year,” acting national accounts manager Steffi Schuster said. “The increase in agriculture is the largest in more than 25 years, as good weather boosted production well above the weak June quarter.”

Dairy product manufacturing also increased this quarter, which contributed to a 1.5 percent rise in total manufacturing. While manufacturing production was up, exports of dairy products fell this quarter, leading to a build-up of inventories. The $770 million increase in total inventories this quarter is the largest build-up since the series began.

Increases in agriculture and manufacturing production were partly offset by declines in:

  • Construction (down 1.0 percent), as falls in infrastructure and commercial construction outweighed an increase in housing construction. Investment in housing was up 8.5 percent from the previous quarter.
  • Business services (down 0.8 percent), with most sub-industries down, except for architectural and engineering services.

Economic activity for the year ended September 2013 was up 2.6 percent.

The expenditure measure of GDP was up 1.1 percent in the September 2013 quarter. The main movements were:

  • Investment in fixed assets (up 3.1 percent), driven by increased imports of plant, machinery, and equipment. This was also reflected in a 4.5 percent rise in imports of goods and services.
  • Build-ups in manufacturing and distribution inventories, as supply of goods exceeded demand this quarter.
  • Volume of spending by New Zealand households (up 0.4 percent), mainly due to increased spending on durables like furniture and motor vehicles.

A lot of the increased dairy production is going to China which in November passed Australia as our New Zealand’s top goods export destination on an annual basis.

“China is now our top export destination on an annual basis, just under two years after it became our top annual imports partner in December 2011,” industry and labour statistics manager Louise Holmes-Oliver said.

In November 2013, goods exports were valued at $4.5 billion, up $647 million (17 percent) from November 2012. Exports to China hit record levels in October 2013 and November 2013. Exports to China were valued at $1.2 billion.

Dairy contributed the most (63 percent) to the total exports to China, valued at $774 million, in November 2013. This is the highest value of dairy exports to China for any month. Total dairy exports were valued at $1.7 billion – also the highest for any month.

The value of imported goods was $4.3 billion – down $124 million (2.8 percent) from November 2012. A fall in intermediate goods, due to crude oil, affected this movement. Consumption goods also fell, while capital goods rose.

The trade balance for November 2013 was a surplus of $183 million (4.1 percent of exports). This is the first trade surplus for a November month since 1991. This follows a trade deficit in October 2013, which was the lowest deficit for an October month since the mid-1990s. . .

The lowest trade deficit for October since the mid 1990s and the first trade surplus for November since 1991 signals an encouraging trend back to paying our way again.

We can’t produce all we need and we can’t consume all we produce.

Sustainable growth depends on producing and selling goods and services of greater value than those we need, or want, to buy.

We haven’t been doing that for far too long.

This news from Statistics New Zealand and a survey from Export New Zealand showing a lift in exporter confidence, in spite of the high dollar, indicate a welcome change to that.


“Family silver’ looking a bit tarnished

December 20, 2013

Opponents to the sale of minority shareholdings in a few state owned assets would have us believe that the government is selling the family silver.

Treasury’s annual portfolio return shows that silver isn’t returning much:

Government businesses with assets worth $45 billion made a total net profit of just $20 million in the year to June 30, according to the Treasury’s annual portfolio report.

The assets don’t include Meridian Energy, Air New Zealand and Mighty RiverPower, which were partially privatised, but cover troubled entities like KiwiRail, Solid Energy and New Zealand Post, which are all struggling to make their business models work.

The annual review covers Crown-owned assets valued at $125b.

A return of just $20 million on $125b is lamentably low.
“For the residual commercial priority portfolio, overall performance (with some notable exceptions) was mediocre,” the Treasury’s Crown Ownership Monitoring Unit says in the report. . .

Total shareholder return excluding KiwiRail was 3.0 per cent, although that represents an improvement on the negative 8.2 per cent return achieved in the year to June 30, 2012, which was hit hard by the first round of losses from Solid Energy, which is now being managed in rescue mode.

“This overall result does not represent a satisfactory return in an environment where stock market indices have performed strongly,” COMU says. It comprised “a 6.5 per cent dividend yield combined with a 3.5 per cent decrease in the value of the commercial priority portfolio”.

“While there are some positive indicators in terms of total shareholder return and dividend yield, the overall financial performance for the commercial priority portfolio was poor in 2012/13,” the report says.

“The bottom line result was only marginally better than breakeven for the portfolio” and represented a return on equity of 0.2 per cent.

Some of this silver might have emotional value but emotion doesn’t reduce debt or provide capital for reinvestment in other much-needed assets like schools, hospitals and infrastructure.

It’s not returning a decent yield.

And for all the emotion about the family silver, where’s the logic in owning most of these companies?

  • Airways Corporation of New Zealand Limited
  • Animal Control Products Limited
  • AsureQuality Limited
  • Corporatised Airports
  • FairWay Resolution Limited
  • Genesis Energy Limited
  • KiwiRail Holdings Limited
  • Kordia Group Limited
  • Landcorp Farming Limited
  • Learning Media Limited
  • Meteorological Service of New Zealand Limited
  • New Zealand Post Limited (Group)
  • Kiwibank
  • Public Trust
  • Quotable Value Limited
  • Solid Energy New Zealand Limited
  • Television New Zealand Limited
  • Transpower New Zealand Limited

A lot of that “silver” is looking a bit tarnished.

There’s a case for retaining a natural monopoly like Transpower but what’s the point of holding on to most of it when it’s  returning so little?

Any reputable financial advisor looking after a client with such a mediocre return on a sizeable portfolio would be advising them to sell, reduce debt and/or invest the money where it got a much better return.


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