365 days of gratitude

September 13, 2018

One always has a better book in one’s mind than one can manage to get onto paper. Michael Cunningham

When I used to write weekly columns for the ODT, the best ones were always composed over a few days.

Like a good soup or casserole, they improved with time and the addition of several ingredients, helped by the simmering that took place while I was on my morning walk.

The better ones almost wrote themselves but sometimes the recipe wouldn’t work and what I thought was right in my mind flopped when I typed it up.

Recently I was asked to write a letter of recommendation for someone.

I waited a while, not procrastinating but deliberately delaying to let the ideas percolate so I could do justice to the subject.

It worked, and I’m grateful that the letter that worked in my mind transferred to paper well.

 


Birds bludgeoned

September 13, 2018

Native birds used in a protest against 1080 were bludgeoned to death:

The speaker of the house has laid a complaint with police after discovering native birds used in a 1080 protest were bludgeoned to death.

Protestors laid dead birds on the steps on parliament yesterday along with fake 1080 pellets.

Protestors claimed the birds were killed by 1080 poisoning.

However, Trevor Mallard says forensic experts say the birds were killed by blunt force trauma.

Even people who aren’t experts ought to be able to tell the difference between death by poisoning and death by blunt force.

Who did the bludgeoning and how did the protesters find the birds that had been bludgeoned?

Whatever the answers, and whoever did it, both killing birds this way and using them in a protest like this is seriously sick.


Word of the day

September 13, 2018

Hautupua – to be fearsome, formidable, awesome; remarkable, monstrous.

(Celebrating Maori Language Week).


Good and bad news in Fonterra’s annual report

September 13, 2018

Fonterra’s annual report has both good and bad news:

The good – last season’s payout dropped a cent but is still the third highest the company has achieved.

The bad – a net loss after tax of $196 million.

Federated Farmers Dairy Chairperson Chris Lewis says the company must do better.

“That’s the first full-year loss in their 18-year history. From a $745 million profit last financial year to a $200 million loss – that’s a big drop and they simply must do better. But I’m confident they’ll turn things around.”

Chris says farmers and shareholders will be looking for the new chief executive and chairperson to hit the ground running.

“I hope those two have a new broom for the shop floor. Good communication will be key.” . . .

Highlights:

  • Total Cash Payout for 2017/18 season: $6.79
    • Farmgate Milk Price $6.69 per kgMS
    • Dividend of 10 cents per share
  • New Zealand milk collections: 1,505 million kgMS, down 1%
  • Sales volumes: 22.2 billion Liquid Milk Equivalents (LME), down 3%
  • Normalised sales revenue: $20.4 billion, up 6%
  • Net loss after tax: $196 million
  • Normalised EBIT: $902 million, down 22% 
  • Normalised gross margin: 15.4%, down from 16.9%
  • Return on capital: 6.3%, down from 8.3%
  • Normalised earnings per share: 24 cents
  • Gearing ratio: 48.4%, up from 44.3%
  • FY19 forecast Farmgate Milk Price: $6.75 per kgMS
  • FY19 forecast earnings per share range: 25-35 cents 

It might be easier for a new chair and new, albeit acting, CEO to make the necessary changes to improve performance than it would had the board and management stayed the same.

Director elections are underway and could bring in some fresh talent that will help the process.

The media release continues:

Fonterra CEO Miles Hurrell says the Co-operative’s business performance must improve.

“There’s no two ways about it, these results don’t meet the standards we need to live up to. In FY18, we did not meet the promises we made to farmers and unitholders,” says Mr Hurrell.

“At our interim results, we expected our performance to be weighted to the second half of the year. We needed to deliver an outstanding third and fourth quarter, after an extremely strong second quarter for sales and earnings – but that didn’t happen.”

Mr Hurrell says that in addition to the previously reported $232 million payment to Danone relating to the arbitration, and $439 million write down on Fonterra’s Beingmate investment, there were four main reasons for the Co-operative’s poor earnings performance.

“First, forecasting is never easy but ours proved to be too optimistic. Second, butter prices didn’t come down as we anticipated, which impacted our sales volumes and margins. Third, the increase in the forecast Farmgate Milk Price late in the season, while good for farmers, put pressure on our margins. And fourth, operating expenses were up in some parts of the business and, while this was planned, it was also based on delivering higher earnings than we achieved.

“Even allowing for the payment to Danone and the write down on Beingmate, which collectively account for 3.2% of the increase in the gearing ratio, our performance is still down on last year.”

Mr Hurrell says when looking at the underlying performance of the business, which you can see in the normalised EBIT of $902 million, progress has been made in moving more milk into higher value products.

“While sales volumes were down 3% in FY18, a larger proportion of milk was sold through Consumer and Foodservice and Advanced Ingredients. In fact, 45% of our sales volumes were through these businesses and this is up from 42% in FY17, despite the higher input-price environment.

“Our Consumer and Foodservice business grew in all regions, except Oceania, with our strongest growth in Greater China. Of particular note, our Consumer business in China broke even this year, two years ahead of schedule. A big contributor to this success is the popularity of Anchor, which is now the number one brand of imported UHT milk in both online and offline sales in China.

“Despite this progress, performance across the Co-operative was below our expectations. Based on this, the Board has decided to limit our dividend to just the 10 cents paid in April and has confirmed the final Farmgate Milk Price for the 2017/18 season at $6.69 per kgMS,” added Mr Hurrell.

Plan for the future:

Mr Hurrell says these results are not just numbers – they’re the livelihoods of the Co-operative’s farmers and their families and the investment of unitholders.

“There are people depending on us – farmers, unitholders and employees who want to be part of a successful Co-operative. We are putting in place a clear plan for how we are going to lift Fonterra’s performance. It relies on us doing a number of things differently.

Fonterra’s Board and Management has outlined a plan based on three immediate actions:

  1. Taking stock of the business Fonterra will re-evaluate all investments, major assets and partnerships to ensure they still meet the Co-operative’s needs today. This will involve a thorough analysis of whether they directly support the strategy, are hitting their target return on capital and whether it can scale them up and grow more value over the next two-three years. This will start with a strategic review of the Co-operative’s investment in Beingmate.
  2. Getting the basics right – Fonterra has already begun taking action and fixing the businesses that are not performing. The level of financial discipline will be lifted throughout the Co-operative so debt can be reduced and return on capital improved.
  3. Ensuring more accurate forecasting – the business will be run on more realistic forecasts with a clear line of sight on potential opportunities as well as the risks. It will also be clear on its assumptions, so farmers and unitholders know exactly where they stand and can make the decisions that are right for them and their businesses.

And the outlook for the coming season:

The forecast Farmgate Milk Price for the 2018/19 season is held at the $6.75 per kgMS Fonterra announced at the end of August and the Co-operative’s forecast earnings per share range for FY19 is 25-35 cents.

At $6.75 per kgMS the forecast Farmgate Milk Price for the 2018/19 season is the third consecutive year of strong milk prices. That’s good for farmers and for rural economies where farmers spend 46 cents of every dollar they earn.

Chairman John Monaghan says the Co-operative is being clear with farmers and unitholders on what it will take for the Co-operative to achieve the forecast earnings guidance.

“For the first time we are sharing some business unit specific forecasts. Among others, these see the Ingredients and Consumer and Foodservice businesses achieving an EBIT of between $850 million and $950 million, and between $540 million and $590 million, respectively.”

“FY19 is about lifting the performance of our Co-operative.

“We are taking a close look at the Co-operative’s current portfolio and direction to see where change is needed to do things faster, reduce costs and deliver higher returns on our capital investments.

“This includes an assessment of all of the Co-operative’s investments, major assets and partnerships against our strategy and target return on capital. You can expect to see strict discipline around cost control and respect for farmers’ and unitholders’ invested capital. That’s our priority.”

The results are here.

 


Rural round-up

September 13, 2018

Young Farmer of the Year to undergo major overhaul:

New Zealand’s longest-running agricultural contest the FMG Young Farmer of the Year is set to undergo a major overhaul.

The revamp is designed to entice more women to enter the iconic contest and to help showcase the country’s food story.

As part of the significant changes, the TeenAg competition will be rebranded the FMG Junior Young Farmer of the Year. . .

Take care with kids and vehicles – Richard Loe:

MYTH 3: WorkSafe doesn’t want kids on farm vehicles.

My youngest is 25 now but it seems no time since I was stopping the truck so my kids could get out and pick the lambs up. 

It’s natural to want your kids and grandkids to be involved on the farm and WorkSafe doesn’t want to change that. 

However, farmers are responsible for ensuring other people, including children, are not put at risk.

Vehicles are the major factor in fatal accidents on farms and children are particularly vulnerable to that critical risk.  . .

New campaign aims to reduce injuries in the woolshed :

The farming industry is trying to cut down on injuries in and around the woolshed with a new online injury prevention programme.

In 2017 there were 755 work-related injuries in wool harvesting, resulting in 9300 working days lost to the industry, according to ACC weekly compensation data.

See the Health and Safety Performance Wool Growers Leaderboard 2017 (PDF272KB)

The same year there were 4700 work-related injuries in wool growing, resulting in 35,000 days lost to the industry. . .

Independently nomianted candidates for Fonterra board of directors’ election announced:

Peter McBride, Jamie Tuuta and Ashley Waugh have been announced as the Independent Nomination Process candidates for the 2018 Fonterra Farmer Directors’ election.

The three candidates were nominated by the Fonterra Board after being recommended by the Independent Selection Panel. The process for their nomination was supported by the Shareholders’ Council has supported the candidacy of each candidate as part of the Independent Nomination Process. . .

Bull Breeding Worth shifts reflect increase in value of fat :

In what is the most significant change to global dairy trade in the last 20 years, milk fat will earn dairy farmers more than protein in the 2018/19 season.

“Fat has been a low value milk component but has seen a steady rise in recent seasons due to consumer-driven market value,” DairyNZ Strategy and Investment Leader Dr Bruce Thorrold says. “That’s a welcome change for New Zealand dairy farmers who are set to receive a strong 2018/19 milk price, buoyed by the value of milk fat.” . . 

Government direction on transmission may be needed for dairy – Gavin Evans:

Government intervention in transmission will probably be required if the country is serious about electrifying dairy processing to reduce the country’s carbon emissions, Babbage Consultants associate Richard Stretton says.

Processors Synlait Milk and Fonterra Cooperative Group have committed to electrify small sites as part of a progreamme to reduce coal as a fuel source for processing capacity. . .

Fonterra ‘matchmaking’ service to transform workplace:

Fonterra employees will be able to spend up to a third of their time on projects outside their day jobs in what is believed to be a New Zealand-first initiative.

Fonterra’s ‘amp’, short for amplify, is an innovative new approach to working that is set to change the face of employment in the Co-op. Using a gig-economy type approach, employees will be empowered to work on internal projects outside their normal role, based on their individual skills or areas of interest. . .

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If can’t run parliament . .

September 13, 2018

If Labour can’t run parliament can it run the country?

The Government called for an extended sitting of the House to consider six Bills, but showed exactly how shambolic it is when a Minister failed to be present in the House as required to begin a debate on the next Bill on the Order Paper, Shadow Leader of the House Gerry Brownlee says.

“Today’s performance in the House borders on farcical.

“The Speaker was left with no choice but to end the extended sitting an hour and 45 minutes early meaning next to no progress was made on the Government’s legislative programme.

“Meanwhile, because the Government imposed extended sitting hours without agreement from the Business Committee a whole morning of select committee hearings was lost.

“This means Bills which could have had their first reading and be sent off to select committee for scrutiny this morning will now languish on the Order Paper for an unknown period of time. The machinery of government is being ground to a halt by a Government which can’t get the basics right.

“Leader of the House Chris Hipkins will have ministerial colleagues asking for a please explain.

“The Government needs to get its act together. More people will begin to think ‘if it can’t even run Parliament how can it run the country’.”

Labour is also having problems with its relationship with NZ First which stymied an announcement about the Crown/Maori relations portfolio at the last minute.

. . .It’s the latest disagreement between the coalition partners.

NZ First pulled the rug out from under Justice Minister Andrew Little in June when he announced his plans to repeal the three strikes legislation.

Since then NZ First has cast doubt on a Labour pre-election promise to lift the refugee quota to 1500 and has also signalled it wants to see changes to the contentious Employment Relations Amendment Bill.

It’s understood the lines of communication between Labour and NZ First are still not clear almost one year into the coalition arrangement. . . 

Few will be surprised about the difficulties in dealing with NZ First but governments have to be able to deal with all sorts of difficulties.

One of the valid questions asked of Labour as it struggled with in-fighting in opposition was if it can’t run itself, how can it be trusted to run the country?

After nearly a year in government, it’s showing it can’t run parliament and manage its relationship with the support partner which put it into power.

These are two more reasons to question its ability to run the country.


Quote of the day

September 13, 2018

I began to realise how important it was to be an enthusiast in life. If you are interested in something, no matter what it is, go at it full speed. Embrace it with both arms, hug it, love it and above all become passionate about it. Lukewarm is no good. Hot is no good either. White hot and passionate is the only thing to be. – Roald Dahl who was born on this day in 1916.


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