Rural round-up

March 29, 2015

Tenure deal exemption loss angers – Lynda van Kempen:

Two high country farmers who have gone through the tenure review process vented their ire this week about planned changes to the Central Otago district plan they say make a mockery of that agreement with the Crown.

”That agreement will count for nothing,” Nick Mackenzie, of Kyeburn Station, told the Central Otago District Council’s hearings panel.

Ralph Hore, of Becks, said the proposed changes would take away his rights as a landowner. . .

Lifestylers versus orchards – Lynda van Kempen:

The conflict between rural residential living and noisy rural activities was highlighted as lifestyle block residents squared off against orchardists in Alexandra this week.

Gas guns and sirens used for bird-scaring during the fruit season were spoiling rural residents’ peace over summer, several said, while orchardists said cherries boosted the Central Otago economy by about $50 million a year and the total fruit crop boosted it by about $100 million annually.

The differing views were heard at Central Otago District Plan review discussion document hearings. More than 100 written submissions have been received on proposed changes to the plan and the district council’s hearing panel set aside three days this week to hear from those who submitted. . .

City kids schooled in rural jobs – Gerard Hutching:

He is just 16, but Michael McAdam knows exactly what he wants to do for a career.

“I want to become a head shepherd on a station, then a farm manager, and I would love to own my own farm if possible,” the Aotea College student says.

At a Get Ahead careers programme in Wellington, McAdam is one of 50 students who are learning what an agricultural sector career might offer. . .  

NZ dairy exporter Fonterra aims to lift profits after tough year – Sue Neales:

It has been a tough start to the year for the world’s biggest dairy exporter, New Zealand monopoly co-operative Fonterra.

Early this month, the $NZ11 billion ($10.7bn) company, which ranks as New Zealand’s biggest, became the target of an eco-terror scare, with an unknown blackmailer threatening to poison its lucrative baby milk formula exports unless local politicians banned the use of 1080 poison to kill possums in forestry plantations.

This week, the company reported another round of disappointing half-yearly ­financial results, immediately pushing Fonterra’s listed-units down 8 per cent. While Fonterra’s ownership remains with farmers, the units give outside investors exposure Fonterra’s performance. . .

Claim Europe set to outstrip NZ:

Dairy farmers must get used to milk price swings even worse than this year’s collapse, according to a leading analyst.

Torsten Hemme, managing director at the International Farm Comparison Network (IFCN) dairy research centre, said farmers could see prices move 50% once or twice every 10 years.

Swings of 20%, close to what British producers faced in 2014-15, could become the new normal and managing that risk was the biggest challenge in the industry. . .

New world opens up for European dairy farmers:

European dairy farmers will wake up to a different world on April 1.

The end of milk quotas will see the limits on European production disappear so farmers and processors will be free to pursue growing world demand.

But the post-quota world will bring new challenges, a Rabobank report has forecast. . .

Managing risk for food manufacturers: Lincoln offers industry short courses:

Increasingly complex and rapidly changing patterns in global food consumption, manufacturing and retailing are creating a whole new range of problems in food safety, according to Lincoln University Senior Lecturer in Food Microbiology Dr Malik Hussain.

With commercial reputations on the line, the situation has prompted him and his colleagues, Senior Lecturer Dr Sue Mason and Associate Professor in Toxicology Ravi Gooneratne, to organise a range of food safety short courses for industry professionals, with the first three courses commencing in April.

The courses are run through the Department of Wine, Food and Molecular Biosciences, and will involve participation from industry experts from the likes of AgResearch and The Institute of Environmental Science and Research. . .

 


Rural round-up

March 28, 2015

Mackenzie Country Station Wins Supreme in 2015 Canterbury Ballance Farm Environment Awards:

Omarama high-country farmers Richard and Annabelle Subtil are the Supreme Winners of the 2015 Canterbury Ballance Farm Environment Awards (BFEA).

At a BFEA ceremony on March 26, the Subtils also collected the Massey University Innovation Award, WaterForce Integrated Management Award, Ballance Agri-Nutrients Soil Management Award and the Environment Canterbury Water Quality Award.

Richard and Annabelle run 12000ha Omarama Station – a family-owned property previously farmed by Annabelle’s parents Dick and Beth Wardell. . .

Guardians of the land a family tradition – Jill Galloway:

Broadlands Station has 250 hectares in trees, many of them in gullies or on banks, saving the land from slipping.

The farm goes from the banks of the Pohangina River to the foothills of the Ruahine Range in Manawatu. There are 1650 hectare in all, 1400 of them are effective – running sheep and beef.

Broadlands stood out at the Ballance Farm Environment Awards because of its tree programme but also for other reasons. The other finalists for the supreme award were all dairy farms. . .

Is Gypsy Day too disruptive for rural people? :

Discussion is underway about less disruptive methods of moving farms as Gypsy Day looms.

On June 1 thousands of sharemilkers will pack their cows into stock trucks and move equipment and families to new farms. It is a familiar sight which sums up the traditional path of progression in New Zealand’s dairy industry.

DairyNZ strategy and investment leader, people and business, Mark Paine said getting away from the traditional Gypsy Day was one of the issues explored at a workshop that focused on improving the reputation and experience of working in dairying. . .

 

 It can only get better – Annette Scott:

Nothing too flash or expansive for farmers came out of Fonterra’s half-yearly report, dairy farmer Chris Ford says.

Fonterra maintained the 2014-15 forecast Farmgate Milk Price at $4.70/kg milksolids (MS) but lowered its forecast dividend by 5c to 20-30c.

“What it means for most is that the tough just gets tougher,” the Mid Canterbury equity manager said. . .

 NZ milk powder futures drop as Fonterra lifts GDT volumes, signalling prices will fall - TIna Morrison:

(BusinessDesk) – New Zealand whole milk powder futures dropped after Fonterra Cooperative Group said it will increase the volume of product it puts up for sale on the GlobalDairyTrade platform, suggesting prices may extend their decline in next week’s auction.

Auckland-based Fonterra, the world’s largest dairy exporter, has increased the amount of whole milk powder it will offer at the upcoming April 1 auction in Contract 2, which covers product with a June shipping date, by 14 percent to 4,965 metric tonnes. Whole milk powder futures for June delivery dropped US$230 a tonne to US$2,400 a tonne today. At last week’s GDT auction, whole milk powder fell 9.6 percent to US$2,928 a tonne. . .

Bittersweet response to bee code – Rebecca Sharpe:

THE honey bee industry is set to be modernised with the adoption of the industry’s first biosecurity code of practice.

The Australian Honey Bee Industry Biosecurity Code of Practice is in the draft stage, which has received mixed feelings from beekeepers.

Glen Innes-based Craig Klingner, who is chairman of the industry working group developing the code, said the bee industry had to “step up”.

“All the (states’) Department of Primary Industries are slowly walking away from us so unless the industry steps up, we’re going to go without,” he said. . .

 

 


Fonterra holds forecast payout drops dividend UPDATE – Synlait increases forecast

March 25, 2015

Fonterra is maintaining its forecast milk payout for the current season but is dropping the proposed dividend.

In a newsletter to shareholders, chair John Wilson said:

  • We are holding the forecast Farmgate Milk Price at $4.70 per kgMS.
  • However, we are lowering our forecast dividend to 20-30 cents per share, resulting in a forecast Cash Payout of $4.90 – $5.00.
  • The Board has declared a 10 cent interim dividend to be paid on April 20 (the record date is April 10).
  • The half-year results will be below your expectations, in a period when the Milk Price is low and the forecast dividend range is being reduced.
  • The results are due to tough conditions in dairy globally, with volatility in production and pricing, and further impacts of inventory valuation realities after our record Milk Price last year. . .

 

  • In summary, the results:
    • Forecast Cash Payout for the 2014/15 season, maintained at $4.90 – $5.00
      • Forecast Farmgate Milk Price $4.70 per kgMS
      • Estimated full year dividend of 20-30 cents per share
    • Revenue $9.7 billion, down 14 per cent
    • Normalised EBIT $376 million, down 7 per cent
    • Net profit after tax (NPAT) $183 million, down 16 per cent
    • Interim dividend of 10 cents per share.

Farmers will be relieved the milk payout is not being reduced.

UPDATE:

Synlait has increased its forecast milk price.

Synlait Milk has increased its forecast of the market milk price for the FY2015 season from $4.40 per kgMS to a range of $4.50 – $4.70 per kgMS.

“The market has recovered faster than expected, but recent volatility has shown us it still remains fragile,” said John Penno, Managing Director.

Mr Penno also acknowledged how financially difficult the current season is for suppliers and says this increased forecast market milk price range will be well received.

“Cash flows are incredibly important for our suppliers, particularly as they head into winter. We indicated in February that our next update would be in May, but given current market conditions, I’m pleased we can provide one now”.

Mr Penno added that this update will enable Synlait suppliers to manage their finances with more certainty and a corresponding increase in advance rates will further support this.

“We believe the market will continue to recover in the medium term as consumption expands and production growth slows in response to lower pricing. However, we remain mindful of the additional milk growth likely to come from Europe as milk production quotas are removed on April 1”.

“We will continue to keep an eye on the market and expect to update our forecast market milk price towards the end of May 2015”.

 


Korea FTA worth million$

March 24, 2015

The signing of the Free Trade deal with Korea, singed by Trade Minister Tim Groser yesterday  has the potential to add millions of dollars in extra export earnings.

“Improving access to international markets through free trade agreements is a key component of the Government’s Business Growth Agenda. Supporting our exporters is crucial to creating new jobs and boosting incomes for New Zealanders,” says Mr Groser.

“This Agreement secures the long-term future of New Zealand exporters to Korea whose international competitors were benefiting from Korea’s other FTAs.

“It reduces barriers to trade and investment, provides greater certainty about the business environment and ensures our exporters remain competitive in each other’s market.”

On entry-into-force, tariffs on 48.3 percent or NZ$793.7 million of New Zealand’s current exports to Korea will be eliminated. The Agreement will progressively remove tariffs on 98 per cent of New Zealand’s exports to Korea.

“Particular success stories include the removal of wine tariffs of 15 percent on entry into force, and the removal of 45 percent tariffs on kiwifruit effectively five years after entry into force,” says Mr Groser.

“It will also make possible a new level of cooperation in areas like agriculture, the creative economy, the environment and education, and spur greater investment.”

The FTA will offer improved protections for New Zealand investors in the Korean market, and reinforce the attractiveness of New Zealand as a stable investment destination.

Prime Minister John Key and President Park Geun-hye of Korea witnessed the signing of the Agreement by Trade Ministers Tim Groser and Yoon Sang-jick in Seoul.

“The Agreement shows the strength of the relationship between New Zealand and Korea. It symbolises our countries’ commitment to economic openness and market integration in the Asia-Pacific region,” says Mr Key.

“Korea is one of New Zealand’s biggest and most important trading partners. This Agreement makes it easier for Koreans and Kiwis to do business with each other, and the removal of tariffs will benefit consumers in both countries.

“At the moment, New Zealand exports into Korea attract NZ$229 million a year in duties.  Tariff reductions in the first year of the FTA alone will save an estimated NZ$65 million.”

The Agreement now needs to be ratified by the New Zealand Parliament.

“We are keen for the Agreement to come into force this year,” says Mr Key.

“With a population of over 50 million and as the 13th largest economy in the world, Korea is an attractive market for New Zealand exporters.” . . .

Korea is New Zealand’s sixth largest export destination for goods and services and our eighth largest import source, with total two-way goods trade of NZ$4 billion.

Once ratified by parliament, the FTA will open the door to better business for Koreans and New Zealanders.

It makes the eggs in other trading baskets than China more valuable, will give better returns for our exporters and more choice and lower prices for consumers in both countries.


GDT drops 8.8%

March 18, 2015

Fonterra’s GlobalDairyTrade price index dropped 8.8% in this morning’s auction.

That’s disappointing after six successive increases and may or may not be a consequence of the threat to lace infant formula with 1080.

gdt18.5.15


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.


GDT up 10.1%

February 18, 2015

Dairy farmers got a morale boost with a 10.1% increase in the GlobalDairyTrade price index this morning.

gdt18215

gdt18.2.15

gldt18215

 


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