Word of the day

September 15, 2015

Peripeteia – a sudden turn of events, reversal of fortune or change in circumstances, especially in reference to fictional narrative; the turning point in a drama after which the plot moves steadily to its denouement. .


Rural round-up

September 15, 2015

Silver Fern Farms Board Unanimously Recommends Partnership with Shanghai Maling:

Board gives unanimous recommendation to accept Shanghai Maling Aquarius Group (Shanghai Maling) as new partner to secure an improved and sustainable future

• A 50:50 partnership with total commitment to our global plate to pasture strategy

• Transaction values Silver Fern Farms’ equity at $311m. This equates to $2.84 per ordinary share, which compares to the $0.35 share price prior to their suspension in July

• Shanghai Maling to invest $261m in cash to own 50% of Silver Fern Farms’ business, in partnership with the existing Silver Fern Farms Co-operative

• A special dividend of $0.30 per share to Co-operative ordinary and rebate shareholders . . .

Cooperatives and private companies work best in agriculture – Allan Barber:

Good company performance demands clarity of purpose which is defined and monitored by a board of directors elected or appointed by the shareholders. There are five main types of company ownership structure that are or have been represented in New Zealand’s agricultural sector and each has advantages and disadvantages.

The five are private and public companies, cooperatives, subsidiaries of an overseas company and State Owned Enterprises. Whatever the structure, good governance and direction are pre-requisites of success.

A privately owned company normally has the greatest clarity of purpose because of the simplicity of the ownership structure, although there is plenty of scope for disputes between individual shareholders, particularly family members. Private company structures range from very simple to more complicated, depending on relative size of shareholdings and the number and origin of the shareholders. . . 

Rural productivity is improving in some sectors, falling in others. Influenced by soil, technology, size and governance according to Motu research:

The agricultural sector produces 40% of New Zealand’s merchandise exports. Not only is agriculture the primary source of employment in many rural areas, its performance influences the success of urban regions and many secondary industries are dependent upon it.

In this study, we estimate the drivers of revenue and productivity in two key agricultural industries – dairy and sheep/ beef. Together these account for about two-thirds of New Zealand’s agricultural exports.

Productivity is an economic term that, in this case, explains changes or differences in output not explained by use of labour, capital, other expenditures or land. Output is measured as revenue excluding income from interest and dividends. Labour is employees and working proprietors. Capital includes stock, depreciation and rent on tractors, irrigation systems and fencing. Other expenditure includes use of fertiliser, diesel, electricity, wormicide and grass seeds; and land is all the land used for production. Productivity encompasses everything else, including management and worker skills and knowledge, technological improvements, unexpected economic shocks (such as the global financial crisis), changing weather conditions (e.g. droughts), and the inherent quality of each farm. . . 

Strong farmer support for sheepmeat and beef levies to continue:

Farmers have given their organisation Beef + Lamb New Zealand a strong mandate to work on their behalf for the next six year sheepmeat and beef levy cycle with over 84% support.

The Declaration of Result provided by the independent Returning Officer, Warwick Lampp, of Electionz.com said 84.56 per cent of farmers on a one farmer, one vote basis had voted in favour of the sheepmeat levy with support of 86.04 per cent on a weighted stock unit basis. There was over 84.66 percent support for the beef levy on a one farmer, one vote and 84.60 per cent on a weighted stock unit basis. . . 

Roles review part of a bigger cost savings project Westland says:

Westland Milk Products confirmed today that it is conducting a review of staff roles throughout the company. The review is part of an overall programme to gain efficiencies and reduce costs to help preserve the best possible return to shareholders during the current global dairy price downturn.

Chief Executive Rod Quin says the review is likely to result in some redundancies. However, he was not going to speculate on how many, or what positions might be affected, until the review is complete, affected staff are consulted, and given an opportunity to provide feedback on any proposed roles under review. The review is scheduled to occur over two rounds, with the first round this month (September 2015) and the second in February 2016. . . 

UN issues stark warning on Pacific drought threat:

The UN’s Resident Coordinator, Osnat Lubrani, says communities and governments need to prepare now for the extreme weather changes El Niño usually triggers.

He says some countries are already implementing or drafting drought plans and the UN is ready to help co-ordinate this and to provide technical advice.

Over the coming months, countries on the equator can expect more rain, flooding and higher sea levels, presenting challenges for low-lying atolls already feeling the impacts of climate change. . . 

Getting the better of El Nino before it gets dry:

Tap rooted, reliable and highly productive, one forage herb species could make all the difference to farmers’ summer feed supply as El Nino looms large this season.

Summer crops are being sown early before soils dry out and chicory is already proving to be a popular drought-proofing choice, according to local pasture specialist Paul Sharp.

“With the long range forecast the way it is, 501 Chicory makes a lot of sense. In a dry year, it’s more reliable than leafy turnips and it also has several other advantages.”

Current soil moisture levels are significantly below average in Hawke’s Bay and Sharp, who works for Agriseeds, says many farmers are being very proactive about setting their feed supply up for the months ahead. . . 

Commission releases final report on 2014/15 review of Fonterra’s base milk price calculation:

The Commerce Commission today released its final report on Fonterra’s base milk price calculation for the 2014/15 dairy season. The base milk price is the price Fonterra pays to farmers for raw milk and is currently set by Fonterra at $4.40 per kilogram of milk solids for the 2014/15 season.

Having considered public submissions on the draft decision released last month, the Commission’s overall view that Fonterra’s calculation of the 2014/15 base milk price is largely consistent with both the efficiency and contestability purposes of the Dairy Industry Restructuring Act 2001 remains unchanged.

Deputy Chair Sue Begg said the Commission appreciated the engagement and effort from Fonterra and the parties they met with during this year’s review. . . 

Funding round starts for new forest planting:

The first funding round of the Afforestation Grant Scheme will see 5819 hectares planted throughout New Zealand, says Associate Primary Industries Minister Jo Goodhew.

The Afforestation Grant Scheme is a $22.5m programme to help establish about 15,000 hectares of new forest plantations over the next six years.

“Under the first round of funding the total area applied for covered 9044 hectares, far exceeding our expectations,” says Mrs Goodhew. . . 

Farm skills day proves popular – James Kinsman:

On Sunday, August 23, the Waitaki Boys’ Fraser Farm hosted Opihi College, Waitaki Girls’, St. Kevin’s and Geraldine High to our first farm skills day.

School pupils did a lot of prior planning to make the day a success. It was a big learning curve for us and the school. The day started with a dog trialling demonstration by Barry Hobbs, assisted by Allan Thompson.

The visitors watched with interest as his well trained dogs got the sheep into the pen. Next it was off to be put into random groups for modules. Barrie Rae, an enthusiastic Poll Dorset breeder taught them stock judging, helped by Jack Price. . . 


$250m for 50% of SFF

September 15, 2015

Shanghai Maling Aquarius – a Bright Foods subsidiary – would invest $260 million to form a 50/50 joint partnership withSilver Fern Farms:

Chairman Rob Hewett said the move, which he said would prove to be a “watershed” for both company and the meat industry, and would make Silver Fern debt free by the year’s end.

Silver Fern, a hybrid farmer-owned co-operative, has for several months been looking at its capital structure with a view to paying down debt.

A number of parties, both domestic and foreign, are understood to have looked at Silver Fern at some point after Silver Fern late last year hired Goldman Sachs to look at its options to raise up to $100 million.

The meat industry has for several years struggled with issues of overcapacity and competition for stock – made worse by a dwindling sheep population which has gone from a peak of 70.3 million in 1982 to 28.6 million today.

“A lot of money needs to be spent on Silver Fern Farms to make it efficient again,” said one analyst. “Many of the Silver Fern plants are at the high end in terms of operating costs.”

The industry suffers from overcapacity, much of it with Silver Fern Farms.

ANZ rural economist Con Williams said profitability in the sector had been poor for an extended period, which had hampered reinvestment, weakening profits and balance sheets. . . 

It would be difficult for local investors to offer that much money and the ability to put the firm on a sound financial footing.

Fran O’Sullivan made this point yesterday:

. . .The extent of the proposed Chinese commitment has made it more difficult for those Silver Fern Farms shareholders who want to keep control of their hybrid co-operative in NZ ownership to persuade their board, and more importantly the company’s bankers, to support other alternatives.

Herald inquiries reveal that sufficient support was earlier raised from a range of parties for a $40 million to $45 million underwrite for a rights issue to help recapitalise the company. But one of the parties – who wished to remain anonymous – said that did not go far enough for the co-operative’s banking syndicate. At least $70 million would be required and that would have flowed straight out the door to reduce debt.

It is understood other endeavours to find a “white knight” to ensure Silver Fern Farms remains majority-controlled by Kiwi interests have been pursued.

But the company is fast running up against a banking-imposed deadline to reduced its debt exposure. . .

It’s not just what the company owes now but the ability to pay the costs of getting rid of excess capacity and upgrading plants.

But it’s not just the cash investment either, the deal has the potential to give much better access to Chinese markets.

This is how the meat industry used to be – British companies owned freezing works to ensure access to meat.

Shareholders now have to decide whether they are prepared to let 50% of the company go in return for the significant investment by Shanghai Maling Aquarius.

And regardless of what some opposition politicians are saying, providing the offer satisfies the Overseas Investment Office, this is a matter for the board and shareholders not the government.


Quote of the day

September 15, 2015

“I have been heartened by the messages of support flooding into Liberal MPs’ offices this evening saying most emphatically, ‘We are not the Labor Party’,” –  Tony Abbott


September 15 in history

September 15, 2015

668  Eastern Roman Emperor Constans II was assassinated in his bath at Syracuse, Italy.

921  At Tetin Saint Ludmila was murdered at the command of her daughter-in-law.

994 Major Fatimid victory over the Byzantine Empire at the Battle of the Orontes.

1254 Marco Polo, Italian explorer, was born (d. 1324).

1616 The first non-aristocratic, free public school in Europe was opened inFrascati, Italy.

1649 Titus Oates, English minister and plotter, was born (d. 1705).

1762 Seven Years War: Battle of Signal Hill.

1820 Constitutionalist revolution in Lisbon.

1821  Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica jointly declared independence from Spain.

1830  The Liverpool to Manchester railway line opened.

1831  The locomotive John Bull operated for the first time in New Jersey on the Camden and Amboy Railroad.

1835 HMS Beagle, with Charles Darwin aboard, reached the Galápagos Islands.

1851  Saint Joseph’s University was founded in Philadelphia.

1857 William Howard Taft, 27th President of the United States, was born (d. 1930).

1879 Joseph Lyons, 10th Prime Minister of Australia, was born (d. 1939).

1881 Ettore Bugatti, Italian automobile engineer and designer, was born (d. 1947).

1883 The Bombay Natural History Society was founded in Bombay (Mumbai).

1889  Robert Benchley, American author, was born (d. 1945).

1890  Agatha Christie, English writer, was born (d. 1976).

1894 First Sino-Japanese War: Japan defeated China in the Battle of Pyongyang.

1916  World War I: Tanks were used for the first time in battle, at the Battle of the Somm

1928  Tich Freeman became the only bowler to take 300 wickets in an English cricket season.

1931 In Scotland, the two-day Invergordon Mutiny against Royal Navy pay cuts began.

1935 The Nuremberg Laws deprived German Jews of citizenship.

1935  Nazi Germany adopted a new national flag with the swastika.

1937 Fernando de la Rúa, 51st President of Argentina, was born.

1940 World War II: The climax of the Battle of Britain, when the Royal Air Force shot down large numbers of Luftwaffe aircraft.

1942  World War II: U.S. Navy aircraft carrier USS Wasp was torpedoed at Guadalcanal

1944 Franklin D. Roosevelt and Winston Churchill met in Quebec as part of the Octagon Conference to discuss strategy.

1945 Hans-Gert Pöttering, German politician, President of the European Parliament, was born.

1945  A hurricane in southern Florida and the Bahamas destroyed 366 planes and 25 blimps at NAS Richmond.

1947  RCA released the 12AX7 vacuum tube.

1947  Typhoon Kathleen hit the Kanto Region in Japan killing 1,077.

1948  The F-86 Sabre set the world aircraft speed record at 671 miles per hour (1,080 km/h).

1952 United Nations gave Eritrea to Ethiopia.

1958 A Central Railroad of New Jersey commuter train ran through an open drawbridge at the Newark Bay, killing 58.

1959  Nikita Khrushchev became the first Soviet leader to visit the United States.

1961  Hurricane Carla struck Texas with winds of 175 miles per hour.

1962  The Soviet ship Poltava headed toward Cuba, one of the events that sets into motion the Cuban Missile Crisis.

1963  The 16th Street Baptist Church bombing: Four children killed at an African-American church in Birmingham, Alabama.

1966 U.S. President Lyndon B. Johnson, responding to a sniper attack at the University of Texas at Austin, wrote a letter to Congress urging the enactment of gun control legislation.

1968  The Soviet Zond 5 spaceship was launched, becoming the first spacecraft to fly around the Moon and re-enter the Earth’s atmosphere.

1969 Iron and steel from local ironsand (titanomagnetite) was produced for the first time at New Zealand Steel’s mill at Glenbrook, south of Auckland.

First steel produced from local ironsand

1971 Nathan Astle, New Zealand cricketer, was born.

1972  A Scandinavian Airlines System domestic flight from Gothenburg to Stockholm was hijacked and flown to Malmö-BulltoftaAirport.

1974  Air Vietnam flight 727 was hijacked, then crashed while attempting to land with 75 on board.

1976 The Rangatira arrived in Wellington from Lyttelton for the last time, bringing to an end more than 80 years of regular passenger ferry services between the two ports.

Lyttelton–Wellington ferry service ends

1981 The Senate Judiciary Committee unanimously approved Sandra Day O’Connor to become the first female justice of the Supreme Court of the United States.

1981 – The John Bull became the oldest operable steam locomotive in the world when the Smithsonian Institution operated it under its own power outside Washington, D.C.

1983  Israeli premier Menachem Begin resigned.

1984 Prince Harry of Wales, was born.

1987  United States Secretary of State George Shultz and Soviet Foreign Minister Eduard Shevardnadze signed a treaty to establish centres to reduce the risk of nuclear war.

1993  Liechtenstein Prince Hans-Adam II disbanded Parliament.

2008 Lehman Brothers filed for Chapter 11 bankruptcy, the largest bankruptcy filing in U.S. history.

Sourced from NZ History Online & Wikipedia


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