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

 


Protection penalises poor

February 17, 2015

Protectionist trade practices penalise the poor:

Trade policy adjustments to insulate domestic markets when world food prices spike have been ineffective in dealing with food price shocks that exposed millions of people to poverty in developing countries, a World Bank researcher told a New Zealand agricultural economics conference this week.

Dr Will Martin, the manager for agriculture and rural development research in the World Bank is an Australian who has worked for the Washington-based World Bank for the past 25 years. He is also President-Elect of the International Association of Agricultural Economists. He was speaking to more than 250 international delegates attending the Australian Agricultural & Resource Economics Society’s conference in Rotorua this week.

His analysis of detailed expenditure and agricultural production data from 31 developing countries assesses the impacts of changes in global food prices on poverty in an effort to understand their impacts on the poor.

Food price increases unrelated to productivity changes in developing countries raise poverty in the short run in all but a few countries. “That’s because the poor spend large shares of their incomes– frequently about 60-70 percent–on food and many poor farmers are net buyers of food,” he says.

“However, in the longer run, if prices stay high, two other important factors come into play. Poor workers are likely to benefit from increases in wage rates for unskilled workers resulting from higher food prices, and poor farmers are likely to benefit from higher agricultural profits as they produce more food. As a result, higher food prices appear to lower global poverty in the long run.”

He says a natural and understandable policy reaction for many countries when food prices rise is to lower domestic prices through levies on exports, temporary import tariff reductions, or import subsidies. “But these are beggar-thy-neighbour policies that push up world prices,” he says. He estimates that these policies accounted for nearly half the increase in world rice prices in 2007-8. Individually, most countries took action that reduced the impact of higher world prices on the poor. But, when the contribution of these policies to the higher world prices is taken into account, they turn out to have been ineffective.

“What countries need is a collective approach that enables relatively open trade to continue in those circumstances. Clearly, this still needs to be combined with social safety nets so poor people can cope in the short term, but then realise the longer term benefits of higher prices. We need to deliver policies that actually work rather than policies that appear to work.”

Dr Martin says countries need to develop this ‘social safety net’ so the poorest can get access to what they need when they need it.

He says the World Trade Organisation (WTO) showed with the abolition of variable import levies in the Uruguay Round that it can introduce trade policies that bring about the kind of collective action needed to tame food price spikes.

“The collective agreement of the EU-US over export subsidies in the Uruguay Round also showed what can be done when there is clear recognition of the problem. It’s much more complex when many more countries are involved but we need to keep working away at the challenge if we are to make progress. Getting the confidence of policymakers to act differently will require a lot more research and policy formulation.”

Most people, rich or poor, farmers or not are net buyers of food. All will be affected by price rises and the poor, who spend a greater proportion of their income on food,  will be hardest hit.

Export bans and other protectionist measures might help the poor in the short-term but it is a temporary fix.

Policies which increase wealth rather than those which artificially keep prices low provide the best long-term solution to poverty and hunger.

The solution to poverty and food shortages isn’t restrictive trade practices, it’s liberalising trade.

The challenge is how to help the poor cope with price rises in the short-term until they benefit from improved incomes which enable them to afford more food.

 


Rural round-up

February 12, 2015

Farmers trading risks with barns, study shows:

Investing in a wintering barn may feel good for the farmer but it won’t necessarily be profitable, according to a DairyNZ study.

DairyNZ senior economist Matthew Newman and AgFirst consultant Phil Journeaux, presented the interim results of the study to a conference in Rotorua today, indicating that the jury is still out on whether investing in a wintering barn is a good financial or environmental move.

The paper presented to the Australian Agricultural and Resource Economics Society’s annual (AARES) conference is based on analysis of a selection of five South Island farms with free stall barns. . .

Safer Farms a personal responsibility:

Speech by Peter Jex-Blake, Federated Farmers Gisborne/Wairoa provincial president to the SaferFarms launch at Wairakaia Station, Muriwai

First of all I would like to congratulate WorkSafe on the Safer Farms initiative. Improving farmer awareness and understanding of risks involved, along with education on how these risks can be minimised and or managed, is a far more effective approach than dishing out heavy handed fines which are totally disproportionate to the offence committed, and create much antagonism towards the regulators.

By nature, farmers are individuals who strongly believe in personal responsibility rather than having ‘big brother’ telling them what to do, and have an inherent intolerance for bureaucracy and attending to endless compliance documents. Family farms are still the backbone of the New Zealand economy, and often are run solely by family members. Farmers do what they do because they enjoy the lifestyle the business provides. It enables the family to be involved in the business. It is a challenging, demanding and complex business, so attending to increasing compliance and filling out of forms is not something that most farmers enthuse over, and does take away some of the enjoyment factor. . .

Biosecurity officials go to war over bug:

Biosecurity officials are raising a bit of a stink about a voracious bug that could cause havoc with fruit and vegetable crops if it gets loose here.

The Ministry for Primary Industries has scaled up treatment requirements for vehicles and machinery coming from the United States because of more frequent discoveries of the brown marmorated stink bug on these imports.

The stink bug originated in Asia, notably China, Japan, and Korea but has now invaded the United States where it is causing huge losses to crops. . .

China-NZ Customs work to enhance trade:

Customs Minister Nicky Wagner says New Zealand and China Customs authorities are a step closer to establishing a system to enhance trade assurance and facilitation under the New Zealand China Free Trade Agreement.

Ms Wagner and NZ Customs officials met with the Vice Minister of the General Administration of China Customs Mr Sun Yibiao and his delegation in Auckland today to discuss facilitating trade and combating drug trafficking.

“Trade with China is critical to our economy, and it’s important that traders’ documents meet our trade partners’ standards to ensure exports travel smoothly,” Ms Wagner says. . .

 

Julio’s first day of farming – Julian Lee:

Campbell Live reporter Julian Lee – also known as Julio – wanted to find out what it was really like to be a dairy farmer.

So he left the office for the day and stayed on the Downings’ Farm in Morrinsville and did an actual shift on the job.

Everyone in the Campbell Live office was so impressed by Julio’s first day as a dairy farmer, that we’ve decided to turn it in to a series: Have you got a job for Julio? . . .

Merino fashion brand PERRIAM expands with the launch of Little PERRIAM:

Little PERRIAM, the exciting, fresh new babies and children’s merino clothing label by Wanaka fashion designer Christina Perriam, launches online and in select retail outlets today.

Today’s release of the first Little PERRIAM range follows the successful launch of Christina’s new luxury lifestyle merino fashion brand PERRIAM, which took place in Tarras in October 2014.

Little PERRIAM replaces Christina’s hugely popular babies and children’s label Suprino Bambino as she continues to deliver her new brand’s overall vision. With similar design elements to Suprino Bambino, like fun prints, bold colours, touches of Liberty fabrics and on-trend designs, the Winter 2015 range of Little PERRIAM is expected to continue to be a hit with parents and kids.

 

Leading real estate company strengthens leadership of its rural division:

Bayleys Real Estate has strengthened its countrywide rural division – with the appointment of Simon Anderson to head up the company’s rural marketing and sales activities nationally in the newly created role of national country manager.

Mr Anderson has been involved with the company’s rural activities for 13 years as the regional rural manager for the Bay of Plenty, Waikato and Taranaki regions.

Based out of Bayleys’ Tauranga office, Mr Anderson will take on a strategic role to expand the agency’s national and international marketing of rural properties – ranging from horticulture, sheep and beef, forestry and viticulture sites, through to agricultural and dairying blocks. . .

 

 

 


Rural round-up

February 7, 2015

Landcorp Farming 2014/15 half year financial results:

Landcorp Farming has recorded operating revenue of $109.8 million for the six months to 31 December 2014 and a net operating profit of $1 million.

Landcorp Chief Executive, Steven Carden, said the first six months had been challenging and Landcorp is reviewing its full year profit forecast of between $1 -$6 million.

“A result like this will come as no surprise given the milk price and drought challenges. However we have cushioned the impact of these external factors by anticipating them early. One example is our support of the Fonterra Guaranteed Milk Price Scheme and another is our proactive livestock management around the country ahead of the drought.

“The fall in milk prices has significantly impacted our revenue, although we remain on track for a modest profit. . .

Responsible access theme of commission – Mark Neeson:

With summer here and New Zealanders embarking on their annual migration to the outdoors, it is an ideal time to reflect on the widespread access so many of us enjoy to our country’s lakes, beaches, rivers and mountains.

The outdoors provides opportunities to explore new places, and experience solitude, challenge, adventure, and a different perspective on life.

It is this image of New Zealand that is celebrated and promoted around the world, helping to create a thriving tourist industry. . .

Storm damages crops – Leith Huffadine:

A Dumbarton fruitgrower says a storm on Sunday afternoon has ”written off” most of the crops on his property.

The man, who did not want to be named, said his corn, pumpkins and peaches had been damaged in the downpour, which was localised to Dumbarton, between Roxburgh and Ettrick, and some surrounding areas.

”There might be a wee bit left but not much. [There’s] nothing there of any value.” . . .

Family affair keeps family farming dream alive – Sonita Chandar:

The dreams of a Taranaki farmer have become reality although he did not live to see them to fruition.

Duncan and Fiona Corrigan planned to expand their Hawera farm but when Duncan died in October 2012 his family continued what he started.

Josh, 22, the second eldest of 10 children, put his career on hold and took on the challenge of managing it. . .

 US fans raise their glasses to Kiwi wine - Gerard Hutching:

The United States is likely to become New Zealand’s leading wine destination this year.

Although more litres were shipped to Britain last year, the US is tipped to soon overtake that amount.

In terms of value, Australia is just ahead of the US, but that should also change this year.

For the year ended November 2014, wine exports to the US were worth $348 million, to Australia $360m and Britain $332m. . .

New Zealand Rural Games added 22 new photos to the album: The Running of the Wools — at Queenstown NZ

More than 350 merino sheep from Bendigo and Mt Nicholas stations in downtown Queenstown to preview the ‪#‎Hilux‬ New Zealand Rural Games 2015.

New Zealand Rural Games's photo.New Zealand Rural Games's photo.
New Zealand Rural Games's photo.

 The Farming Show added 3 new photos.
A great start to the Hilux New Zealand Rural Games as 350 merinos were herded through central Queenstown! Looking forward to all the rest of the events kicking off tomorrow morning from 8! The Farming Show's photo.
The Farming Show's photo.


Rural round-up

February 6, 2015

Project to reduce nitrate levels in Ashburton:

A project looking to reduce nitrate levels in groundwater around Ashburton is underway.

The Hinds Drains working party was exploring ways to address what it said were consistently high levels of nitrates in the lower Hinds Plains’ groundwater.

The working party was helping the Ashburton Zone Committee, which was responsible for local water management, with recommendations on minimum flows and water allocations.

Committee chair Donna Field said a Managed Aquifer Recharge, or MAR, project was being explored to manage declining water quality and quantity in the catchment. . .

Delays at slaughter houses:

Dry conditions throughout much of the country means some cockies are now facing long waits to get their stock slaughtered, a Hawkes Bay farmer says.

Federated Farmers Hawkes Bay president Will Foley said the long delays were piling more pressure on farmers who were trying to offload stock.

Mr Foley said huge stock numbers were being sent to the meat works and that was creating a big backlog. . .

ANZ AgriFocus forecasts farmgate milk price of $4.50-to-$4.70/kgMS – Fiona Rotheram:

(BusinessDesk) – New Zealand’s farmgate milk price may be $4.50-to-$4.70 per kilogram of milk solids for the 2014/2015 season with dairy incomes a key downside risk for the economy, Australia & New Zealand Banking Group’s AgriFocus report says.

That compares with the AgriHQ seasonal farmgate milk price of $4.55/kgMS and Fonterra Cooperative Group’s December forecast of $4.70/kgMS, which was down 60 cents on its earlier estimate following a halving of dairy prices during the season.

In its latest Agri Focus report, the bank’s economists said this week’s GlobalDairyTrade auction, which led to a larger-than-expected jump in the price of whole milk powder to US$3,042 per tonne from US$2,758 two weeks ago, suggests the tide has turned for dairy prices. The question is whether the bounce will be strong enough to ward off further cuts in the 2014/2015 outlook. . .

 

Minimal impact to farm price values from falling commodity price index:

A drop in the latest primary produce commodity price index will have little effect on the valuation matrices many farmers will use for base data when calculating their potential rural property purchasing levels, according to a senior figurehead in the real estate industry.

The latest ANZ Commodity Price Index released this week recorded an overall 0.9 percent fall in January – the 11th consecutive monthly decrease in the index, which is now down some 18.8 percent over the past 12 months. . .

Walter Peak Land Restoration Project:

Real Journeys is embarking on large scale restoration of its land at Walter Peak to ensure visitors continue to have an authentically New Zealand experience.

Almost 90 hectares of wilding Douglas Fir will be removed by logging or spraying (around 40 hectares of the area consists of dense trees – the rest are scattered) in partnership with the Wakatipu Wilding Conifer Control Group (WCCG) and Department of Conservation. A further 30 hectares of land will be cleared of invasive weeds such as broom, gorse and hawthorne.

Commercial Director, Tony McQuilkin is behind the move, which he says is both exciting and necessary for a company with a proud tradition in conservation and as a responsible landowner. (Real Journeys purchased 155 hectares at Walter Peak in December 2013.) . . .

 

 


GDT index up 9.4%

February 4, 2015

The Global Dairy Price Index  increased by 9.4% in this morning’s auction.

gdt4.2.15

 

 

 

 

 

The price of wholemilk powder, which has the biggest influence on the milk payout, increased 19.2%.

gdt4.215

 

 

 

 

 

 

 

That might not be enough to increase the payout but it will help prevent another drop in it.

gdt4215


Follow

Get every new post delivered to your Inbox.

Join 1,550 other followers

%d bloggers like this: