Rural round-up

September 30, 2016

Pasture to plate approach for DCANZ regulatory manager Dianne Schumacher – Sue O’Dowd:

A Taranaki microbiologist skilled in the development of regulatory strategies for the New Zealand dairy industry brings a perceptive pasture-to-plate approach to her work.

Dianne Schumacher, who owns a 62-hectare dairy farm milking 110 cows near Stratford with husband Chris, joined the Dairy Companies Association of New Zealand (DCANZ) as regulatory manager in January this year. 

She brings to the role broad international and national food safety expertise gathered during her 30-year career in the dairy industry. . . 

The short-term or long-term game – Rick Powdrell:

With hotly contested demand for stock, farmers and meat processors need to think carefully about their existing strategy and what it means for our industry in the long-term.

Rural New Zealand has been through a challenging climate in recent years, with many farmers still enduring the ‘fallout’ and adjusting their farm policies going forward as they look to return to normal.

Whether you have been through severe drought or de-stocked as a result of last season’s perceived strong El Nino you will be looking to re-stock to more normal numbers. . . 

NZ wins from trade deals –  Mike Chapman:

The question many people are asking is, ‘which trade deal will it be: the Trans Pacific Partnership (TPPA) or the Regional Economic Partnership (RCEP)?’

So much focus has been on the TPPA it is very likely few people in New Zealand know anything about RCEP. The main difference is that the TPPA has the US as one of the partner nations, but not China; while, the RCEP has China as one of the partner nations, but not the US. Neither the US nor China is in both the TPPA and RCEP. For many nations, preferential access to both the US and China is a major goal.

The Peterson Institute assessment is the TPPA will increase annual real incomes in NZ by $US6 billion – 2.2% of our gross domestic product. It will increase our annual exports by $US9b –10.2% of our exports over baseline projections by 2030. This is because the TPPA will eliminate 75% of tariffs when it comes into force and 99% of tariffs when it is fully in force. For horticulture there are real trade benefits totalling around $26m per annum directly due to reduced tariffs. . . 

Time to review your calving date? – Wilma Foster:

With calving almost over and mating on the horizon it’s time to have a review of one of the most significant decisions you will make for next season, calving date.

There are four significant decisions you make on farm every year. They are calving date, stocking rate, BCS at calving and pasture cover at calving.

Historically calving dates were 10-14 days later than what we currently calve.

This has been due to a desire to increase days in milk, farmers mating rising 2-year heifers earlier than the main herd to improve their incalf rates, and the use of bulls with a shorter gestation. . . 

Beetle pest deterred by mussel shell mulch:

Research to find natural ways of reducing insect pest damage in vineyards was highlighted at the 2016 Romeo Bragato Conference – the largest conference for wine growers and makers in New Zealand.

Mauricio González-Chang, a Lincoln University PhD student in the Bio-Protection Research Centre, presented evidence that mineral feeding deterrents and mussel shell mulch can protect vines from grass grub beetle attack.  

Mauricio’s study of vines in the Awatere Valley in Marlborough, found that natural silica-containing feeding deterrents, such as kaolin particles (hydrophobic particle films) and diatomaceous earth, reduced the damage caused by beetles by about a third in chardonnay, and a half in pinot noir grape varieties.  

While the silica results were promising, the greatest reduction in damage was seen when crushed mussel shells were spread under the vine rows. The shells affected landing behaviour of the beetles and resulted in a two-thirds reduction in feeding damage. .  .

Bring your ag innovations to the table :

Innovative food and agribusiness start-ups and fledgling ventures will have the opportunity to showcase themselves to potential investors in Sydney in November.

FoodBytes! Sydney will be staged as part of the international Farm2Fork Summit, focusing on future innovation in food and agriculture, to be held on Thursday, November 3.

Originally launched in the United States in 2015, FoodBytes! is designed to find the most innovative concepts in food and agriculture and pair that creativity with the capital needed to bring them to market. . . 

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I am a farmer. I solve problems you don’t know you have in ways you can’t understand.


Rural round-up

September 29, 2016

Farmer allegedly shot at by poachers – Paul Mitchell:

An elderly farmer gave chase after he was allegedly shot at by a group of poachers in the early hours of the morning. 

The farmer, 75-year-old Alisdair Macleay, had no second thoughts about his actions.

“I’m 75, so I don’t mind dying in the chase. I wasn’t going to let them get away,” he said. . . 

Grant Norbury – testing potential predator control techniques – Kate Guthrie:

A week or two ago, Alexandra-based Landcare Research scientist Grant Norbury found himself alone in the middle of the remote Mackenzie country, syringe in hand, squirting Vaseline onto rocks. He had to laugh.

“It’s such a weird way to protect dotterels,” he says.

Yes it is. But weirdness aside, the science behind his latest ‘chemical camouflage’ research project is fascinating. It’s all about making predators bored with birds, so that they stick to their normal prey like rabbits and mice. . . 

Bayer’s Monsanto deal to be closely watched by NZ farmers as agri-chemical players dwindle – Jonathan Underhill:

(BusinessDesk) – Bayer’s US$66 billion acquisition of Monsanto, creating the world’s biggest supplier of seeds and agri-chemicals to farmers, will be closely watched by New Zealand’s rural sector as the latest in a series of deals that has shrunk the number of competitors in the market.

Bayer and Monsanto are two of the big seven companies selling agricultural chemicals in New Zealand. Of the other five, Dow Chemical is in the process of a global merger with DuPont and Swiss seed giant Syngenta is close to being acquired by China National Chemical Corp, which already owns Adama. Of the others, ASX-listed Nufarm had a distribution agreement with Monsanto for its Roundup glyphosphate products up until 2013, while Bayer rival BASF reportedly held inconclusive talks with Monsanto earlier this year . . .

International Judges to preside over record entry for the New Zealand Extra Virgin Olive Oil Awards:

A record of 136 entries has been received for the 2016 New Zealand Extra Virgin Olive Oil Awards; 117 Extra Virgin and 19 Flavoured olive oils. The previous best entry was less than 100.

The international judges are Reni Hildenbrand from South Africa, Georges Feghali from Lebanon, Robert Harris from Germany/Australia along with New Zealand judges Charlotte Connoley from Auckland, Rachel Priestley from Greytown and Rachel Costello from Nelson. . . 

Wagyu sire progeny test underway:

THE Wagyu breed is set to benefit immensely from Australia’s first sire progeny test where net feed intake (NFI) is assessed in a commercial feedlot situation.

Australian Wagyu Association and Kerwee Lot Feeders on Queensland’s Darling Downs have developed a comprehensive program with the first intake of 180 head representing nine sires in the feedlot since  the start of August.

Kerwee has installed GrowSafe feed bins, the first available in a commercial feedlot in Australia, in two pens with a total capacity of 180 head.  Three intakes a year can be assessed. . . 

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We work in acres not hours – Pink Tractor


Rural round-up

September 27, 2016

Drones to aid farm work :

Rab Heath grew up on a farm so he knows that grass equals money.

However, keeping an eye on your pasture takes time, and a huge amount of physical effort when checking soil conditions in every paddock.

Rab’s worked out a way to do this remotely, using drones. . . 

Canterbury farmers face bleak irrigation season – Thomas Mead:

Canterbury farmers face a tough spring with several key irrigation rivers already on restriction after a third straight year of low groundwater levels, with some wells, streams and springs to dry up.

Poor rainfall has left alpine rivers well below their long-term averages, with the Ahuriri River in South Canterbury already on a full restriction preventing all kinds of irrigation. Other rivers, including the Rakaia, Waimakariri, Hurunui, and Rangitata, are partially restricted.

Environment Canterbury (ECAN) surface water science manager Tim Davie says the restrictions are designed to protect ecosystems and stream-life. . . 

Technology set to play big part in NZ agriculture:

Ultimately, for New Zealand to diversify its export base, technology will play a critical role in improving value-add in agricultural exports, a leading New Zealand agri-tech expert says.

Craige Mackenzie, chair of Precision Agriculture Association of New Zealand (PAANZ), says precision agriculture has a lot to offer the bright future of the second biggest New Zealand industry sector.

“There is growing interest in the benefits of precision agriculture for environmental and financial viability of our New Zealand farms but we have a challenge ahead to get greater engagement with more farmers and companies in this sector. . . 

NZ Farming Systems Uruguay to cut ties with NZ, posts biggest loss since Olam took control – Jonathan Underhill:

(BusinessDesk) – NZ Farming Systems Uruguay, set up by New Zealand investors in 2006, is to cut ties with the country after delivering its biggest-ever loss to owner Olam International of Singapore.

Olam has retained a New Zealand registration for the South American subsidiary since buying out minority shareholders and delisting it from the NZX in late 2012, with its registered office care of law firm Buddle Findlay in Auckland. But the latest annual report of Farming Systems says the group “has the intention to deregister the parent company from the NZ Companies Office and migrate to Uruguay.”

Farming Systems appears to have been hard hit by the downturn in global prices of dairy products, with its net loss widening to US$74.5 million in the year ended June 30, from US$69.5 million a year earlier. Sales fell 34 percent to US$48.9 million. . . 

NZ dairy farm prices show sharp rise, REINZ figures show – Edwin Mitson:

(BusinessDesk) – The median price per hectare for a New Zealand dairy farm sales has increased by more than 50 percent on a year ago, Real Estate Institute of New Zealand figures show.

In the three months to the end of August 2016, the median sales price per hectare was $40,469, with 14 properties sold. In the same period a year earlier, the median price was $26,906, with 21 properties sold, a rise of 50.4 percent.

The figures cover the winter period, with REINZ noting that the low level of sales can distort statistics. The median size of a dairy farm sold was 100 hectares. . . 

Venison sales set to soar this spring as Kiwis become more adventurous and health conscious in the kitchen:

Duncan Venison has reported a surge in demand from consumers and professional chefs in the run up to spring and summer, indicating that Kiwis are recognising the health and taste benefits, are starting to see it as a year-round option, and are also becoming more adventurous with how they cook it.

The company is selling considerable quantities of venison to restaurants and home cooks per week, with no sign of sales slowing down as the warmer weather approaches. This includes the “Bistro Fillet from Pāmu Farms,” a tender, pan ready cut that was developed earlier this year, and is now on the menu at restaurants such as The Sugar Club, Sails Restaurant, The French Café, Paris Butter, and Clooney.

Since the 1st July launch, sales of Bistro Fillet have exceeded budgeted volumes by over 50%, with a number of restaurants still to change over to their spring menu. . . 

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Because of their connection to the land, farmers do more to protect and preserve our environment than almost anyone else. They are some of the best environmentalists around  – Ike Skelton.


Rural round-up

September 26, 2016

A woman’s influence can help make NZ’s primary industry great:

While the boardrooms of the various primary sectors are crowded and still male-centric, a natural flair for networking and the rise of new technologies like social media are contributing to the growing influence of women in the industry.

Finalist in the Women of Influence awards for 2016 and director of Grass Roots Media in Feilding, Chelsea Millar, says one of the biggest questions for women who haven’t started a career, or who may have paused to have a family, is figuring out where they fit in the primary industry picture.

“I think that women are key decision-makers on the farms and in the businesses of the primary sector, and they can benefit from understanding that they bring a different perspective to the business. We are living in a world where producers have to be business people, and where technology has reduced the physical demands that previously characterised primary work – so there’s room for everybody.”  . . 

From the Lip – swimming in murky waters – Jamie Mackay:

There’s no doubting the most contentious issue in farming is water; not only the storage and harvesting of this most precious of commodities but, perhaps more importantly, the maintenance of its quality.

To that end, on The Country, we hosted the Great Water Quality Debate last week. In the red corner we had the controversial and outspoken water scientist, Dr. Mike Joy from Massey University, and in the blue corner it was Jacqueline Rowarth, a Professor of Agribusiness from Waikato University.

In conjunction with the on-air radio debate we ran a poll on our website asking, “Is intensive dairy farming degrading our waterways?” At the time of writing, from 650 respondents, 74% said yes, 22% no and 4% did not know. . . 

Network fills gap for rural women Pam Tipa:

Dairy Womens Network (DWN) fills many gaps for women in rural areas, including providing a social network and upgrading their skills, says chief executive Zelda de Villiers.

De Villiers was responding to the findings of a student research project from the Lincoln University Kellogg’s Rural Leadership Programme, by NZ Young Farmers communication manager Nadine Porter.

The survey found 57% of rural women feel isolated, and many find their skills and training from university or career are not being utilised. . . 

Avocado has start status – Jen Scoular:

With the growing body of scientific and nutritional research that revers them as a ‘superfood’, avocados have never been more popular.T

This summer the industry is set to deliver a whopping 7.6 million trays into export markets and the New Zealand market — nearly double the volume last year.

As a result of the success of the marketing programme in New Zealand, the real work being done to educate both retailers and consumers about avocados and the global celebrity status of this wonderful fruit — we all felt the impact of a low crop last year. . . 

Global animal health company sets up in NZ:

Benefits previously only available overseas from world-leading anti-infectives are now available for New Zealand’s dairy farmers, claims David Barnett of Ceva Animal Health.

Ceva describes itself as one of the world’s fastest growing and largest animal health companies.

“Possibly you will not be familiar with the name, but don’t let that put you off,” Barnett says. “Ceva is a significant R&D company based all across the world and has now set up a base in NZ to bring significant innovation to local farmers.”

Barnett says two new anti-infectives form the company are available this spring. . . 

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Today the average US farmer feed 155 people. In 1960 a farmer fed just 26 people. – AMERICASFARMERS.COM


Rural round-up

September 23, 2016

Farmers must ‘lock in the gains’ as milk price lifts:

DairyNZ is encouraging farmers to lock in the gains achieved in the past two seasons, as a pasture-first farm system will continue to provide payback as the milk price rises.

Chief executive Tim Mackle says the increase to $5.25 per kg MS for the forecast 2016/17 Fonterra Farmgate milk price is terrific news for dairy farmers.

“This brings many farm businesses to around the 2016/17 break-even milk price of $5.05 per kg MS, once retrospective payments and dividends are taken into account. This means fewer farmers will need to borrow extra funds this season,” says Tim.

“Retrospective payments for next year have also been boosted by 20-25 cents in this announcement, to over $1 per kg MS. . . 

New funding for Mayfield Hinds irrigation scheme:

Primary Industries Minister Nathan Guy has welcomed $345,000 in new funding to investigate expansion of the Mayfield Hinds irrigation scheme in mid-Canterbury.

The funding comes from the Ministry for Primary Industries’ Irrigation Acceleration Fund (IAF)and will look at the feasibility of increasing the irrigated area of the current scheme by 4,500 hectare through piped extensions.

“Storing alpine water to use in dry times is crucial for rural communities to thrive, especially as the climate becomes more variable,” says Mr Guy.

“Well planned and managed irrigation schemes are good for rural economies and the environment. . . 

Fonterra says China well-poised for growth, regulatory changes will see 1800 brands disappear – Fiona Rotherham

(BusinessDesk) – Fonterra Cooperative Group chief executive Theo Spierings says legislation will mean drastic changes in the Chinese infant formula market with the removal of between 1800 and 2000 brands in the next 15 to 18 months.

Regulatory changes require each entity to have only three brands and three different recipes of infant formula in a bid to crack down on the grey market and allay consumers’ food safety concerns by reducing fake formula.

Spierings said Fonterra was well-positioned in every segment in China where it is already the global market leader for ingredients such as whole milk powder but a lot of things have changed in the past few years including a shift to sales from mother and baby shops to e-commerce. . . 

NZX milk futures fall from record after GDT, still above Fonterra payout forecast – Tina Morrison

(BusinessDesk) – New Zealand milk price futures have fallen in the wake of the latest GlobalDairyTrade auction, having reached a record in the run-up to this week’s sale, but remain above the payout level forecast by most of the country’s milk processors.

The NZX milk futures contract for the 2016/17 season hit a record $5.65 per kilogram of milk solids ahead of the GDT overnight on Tuesday, and recently traded at $5.50/kgMS. That’s still above the base milk price forecast by the country’s major milk processors, with Fonterra Cooperative Group this week updating its forecast to $5.25/kgMS, while Synlait Milk’s is at $5/kgMS, Westland Milk Products at $4.75-to-$5.15/kgMS, Miraka at $4.55-to-$4.80/kgMS, and Open Country Dairy at $4.60-to-$4.90/kgMS. Tatua sits above the futures with a current forecast of $5.50-to-$6/kgMS while Oceania Dairy didn’t immediately respond to a request for its forecast. . . 

NZ Merino and Silver Fern Farms set out new path for Silere:

The New Zealand Merino Company (NZM) and Silver Fern Farms have reached agreement for NZM to take 100 per cent ownership of Alpine Origin Merino Limited, previously owned jointly.

Alpine Origin Merino Limited was established 5 years ago as a joint venture between NZM and Silver Fern Farms to own the SILERE alpine origin merino brand and to fund the development and marketing of the SILERE merino meat range. Under the agreement NZM becomes the sole shareholder in Alpine Origin Merino Limited.

NZM Chief Executive John Brakenridge stated that “when we set out we needed to prove merino meat could be differentiated as a luxury eating experience and value created in market could be delivered to grower suppliers. . . 

Kiwi moves to Pitt island, with no electricity or phones, for love – Ryan Bridge:

There’s no love without sacrifice, right? How far would you be willing to go to make it work?

Story met Amy Podjursky during our flight to the Chatham Islands, and discovered she was moving hundreds of kilometres to a remote island in the name of love.

There’s no electricity or cellphones on Pitt Island – and there’s only around 50 people who actually live there. It’s quite uninhabited and it’s the eastern-most point of New Zealand. . . 

 

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Not all superheroes wear capes. Some wear boots and know how to use a crock pot – PinkTractor.com


Rural round-up

September 22, 2016

The P epidemic has reached Waikato farms – Chris Lewis:

Federated Farmers runs an 0800 helpline for members, which is a popular way our members get value out of their subscriptions. Increasingly we are getting member calls around drugs and alcohol and advice on how to address this growing issue.

We’ve previously provided advice to farmers who have had multiple houses contaminated with P and even advice to a farmer for an entire workforce that tested positive for drugs. Some of the common questions being asked include: If I don’t have a drug and alcohol policy, how do I go about testing my staff? And, am I insured for my houses and business?

So what are our rights as employers? Should you turn a blind eye so your cows get milked? It is time to directly answer some of the questions, and for you to get answers from experts who work in this field. . . 

SFF ‘unleashed’ by assent – Dene Mackenzie:

Silver Fern Farms would be a ”company unleashed” now approval for Shanghai Maling to buy 50% of the Dunedin meat processor had been confirmed, SFF chairman Rob Hewett said yesterday.

After months of debate and some opposition from dissenting shareholders, Shanghai Maling received approval yesterday to inject $261million into SFF and take a 50% share.

The decision was never in doubt, although the Overseas Investment Office process was a ”black box”, Mr Hewett said in an interview. . . 

Govt defends Wairarapa water grant:

A Wairarapa irrigation system which didn’t stack up economically still got taxpayer cash from the Ministry for Primary Industries, says a damning study commissioned by Fish & Game.

But MPI is standing by its decision and says the report is flawed.

Fish & Game has released an independent analysis of the Wairarapa Water scheme’s successful application for $821,500 from MPI’s Irrigation Acceleration Fund for stage 2 of the scheme, which aims to irrigate 30,000ha.

The 2014 application was based on a long run farmgate milk price of $7.07 per kg of milksolids, which was questionable, and that 55 percent of the irrigated land would quickly be converted to dairy, says author Peter Fraser, of Ropere Consulting. . . 

Strong 2015/16 Profit Result for Fonterra, Encouraging Milk Price Signals Ahead for Fonterra Farmers

Fonterra Shareholders’ Council Chairman, Duncan Coull, said Fonterra’s recording of its highest ever EBIT, which resulted in Fonterra Farmers receiving a 60% increase on the earning per share received last season, was a positive result in an otherwise challenging environment.

Mr Coull: “The final payout of $4.30 for a fully shared-up Farmer is reflective of the very tough season we have endured.

“However, it is encouraging to see that Fonterra, assisted by the low Milk Price environment, has further driven volume into value and captured efficiency gains which have cumulated into a strong dividend while also serving to strengthen our Co-operative’s balance sheet. . .

Self-resetting rat traps 20 times better than standard traps -study:

Self-resetting rat traps are 20 times more effective at killing the pests than standard traps, a new study has shown.

The project – conducted by Bay of Plenty Polytechnic student Chantal Lillas – compared the amount of rats killed by self-resetting traps over a 10-day period last month, compared to the single-action traps more commonly used.

The self resetting traps were developed by the company Goodnature in collaboration with the Department to Conservation, and could reset up to 24 times before it needed to be reloaded. . . 

Zespri Board announces succession planning for new CEO:

The Board of Directors of Zespri will start a search process next year to select a new Chief Executive Officer. The succession is being planned with a view to having the new CEO in place by the beginning of 2018.

The current CEO Lain Jager, who was appointed Zespri CEO in December 2008, will remain in the role until the new CEO starts.

Zespri Chairman Peter McBride says the Board is balancing continuity and renewal in the leadership of the organisation. “The Zespri Board has set out a process for succession at an optimal time. The timeframe helps to ensure continuity through this transition, which is important given Zespri’s critical role in the value chain for kiwifruit growers and customers globally.” . . 

NZ Merino lifts annual profit 19%, meets growth targets – Tina Morrison:

Sept. 21 (BusinessDesk) – New Zealand Merino Co, a wool marketer that aims to develop higher-value markets for sheep products, posted a 19 percent lift in annual profit and said its business has doubled in value over the past three years.

Profit rose to $2.7 million in the year ended June 30, from $2.3 million a year earlier, according to the Christchurch-based company’s 2016 annual report. Revenue rose 4.9 percent to $114.7 million, while cost of sales gained 5.7 percent to $104 million. It will pay its more than 500 growers a total dividend of $1.36 million, up from $1.1 million the previous year and in line with its policy of returning 50 percent of profit to shareholders. . . 

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Don’t complain about a farmer with your mouth full.


Value-add shows value of co-operative

September 22, 2016

Fonterra has announced a 65% increase in net profit after tax to $834 million which the company says reflects a stronger business despite ongoing challenges in global dairy markets.

Highlights:

Sales volume increased 4% to 23.7 billion Liquid Milk Equivalents (LME)

· Revenue $17.2 billion, down 9%

· Normalised EBIT $1.4 billion, up 39%

· Net profit after tax $834 million, up 65%

· Return on capital 12.4%, up from 8.9%

· Ingredients inventories down 25%

· Gearing ratio reduced to 44.3% from 49.7%

· Debt reduced by $1.6 billion to $5.5 billion

· Earnings per share 51 cents

· Cash Payout $4.30

– Farmgate Milk Price $3.90 per kgMS

– Dividend of 40 cents per share

 . . . Chairman John Wilson said that the 2015/16 season had been incredibly difficult for farmers, their families and rural communities, with global dairy prices at unsustainable levels.

“Our Co-operative has responded. We continued with the significant and necessary changes we began in the business over three years ago to support our strategy and its priorities, and worked hard to return every possible cent of value back to our farmers.

“Our business strategy is serving us well. We are moving more milk into higher-returning consumer and foodservice products while securing sustainable ingredients margins over the GlobalDairyTrade benchmarks, especially through speciality ingredients and service offerings.

“Through increased earnings and continuing financial discipline we have increased the return on capital and strengthened our balance sheet by significantly reducing debt.

“We have done what we can to support our farmers with the Co-operative Support Loan, and early payment of dividends.

“After a period of deliberate and disciplined attention to the business, we have become a stronger Co-operative operationally, financially and in our mindset with a clear sense of direction and a structure which will support real momentum in our strategy going forward,” said Mr Wilson.

Mr Wilson said farmers’ decisions to reduce stocking rates and supplementary feeding to help lower costs resulted in milk collection across New Zealand for the 2015/16 season declining to 1,566 million kgMS, down three per cent on the previous season.

Strong volume and value growth

Chief Executive Theo Spierings said more volumes of milk sold at higher value is at the heart of Fonterra’s strategy.

“For our farmers, the promise is that we will make the most of their milk. We’re keeping that promise.

“We’ve seen the real strength of our ingredients business this year. The money our farmers have invested in stainless steel is giving us more choice, and we have matched production to the highest value customer demand. In a difficult market, we increased ingredients normalised EBIT this year by 24 per cent to $1,204 million.

“In consumer and foodservice, we converted an additional 380 million litres of liquid milk equivalents (LME) into higher returning products, bringing our total volumes in this business up from 4.5 billion LME to 4.9 billion. Increasing our consumer and foodservice volumes, and especially our foodservice growth, meant we increased our normalised EBIT in this business by 42 per cent to $580 million.

“Our results show that we continue to do what we said we would do right across the Co-op. We are single-minded about transforming our business to get the best results. We have cut our operating expenses, increased our free cash flow, reduced our working capital days, driven debt down, and reduced our capex and our gearing.

“All of this effort, combined with higher earnings and margins meant our measure of return on capital has increased from 8.9 per cent to 12.4 per cent.

“Our results show how our strategy is creating value for our shareholders. We are driving more volume into higher value products, and we are achieving results with increasing efficiency. We will continue to build on this strong platform to keep improving and delivering results to our farmers.

Investing in our communities and future

“At the same time, we have kept our promise to share great dairy nutrition with our communities through Fonterra Milk for Schools, and through our Grass Roots Fund and Living Water partnership, we are looking after local communities and the environment.

“We can only do all of this with the support and commitment of our farmers, investors and employees. Throughout the year we have challenged our people to adapt how we work to better manage the shifts in the global market. It has been a real team effort and I want to thank all of our people in New Zealand and around the world,” said Mr Spierings.

Future outlook

With a forecast Farmgate Milk Price of $5.25 per kilogram of milksolids (kgMS), the forecast total payout available to farmers in the 2016/17 season is $5.75 to $5.85 before retentions. This includes a forecast earnings per share range of 50 to 60 cents.

Mr Wilson said over the past three years the Co-operative had worked hard to align its structure to its strategy with a focus on achieving more value for the volumes of milk produced by its farmers.

“The higher forecast earnings per share range reflects the performance improvements the business will continue making.

“It is still early in the season, and we expect continuing volatility as reflected in price improvements in recent GDT auctions.

“Current global milk prices remain at unrealistically low levels, but as the signs in the market improve, we are very strongly positioned to build on a good result in the year to come,” said Mr Wilson.

The last season was a very tough one for dairying with the milk price well below the $5.05 almost all farms need to break even.

However, lower milk price makes it easier for the company to make money on its value-added products.

This shows the value of  the co-operative model. It enables producers to share the dividends which off-set the low milk price, and it is why Fonterra suppliers are determined to retain ownership of the company.

In businesses which aren’t co-operatives, higher dividends can come at the expense of producers.

You can see the annual results here.


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