Word of the day

25/01/2022

Kerflooey – to cease functioning, especially suddenly and completely; fall apart; fail; a state of destruction or malfunction; awry; kaput.


Sowell says

25/01/2022


Rural round-up

25/01/2022

NZ’s climate planting asking for trouble – Anne Salmond:

Dame Anne Salmond lays out the fundamental problems with this country’s strategy to use pine forests and overseas offsets to help wish away our climate emissions

New Zealand’s strategy for responding to climate change is fundamentally flawed. Much of the nation’s carbon debt is to be addressed by ‘off-setting’ – planting trees to sequester carbon, either at home or abroad.

On one hand, the government proposes to spend billions of dollars on international carbon credits – in other words, paying people in other countries to plant trees to sequester the carbon emitted in New Zealand.

On the other hand, the Emissions Trading Scheme has been designed as a ‘market’ for the owners of trees in New Zealand to sell the carbon they sequester to buyers who want to offset the carbon they generate.

Since most of the plantations in New Zealand are owned offshore, we’re paying even more to people in other countries to sequester the carbon we’re emitting. . . 

Here for the long game – DairyNZ:

In the sector we know that caring for the land, investing in the future, and making long-term plans are all part of dairy farming in New Zealand. To be a dairy farmer is to be in it for the long game; to create a better future for our farms, our families, our communities, and the country.

With that said it can often be hard to get this across to the wider public – to show we all share the same values, and we all want the best for New Zealand.

We want to help New Zealanders better understand and connect with dairy farmers – what drives you, the common values, and how we are seeking to create a better future for ourselves, our families, our communities, and the country we are proud to call home.  Most of all, we want you to feel proud of your work and vocation, and be confident your story is being proudly told to Kiwis. . . 

New Zealand cheers Canada’s loss in dairy dispute and calls for ‘significant reform’ – Cloe Desirée Juarez:

New Zealand said Canada needs to overhaul its approach to dairy imports because Prime Minister Justin Trudeau’s government has repeatedly broken its promise to let foreign cheese and butter flow more freely into the country.  

The public criticisms are the first in what trade lawyers expect could become an international pile-on following Canada’s loss to the United States this month in a long-running dairy dispute. Canada’s approach to dairy imports has long been a sore spot for trading partners, and the success of the U.S. in challenging that approach could embolden copycat actions under trade agreements Canada signed with the European Union and a group of mostly Asian countries that includes New Zealand, a major dairy exporter.

New Zealand’s ministry of foreign affairs and trade, “is currently considering its next steps to address these serious concerns,” spokesperson Susan Pepperell said in an email on Jan. 17. The trade ruling that got New Zealand’s attention involved U.S. complaints that Canada was using a work-around to dull the impact of extra dairy imports allowed under the United States-Mexico-Canada Agreement (USCMA), the pact that replaced the North American Free Trade Agreement in 2020. . . .

Rider (86) readying for 30th cavalcade – Sally Rae:

“She’s just a treasure.”

That’s how Chris Bayne describes fellow cavalcader Alice Sinclair (86) who is preparing for her 30th consecutive Otago cavalcade next month.

The adventure-loving great-grandmother of 15 has ridden every cavalcade since the inaugural event in 1991 and is somewhat of a legend on the trail. She might rue her knees were “starting to give out” but she made few concessions for her age, including bungy jumping when she turned 85. 

When contacted last week, she was preparing to grub thistles in the hay paddock of her Taieri property.“. . . 

Grapes a bunch of history – Shannon Thomson:

More than 150 years after Frenchman Jean Desire Feraud first made his mark on Central Otago, his legacy lives on.

The goldminer turned winemaker is widely credited as the original commercial winegrower in Central Otago. He planted more than 1200 vines in the Alexandra Basin at his Clyde winery, Monte Christo.

When viticulturalist Sam Wood recently discovered an unidentified grapevine at the original site of Feraud’s winery — the present-day Monte Christo Winery — he turned to the Bragato Research Institute, a specialist research centre for the New Zealand wine industry, for DNA testing.‘

‘We weren’t sure what it was, and I was talking to someone in the industry and they suggested we get it DNA tested,’’ Mr Wood said. . .

 

 

‘Animal sentience committee’ could ‘attack’ farming, MPs fear :

MPs and rural groups have warned that the proposed ‘animal sentience committee’ could be used to ‘attack’ farming, pest control and wildlife management.

Concern has been raised over the Animal Welfare (Sentience) Bill, with one MP this week referring to it as ‘a bad bill’ and ‘an unnecessary one’, during its second reading in the Commons.

The bill, which is only six clauses long, recognises that animals are sentient beings and creates a body to oversee UK ministers’ efforts to take account of their welfare needs when drawing up and implementing policy.

However, much of the controversary to date has centred on the proposed creation of an animal sentience committee. . . 


Fonterra forecasts record payout

25/01/2022

Fonterra is forecasting a record milk payout:

Fonterra Co-operative Group today lifted its 2021/22 forecast Farmgate Milk Price range to NZD $8.90 – $9.50 per kgMS, up from NZD $8.40 – $9.00 per kgMS.

This increases the midpoint of the range, which farmers are paid off, by 50 cents to NZD $9.20 per kgMS.

Fonterra CEO Miles Hurrell says the lift in the 2021/22 forecast Farmgate Milk Price range is good news for both farmers and New Zealand communities. The new midpoint of $9.20 per kgMS would contribute $13.8 billion to the New Zealand economy this season.

“The increase is the result of consistent demand for dairy at a time of constrained global milk supply.

“In general, demand globally remains strong – although, we are seeing this vary across our geographic spread. Overall, global milk supply growth is forecast to track below average levels, with European milk production growth down on last year and US milk growth slowing due to high feed costs.

“It’s a similar supply picture in New Zealand. Earlier this month we reduced our forecast milk collections for 2021/22 from 1,525 million kgMS to 1,500 million kgMS due to varied weather and challenging growing conditions.

The grapevine says production is down all over our district.

We’ve had a lot of rain which has been very good for the quantity of grass growth but the quality of feed has been lower which has impacted on milk production.

“While the higher forecast Farmgate Milk Price does put pressure on our margins in our consumer and foodservice businesses, prices in our ingredients business are favourable for milk price and earnings at this stage. As a result, we remain comfortable with our current 2021/22 earnings guidance of 25-35 cents per share.”

Mr Hurrell says there are a number of factors the Co-op is keeping a close eye on, including growing inflationary pressures impacting on operational costs, the increased potential for volatility as a result of high dairy prices and economic disruptions from COVID-19, particularly as governments respond to the rapid spread of the Omicron variant.

 This is a forecast and forecasts can change but it would be a safe bet that the final payout will be nearer $9 than $8.

That is a very welcome bright spot for the economy that is looking increasingly gloomy.


Economic clouds gathering

25/01/2022

Steven Joyce opines on the gathering economic clouds:

. . . The sad fact is that the world economy is facing darker days ahead. Despite appearing to have skated smoothly through the pandemic, the pressures have been building up. Ironically, the very medicine that has made the pandemic seem so economically benign has created the pressures we now have to deal with. Like much in life, in economics it seems you can take your lumps now or later — but you will have to take them.

The most obvious problem remains inflation. Pretty much everyone now accepts that central banks and governments overshot the stimulus response. Inflation is not transitory as was the collective hope of policymakers last year. In the US it has now hit 7 per cent, the highest level in 40 years. Federal Reserve chair Jerome Powell has finally admitted inflation represents a “real threat” to the US economy. Not before time.

Back here things are not yet as bad, but we are doing our best to emulate our American friends. Inflation for the September year was just a tick under 5 per cent, with much of that occurring in the most recent six months. There is every chance we will be much closer to 7 than 5 by the middle of this year.

Inflation is bad enough, because it erodes the purchasing power of ordinary people and hits the poorest hardest. But the medicine needed to treat inflation presents its own significant problems. 

What the left like to call the failed policies of the 80s and 90s were the tough medicine required to treat inflation which raged in the years before the medicine was prescribed.

Inflation fools people into thinking they are wealthier when the reverse is true. Any increase in value is an illusion when inflation is eroding the real value of money.

In order to bring inflation under control, interest rates have to go up, and all the signs suggest a more aggressive set of rate hikes than many were envisaging even six months ago. In the US they are now expecting four interest rate increases this year, while here in New Zealand our largest consumer bank has just upped its expected interest rate increases by a further percentage point, and now expects the OCR to hit 3 per cent. . . 

A lot of people have borrowed a lot of money to buy houses.

Even small increases in interest rates on a lot of money is a big number that will be unaffordable from some, possibly many.

At the same time, asset prices are going to come under downward pressure. Indeed, that is already happening. In America the sharemarket has had a tough start to the year, with all three major indices significantly down and the Nasdaq entering correction territory. Here at home, the NZX is off around 5 per cent since the start of the year. . . 

Low interest rates fuel higher share prices. As interest rates climb shares will be less expensive and will fall in value.

Given all these risks, prudent governments would be starting 2022 with a plan to constrain government spending where they can to take pressure off interest rate increases, take steps to increase competitiveness and encourage competition in consumer markets to lower prices, and make it easier for firms to do business.

Unfortunately that isn’t the mood around much of the world currently. Governments seem to believe their policy decisions in all areas need not be concerned about economic consequences and our own is no exception.

Indeed, our Government makes matters worse through its highly reactive approach to issues (think the Covid response), and its huge mistrust of the private sector (think Covid again and issues like MIQ, rapid antigen testing, and vaccination). It’s a fair guess the economy is hardly on the Cabinet’s radar currently.

The Government’s economic team should stop the self-congratulatory economic back-slapping of the last six months, roll up their sleeves and think about how we are going to encourage more business investment and grow our way out of this pandemic. Otherwise the coming storm could mean a long, unhappy period of economic underperformance and all the negative effects on wellbeing that come with that.

The uncertainty we’re facing owing to Covid-19 and the response to it, will add pressure to the economic clouds and there’s little hope that the government that is fueling inflation will be any help in sheltering us from the coming storm.

 

 


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