Rural round-up

March 4, 2015

Water refusal ‘will have wide imapct':

Federated Farmers says the Canterbury Regional Council’s refusal to allow some farmers to exceed their groundwater limits this year will have a widespread impact on farming there, as the drought bites deeper.

Some farmers with seasonal restrictions on their ground water allocation have asked the council if they can increase the amount of water they can take, because they say they’ll need more to get them through the irrigation season.

Environment Canterbury turned them down because it said limits were set for each zone for environmental reasons.

It said groundwater levels were now very low, particularly in the southern half of the region, where some wells have dropped to record levels. . .

Improvements to food traceability on agenda:

Food Safety Minister Jo Goodhew has welcomed the release of the Dairy Traceability Working Group’s reports, which make recommendations on food supply chain traceability.

“The group was formed following a recommendation from the Government Inquiry into the Whey Protein Concentrate Contamination Incident, with a mandate to investigate dairy traceability,” Mrs Goodhew says.

“However traceability is critical for all foods exported from New Zealand, and the government is now considering applying the report’s recommendations across all food sectors. . .

Magnetic milk – the lure of dairy investment down under:

In 2014 there was a flurry of inbound investment activity by Asian dairy companies, mostly from China, into the New Zealand and Australian dairy sectors. However Rabobank warns that ongoing growth in import requirements by Chinese and wider Asian dairy companies shouldn’t be taken for granted.

In a recently-released report ‘Magnetic milk – the lure of dairy investment down under’, global agribusiness banking specialist Rabobank says a specific focus for overseas investors in New Zealand dairy has been on securing access to liquid milk and ingredients for infant formula.

Report co-author, Rabobank director of Dairy Research, New Zealand and Asia Hayley Moynihan says a quest to secure access to a high-quality, safe milk pool is driving international investment in dairy down under.

“Between 2014 and 2020 we expect China and South East Asia combined to account for almost one third of the increase in global dairy imports,” Ms Moynihan says. . .

 

 – Keith Woodford:

[This post was first published in the Fairfax NZ Sunday Star Times on 22 February 2015. It is the fourth of a series of five on Fonterra.  The earlier posts were ‘The evolution of Fonterra’, ‘Fonterra’s jouney’, and ‘Fonterra’s global reach’.]

One of the big challenges for Fonterra has been to determine its overall market position. Is it a marketer of commodities? Or is it a marketer of fast moving consumer goods (fmcgs)? Or is it a marketer of specialist ingredients? Can it be all three?

The challenge of trying to be all three is that the appropriate business culture is different for each market positioning. Commodity marketing is all about logistics, efficiency, and financial discipline. Fmcgs are all about entrepreneurship, creation of brands, being fast on one’s feet, and willingness to take risks. Specialised ingredients require a focus on science and technology. . .

 

Scholar is one to watch:

Henry Buckingham says his Beef + Lamb New Zealand scholarship is worth far more than the $5,000 per annum financial support.

“It’s the people I’ve got to meet and the information I’ve picked up from those people.”

The 19 year old is one to watch. He was the 2011 winner of the New Zealand Teen Ag award, which runs along similar lines to the national young farmer of the year competition. Henry also has a goal of competing in the Coast to Coast and is currently building up for the event. . .


Rural round-up

March 3, 2015

Bluff oyster season ‘looks promising’:

The Bluff oyster season has opened with predictions it will be a good one.

The season for collecting oysters from one of the world’s last remaining wild fisheries opened yesterday and runs until the end of August.

Niwa says the oyster population has declined from last year because of the shellfish disease bonamia – which is harmless to humans. . .

- Keith Woodford:

[This post was first published in the Fairfax NZ Sunday Star Times on 22 February 2015. It is the fourth of a series of five on Fonterra.  The earlier posts were ‘The evolution of Fonterra’, ‘Fonterra’s jouney’, and ‘Fonterra’s global reach’.]

One of the big challenges for Fonterra has been to determine its overall market position. Is it a marketer of commodities? Or is it a marketer of fast moving consumer goods (fmcgs)? Or is it a marketer of specialist ingredients? Can it be all three?

The challenge of trying to be all three is that the appropriate business culture is different for each market positioning. Commodity marketing is all about logistics, efficiency, and financial discipline. Fmcgs are all about entrepreneurship, creation of brands, being fast on one’s feet, and willingness to take risks. Specialised ingredients require a focus on science and technology. . .

Dairy women look to future – Blake Foden:

New Zealand’s leading female dairy farmers will come together in Invercargill next month to discuss strategies and plan for the industry’s future.

The Dairy Women’s Network will hold its annual conference at ILT Stadium Southland on March 18-19, with a series of workshops and guest speakers focused on the theme of “Entering tomorrow’s world”.

Chief executive Zelda de Villiers said in the wake of a difficult season where most farmers were expecting a low payout, early bird registrations had been lower than anticipated.

While money might be tight, the current conditions made it even more important to attend and look to the future, she said. . .

Rabobank Dargaville celebrates opening:

Rabobank’s newest office in New Zealand celebrated its official opening on Thursday 26 February with a special event held at the Dargaville branch to mark the occasion.

Located in the heart of Dargaville, the new Rabobank branch is located at 94 Normanby Street and has been purpose-built to suit the needs of clients and staff frequently accessing the facility.

Rabobank chief executive officer for New Zealand Ben Russell said he was pleased to see the new premises “come to life”.

“We have been developing our plan to open in Dargaville for some time now and it’s great to see the team open the new building for business,” Mr Russell said. . .

Second Grand Finalist Confirmed:

Matt Bell is the second Grand Finalist to be named in the 2015 ANZ Young Farmer Contest.

The twenty-eight year old contract-milker took first place at the Aorangi Regional Final in Oamaru on Saturday 28 February.

Mr Bell went home with a prize pack worth over $10,000 including cash, scholarships and products and services from ANZ, FMG, Lincoln University, Ravensdown, AGMARDT, Silver Fern Farms, Honda, Husqvarna and Vodafone.
Matt placed third in the 2013 Grand Final and is determined to take out top honours in his final bid to become the ANZ Young Farmer Contest Grand Champion. In his spare time Matt enjoys getting out on his motor-bike, snowboarding and refereeing rugby. . .

Grow your bottom line with new pasture:

 Cost-conscious dairy farmers take heart – even with the lower payout, investing in new pasture remains highly profitable this autumn.

Financial analysis shows spending $1000 on autumn pasture renewal can lead to a gross return of more than $4000 over the next five years, while spending $1000 on palm kernel actually leads to a small loss this season in terms of milksolids.

“Pasture remains the corner stone of feeding cows in the New Zealand dairy industry, and the amount of pasture eaten per ha is widely acknowledged as a key profit indicator,” explains Graham Kerr, pasture systems manager for Agriseeds. . .

 

 


Rural round-up

March 2, 2015

Farmers are not bulletproof – Neal Wallace:

It was a decision hundreds of farmers make every day. 

But Andrew Fleming’s decision to take a shortcut up the spur of a hill rather than a longer route that involved opening and closing six gates was a life-changing few seconds.

It was October 2000 and near the top of the spur on his in-laws Taranaki farm, the front wheel of his quad bike lifted as he crossed a sheep rut and he believes wind, which had grown in strength in the minutes leading up to the incident, caught under the guards of the quad bike helping to tip it over. . .

Forest safety paradigm shift from international experts:

After a horror year of workplace fatalities in 2013, New Zealand’s forest industry performed superbly in 2014, both in terms of safety and wood production. The credit for the dramatic turnaround in safety performance has to go to the people on the forest floor. These hard-working people were the same ones who made their voice heard at the Independent Forest Safety Review. They did it to ensure workplaces in forestry could be safer for everyone.

As part of the sweeping safety reform in forestry workplaces, the Forest Industry Engineering Association (FIEA) is bringing international safety experts to New Zealand next week for an industry-wide summit. At this event, forest safety leaders and forest company CEOs will have access to the best safety thinkers in the business globally. . .

 

Drought shows water storage vital – Katie Milne:

Water storage will never stop the types of drought which have just been declared throughout the eastern South Island.

But water retention schemes can blunt their impact and negate their effect.

It should be a no brainer.  We are, as Geoffrey Palmer so famously once put it, a pluvial country – in other words, it rains a lot here.

In simple terms, the problem is that most rain falls when it’s too cold for pasture to grow.  And, conversely, it doesn’t rain when it’s warm enough for pasture to grow.

We are so accustomed to farming in between these seasons in our spring and autumn flushes that we don’t realise that in other parts of the world it doesn’t happen that way.  It’s not even universal in New Zealand. . .

Last chance to reunite the Bee Industry:

Federated Farmers is calling on the bee industry to unite and ensure they achieve a fully integrated entity peak body.

John Hartnell, Federated Farmers Bee Chairperson says “The bee industry has long needed a more united approach to its activities, whether it’s to do with the government, market access or biosecurity, but it can only be achieved with the whole industry united as one.”

“When you look at the current structure of the industry well less than 1000 are members of an industry body, whilst the industry has 5400 involved. That is our main problem because you end up with 20 percent funding 100 percent of industry good activity.” . . .

 

A2 Milk 1H profit tumbles 81% as listing costs, fees rise, lodges ASX application – Paul McBeth:

(BusinessDesk) – A2 Milk Co, which markets milk with a protein variant said to have health benefits, said first-half profit fell 81 percent on costs for its planned ASX listing, lodged today, and for hiring consultants.

Net profit dropped to $125,000, or 0.02 cents per share, in the six months ended Dec. 31, from $643,000, or 0.11 cents, a year earlier, the Auckland-based company said in a statement. That included $762,000 in one-time costs associated with the Australian listing, and a $1.4 million increase in other operating costs to $5.3 million, which was largely selling and consulting costs linked to business growth, it said.

Excluding those costs, earnings before interest, tax, depreciation and amortisation climbed 27 percent to $3.3 million as revenue rose 38 percent to $74.8 million, largely in line with Forsyth Barr’s estimate for sales of $75.2 million and Ebitda of $3 million. . . .

Farmers need to step-up their human capital risk planning:

Farmers aren’t paying enough attention to human capital risk planning, says Hastings-based Crowe Horwath Risk Adviser Tim Ewen.

Although the intellectual property underpinning the farm’s wealth was often tied up with the owner, too little focus was placed on the “what-if?” factor, he said. In the event of a farmer becoming either temporarily or totally disabled, or passing away, planning was essential to make sure the farm business could continue to provide for family members.

“Farms rely on key people to make the business work,” said Mr Ewen. “Farmers need to take account of the human capital risk and ensure they have appropriate planning in place so the right money goes to the right people at the right time.” . . .

 

 


Rural round-up

March 1, 2015

Northland water storage study shows potential:

Primary Industries Minister Nathan Guy has welcomed the commissioning of a new report to examine the potential of water storage and infrastructure in Northland.

“This study will identify areas where improved water supply and potential water infrastructure could deliver economic growth and other benefits to Northland,” says Mr Guy.

“The study is an important step in a joint project involving the Ministry for Primary Industries’ Irrigation Acceleration Fund, Northland Regional Council, and economic development agency Northland Inc.

“More reliable irrigation will help develop sectors like farming and horticulture, meaning more local jobs and exports.” . .

 Dramatic figures show human cost – Neal Wallace:

In the three hours it took for the Otago launch of the Safer Farms project on February 20, 16 farm workers filed work-related injury claims with ACC, a statistic that reinforced farming as New Zealand’s most dangerous occupation.

Each year on average 17 people were killed and 20,000 people would lodge a claim with ACC for a farm-related injury and those dramatic statistics aside, the Government’s focus of improving farm safety would bring the sector into line with the legal obligations of other businesses.

Workplace Relations and Safety Minister Michael Woodhouse said 120 people had been killed on farms since 2008, with the 20 who died last year four times as many as the forestry or construction industries.  . .

 We’re in business. Mobile milking approved & the milk is flowing – Milking on the Moove:

Two weeks ago The Ministry For Primary Industries approved my Risk Management Programme!

It’s a huge achievement & it means that mobile milking & more specifically mobile milk processing is possible in New Zealand.

This now opens up a huge range of possibilities for us to develop some pretty radical and truly sustainable dairy farming systems.

I made my first delivery on the 10th February to our first and only customer C1 Espresso in Christchurch. . .

Fonterra’s global reach - Keith Woodford:

[This is the third of five articles on Fonterra written in early 2015 and published in the Fairfax NZ Sunday Star Times. This one was published on 15 February 2015. Earlier articles in the series were titled ‘The evolution of Fonterra’ and ‘Fonterra’s Journey’ ]

Within Fonterra, there is inevitable tension as to its role on the global stage. From a farmer perspective, Fonterra is a business with assets of about $20 billion (about half equity and half debt) which processes the milk produced by five million New Zealand cows. It then markets the resultant dairy products across the world.

Most of the value of these dairy products lies in the farm gate price of the milksolids contained therein. Accordingly, ask any of Fonterra’s farmer owners as to what they most expect and demand of Fonterra, it is likely to be that this farm gate price is maximised. . .

Rural course revamp leads the way:

The highly-respected Kellogg Rural Leadership programme for 2015 has begun at Lincoln University with a new structure and fresh content. A group of 23 participants working within primary industries from around New Zealand started the revamped six-month course in late January. It includes three residential components and an industry-based project. 

“The changes introduced this year include a shortened six-month programme and a second course starting in June. This provides better options for different seasonal sector commitments,” Kellogg Rural Leadership Programme general manager Anne Hindson said. . .

Breeding oomph back into our apples – Laura Basham:

Roxy and Big Daddy are set to make it big. They are colourful characters, and tasty.

They have been in the making for 20 years and now it’s planned to put them on the international market.

The pair are new apple varieties, the darlings of Nelson orchardist and breeder Bill Lynch who reckons there are too many boring, tasteless apples on supermarket shelves.

He wants to put some oomph into the industry that has been his life and leave a lasting legacy, not only for his orchardist son, Dan, but for other growers and the country. . .

 


Rural round-up

February 28, 2015

Dairy commits $5 million to ambitious zero pest plan – Suze Metherell:

New Zealand’s dairy industry has committed $5 million over two years to the fight against stoats, rats and possums, which destroy native flora and fauna, and can carry bovine tuberculosis.

The Zero Invasive Predators scheme, or ZIP, formed after a $10 million injection from philanthropic fund NEXT Foundation, and a further commitment of $5 million from the Department of Conservation. The funds will be used to develop the Wellington-based conservationist’s barrier system, which aims to prevent the reintroduction of pests in cleared zones, without using fences.

New Zealand’s major dairy companies, including Fonterra Cooperative, Westland Milk Products, Open Country, Synlait and Tatua, have contributed to the programme, which is trialing its system on the 400 hectare Bottle Rock peninsula in the Marlborough Sounds. The dairy industry wants to eradicate possums because of the TB threat to dairy herds. . .

 Dairy funding for predator control welcomed:

The announcement that the dairy industry will join an initiative to tackle the predators decimating New Zealand’s native wildlife is another positive step on the way to achieving the long term goal of a predator-free New Zealand, Forest & Bird said today.

Five major dairy companies, including Fonterra, have committed $5 million to the Zero Invasive Predators (ZIP) programme, which was founded late last year by NEXT Foundation and the Department of Conservation. The partnership intends to find new ways to eradicate introduced predators such as rats, stoats and possums from large areas of land.

Forest & Bird Group Manager Campaigns and Advocacy Kevin Hackwell welcomed the dairy industry involvement in the campaign to stop the decline of our native wildlife due to invasive predators. . .

NZ business confidence gains in February as agri sector gets more upbeat - Paul McBeth:

  (BusinessDesk) – New Zealand business confidence improved in February as recent gains in dairy prices turned sentiment around in the agriculture sector, and as low interest rates stoke hiring and investment expectations.

A net 34.4 percent of firms are optimistic about the general economy, up from 30.4 in the previous survey, according to the ANZ Business Outlook. That was aided by a turnaround in agriculture to a net 15.2 percent becoming optimistic, having previously been dominated by pessimists. Firms’ own activity outlook showed a net 40.9 percent of respondents upbeat on their prospects, compared to 37.3 percent.

“General confidence, profit expectations and employment intentions in this sector (agriculture) have flipped from negative to positive,” ANZ Bank New Zealand chief economist Cameron Bagrie said in his report. “Higher dairy prices are no doubt working their magic. Such a bounce-back is particularly welcome considering challenges delivered by Mother Nature.” . .

 

Fonterra’s journey – Keith Woodford:

[This is the second of five articles on Fonterra that I have been writing for the Fairfax NZ Sunday Star Times. This one was published on 8 February 2015. The previous article was titled ‘The evolution of Fonterra’ ]

Last week I wrote about the battles that led to the formation of Fonterra in 2001. However, Fonterra’s structure and associated institutional culture have moved a long way since then.

Sufficient time has elapsed since Fonterra’s formation battles that they can now be seen in reasonable perspective. But subsequent events are still raw. In line with corporate policy, the participants have largely kept their opinions private, and the official line is a product of the public relations team. However, in a co-operative structure, it is inevitable that information does leak. One thing for sure, is that some of the internal debates have been vigorous. . .

Forest safety council underway:

The forest industry has established a safety council to make forests safer places to work. This was a key recommendation of the Independent Forestry Safety Review Panel that reviewed forest workplace safety in 2014.

The Forest Industry Safety Council will formally get underway in early April. But in the meantime a working group representing forest owners, contractors, workers, unions and the government is putting the building blocks in place. An independent chair and national safety director are being recruited.

There were 10 workplace deaths and 169 serious harm injuries in forestry in 2013. This led to the industry establishing the review panel which reported in late October 2014. . .

Sailor convicted after biosecurity ramp-up in Northland:

A sailor who appeared in the Kaikohe District Court last week (17 February) has become the first person convicted for deliberately concealing biosecurity goods on a visiting yacht.

The conviction follows increased biosecurity scrutiny of arriving yachts by the Ministry for Primary Industries (MPI) at Northland this yacht arrival season.

Sylvie Berthe Barre, 61, a retired French national, had earlier pleaded guilty to one charge of knowingly possessing unauthorised goods, and misleading an official. She was fined $3000.

She is currently staying in New Zealand on a three-month visiting visa. . .

2015 Northland Field Days Could Be Biggest Ever:

The 2015 Northland Field Days is shaping up to be the biggest ever according to organisers with more exhibitors, more competitions and better facilities than ever before.

From February 26 to February 28 people from Northland and beyond will flood into Dargaville for the Northland Field Days with high expectations

With over 450 companies exhibiting at the event this year Northland Field Days president Lew Duggan says interest has never been higher with exhibitors taking the extra effort to make site displays more dynamic and exciting than ever.

Those interested in getting a glimpse into Northland’s history will be getting a special treat this year say organisers but not one but two heritage organisations having displays at the event. . .

 Mammoth donkey heads for record books – David Farrier:

Jenny Clausen is famous in Taupiri for a very specific love – donkeys.

The locals call her the “donkey lady” thanks to the 30 or so donkeys she keeps at her and her husband’s dairy farm.

But Ms Clausen may also soon be in The Guinness Book of World Records for one of her donkeys.

Nutmeg is a mammoth donkey born and bred in New Zealand, and she’s bigger than your normal mammoth. . .

New Zealand and Australia Tie in the Trans-Tasman Wine Challenge:

New Zealand Winegrowers injected some old fashioned rivalry in ‘The Great Trans-Tasman Wine Challenge’ on Thursday evening in Auckland ahead of the New Zealand and Australia Cricket World Cup game at the weekend. The two nations channelled their trans-Tasman rivalry as they met head-to-head in a blind wine tasting.

After some rigorous judging lead by Bob Campbell MW and Nick Stock, the ‘dream team’ of top 12 wines turned out to be a perfect split from Australia and New Zealand with each nation claiming six places each. Australian wine, Campbells Merchant Prince Rare Rutherglen Muscat NV, was crowned “player of the match”. . .

 


Rural round-up

February 27, 2015

TB testing reductions another step in eradicating the disease:

Farmers and OSPRI continue to make good progress in their fight against bovine tuberculosis (TB) as high risk areas are reduced.

More than 3190 herds across 937,100 hectares will benefit from reductions in both Movement Control Areas (MCA) and cattle and deer bovine tuberculosis (TB) tests from 1 March 2015.

Herds throughout parts of North Canterbury, Otago and Southland will no longer require pre-movement TB testing, but will continue to be tested annually.

Dunsdale dairy farmer Kelvin Brock is moving out of the Hokonui MCA. He said the progress made by OSPRI’s TBfree programme through movement restrictions and possum control has been particularly satisfying. . .

 

Beef and lamb environment plan approved :

Environment Canterbury has approved a farm environment plan template for the beef and lamb industry under the proposed Land & Water Regional Plan.

Acknowledging the quality of the template, Environment Canterbury chief executive Bill Bayfield said Beef + Lamb New Zealand had met all the requirements of Schedule 7 of the proposed plan.

“We hope the farm environment plans that come from this template are valuable both for farmers and for Beef + Lamb,” Bayfield said. . .

Tagged stock have added value – NAIT – Gerard Hutching:

The move towards tagging and registering all cattle and deer will be a significant boon to farmers and the New Zealand economy, says the agency administering the system.

Farmers have a deadline of July 1 this year to ensure all their cattle are tagged and registered. Deer will have to be up-to-date by March 2016.

Dr Stu Hutchings, head of the OSPRI’s National Animal Identification and Tracing (NAIT) scheme, said there were three main benefits of tagging: for biosecurity; food safety/market access; and farm management.

“The dairy sector thinks about biosecurity implications from a disease perspective such as foot and mouth, so for them it almost becomes an insurance policy,” he said. . .

Nation’s Top Lamb Finalists Announced:

The finalists of the 2015 Beef + Lamb New Zealand Golden Lamb Awards, aka the Glammies, have been announced.

Following stringent scientific testing, over 150 entries have been narrowed down to 20 in the search for the nation’s most tender and tasty lamb.

Carne Technologies General Manager, Nicola Simmons says the tests they run look at yield and the attributes which are relevant to the end product.

“We analyse each lamb leg entry using objective measurements for tenderness, colour and succulence as these are ultimately factors which affect the consumer’s eating experience,” says Nicola. . .

 

The evolution of Fonterra – Keith Woodford:

[This is the first of a series of five articles on Fonterra that I have been writing for the Fairfax NZ Sunday Star Times. This one was published on 1 February 2015.]

It is now a little more than 13 years since Fonterra was formed. In that time, all of the foundation directors have moved on. There have also been three Chief Executive officers (CEOs) and at least four Chief Financial Officers. None of the current top level management team that reports to the CEO were there at the start.

Fonterra itself is a very different company to those early days. It started off as a traditional co-operative, in which members owned shares in proportion to their production. These shares were purchased directly from the co-operative at a price which the co-operative determined. If a farmer ceased production, then the shares were sold back to the co-operative at the current buy/sell price as determined by Fonterra. Given that production and ownership were aligned, any apportionment between what was paid for the milk and what was paid as a dividend on invested capital, was of no material consequence. . .

Synlait Farms rebrands as Purata:

Synlait Farms – the former subsidiary business of Synlait Ltd – has rebranded as Purata.

With Latin and Maori origins meaning ‘clear, bright – like a beautiful morning,” Purata’s name reflects the company’s new vision post ownership change, says Purata CEO Juliet Maclean.

Accompanied by the tagline ‘Farming for Tomorrow’, the Purata brand embodies the company’s focus on innovation, sustainability and creativity.

Juliet Maclean says changing the brand name, tagline and colour palate will help Purata reinforce its separate identity since leaving parent company Synlait Ltd. . .

 

Positive forecast for PGG Wrightson - Alan Williams:

PGG Wrightson is forecasting a very solid increase in annual earnings after reporting its strongest interim result in seven years.

The after tax profit for the six months ended December 31 was $19.7 million, up from $13.4m in the same period a year earlier.

Though there were still several months of trading and the risk of lower farmer spending because of drought conditions, managing director Mark Dewdney said the group was now forecasting operating earnings (Ebitda) of between $62m and $68m for the full year to June 30, up from $58.7m last year. . .

A weather eye on the climate - Pete Mailler:

A FEW years ago my oldest daughter came home from school in a state of high agitation. I quizzed her on what was concerning her, to which she replied angrily that I was killing the polar bears.

Apparently she had learned at school that our collective continued use of petrol and diesel was causing global warming and this was threatening the bears. In her young mind this was interpreted as the fuel use on our farm was directly and singularly the cause of the problem.

“My agricultural science training compels me to rely on good science in forming my own opinion”

I was more than a little disgusted that climate activists were able to terrorise my daughter in such a way. However, as much as it pains me to say so, it did cause me to check my own assumptions and attitudes to climate change. . .

"Bales as far as the eye can see :-D<br /><br /><br /> #Baling #RounBales"


Fonterra holds payout

February 27, 2015

Fonterra’s announcement that it is holding the season’s forecast payout at $4.70 with an estimated dividend range taking it to $4.95 – $5.05 for the current season will have disappointed many after successive increases in the GlobaDairyTrade auction and  commentators had suggested an increase to $5.

Chairman John Wilson said that although dairy commodity prices had gone up, the increase was not sufficient to raise the forecast Farmgate Milk Price at this time.

“Since December, GDT prices for Whole Milk Powder have increased 45 per cent and Skim Milk Powder prices have increased 13 per cent,” Mr Wilson said.

“There continues to be significant volatility in international commodity prices. New Zealand volumes are down, with continued uncertainty in milk production due to climatic conditions in New Zealand with droughts in Canterbury, Marlborough, Central Otago and North Otago.

“Today’s forecast reflects the Board and management’s best estimates at this time. We are advising farmers to continue to be cautious with budgeting and we will update them as the season progresses.”

Chief Executive Theo Spierings said Fonterra was sticking to its strategy, with confidence in the long-term fundamentals of dairy demand.

“We will provide a full business update when we report our Interim Result on 25 March,” Mr Spierings said.

Fonterra is required to consider its forecast Farmgate Milk Price every quarter as a condition of the Dairy Industry Restructuring Act (DIRA). . .

 

But maintaining the payout will give farmers confidence.

Fonterra Shareholders’ Council Chairman, Ian Brown said the Co-operative’s announcement to maintain the 2014/15 forecast Farmgate Milk Price at $4.70 per kg/MS will be a relief for Farmers.

Mr Brown: “On-farm conditions have been really tough throughout the country and Farmers will be pleased that the recent downward trend has stopped.

“It has also been encouraging to see GlobalDairyTrade, and in particular Whole Milk Powder prices, increase significantly recently and given what took place late last year it will go some way to building confidence on farm.”

Mr Brown said that Farmers will be looking with great interest when the forecast dividend is announced at the interim results in late March.

“Our Farmers will want to see the strategy, which is key to adding value long term, deliver a return relative to the significant investment they have made and continue to make in their Co-op.

“In the interim, as always, the Council urges Farmers to be prudent in their financial planning to ensure they place their businesses in the best possible shape for next season.”

 

There is time for an increase but any is likely to be modest.

Most of this season’s milk has already been sold and while the outlook is more optimistic it is still volatile.


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