Rural round-up

07/07/2021

Farmers contribute much to NZ’s balance of payments and our standard of living – but some ministers don’t grasp this reality – Point of Order:

Global  prices for New Zealand products  from the  agricultural sector, as measured on the ANZ Commodity Price Index,  have risen for eight consecutive months to hit a  new  record in May.  Prices on the world index  are  up 18% this  year, or 17% in  local currency terms.

Some  economists are predicting more  rises  are  in  store  this  year.

The  gains  have  gone  some way in the  balance of  payments to offset big losses on  the  foreign  currency  front  from the overseas tourism and   international education sectors.

Westpac senior agri-economist Nathan Penny says being a food producer has been positive during Covid-19 as people still need to eat in times of crisis. . . 

EU biofuel goals likely behind major deforestation in last decade, report says

European Union targets to boost biofuel use are likely to have led to the deforestation of an area roughly the size of the Netherlands over the last decade to expand soy, palm and other oil crops, a report says.

About 4 million hectares of forests mainly in Southeast Asia and South America have been cleared since 2011 – including about 10 percent of remaining orangutan habitat, according to estimates by campaign group Transport and Environment (T&E).

That suggests efforts to replace polluting fuels such as diesel with biofuels are paradoxically increasing planet-warming carbon dioxide emissions, said Laura Buffet, T&E’s energy director.

“A policy that was supposed to save the planet is actually wrecking it,” she said. “We cannot afford another decade of this.” . . 

Primary industry heroes honoured by peers:

A collaboration that will reduce emissions and accelerate green hydrogen infrastructure, a company that has taken our honey to the world and an initiative to boost farmer mental wellbeing by taking them surfing have been recognised by their primary industry peers.

Food and fibre sector achievers were recognised at the 2021 Primary Industries New Zealand Awards dinner at the Air Force Museum of New Zealand in Christchurch last night, with seven winners named from 65 nominations.

A favourite with many of the more than 500 farmers, growers, foresters and fishers present was the winner of the Team Award, sponsored by BASF. Steven Thompson from Bayley’s Rural Real Estate started helping farmers get out on the ocean waves as a way to leave the stress of their busy roles behind them for a few hours. Surfing for Farmers now boasts a team of 50 volunteers and has spread to 16 regions, with nearly 3000 farmers taking part.

“For most farmers it is their first time on a surf-board. Steven says when farmers come out of the water, it’s like a reset for them,” judges noted…

Retaining farming’s voice – Paul Crick:

As farmers, we are skilled at managing what happens inside the farm gate; it is the externalities, the factors we cannot control, that can cause the greatest amount of stress.

There has been a paradigm shift in our sector. So, it is pleasing to see Beef+Lamb New Zealand’s renewed strategy reflecting this change.

Two of the organisation’s three priorities are “outside of the farm-gate”, namely championing the sector and increasing market returns. The third priority, supporting farming excellence, means they will continue to deliver extension and support farmers to run sustainable and profitable farming systems.

This strategy shows that the organisation will do the advocacy and market development work on farmers’ behalf.

Who’s eating New Zealand? – Farah Hancock:

If you imagine New Zealand’s sheep meat as a plate of 10 meatballs, Kiwis would get to eat half of a meatball. So where’s the rest going? In the first story in a new series, Farah Hancock crunches more than 30 years of data to find out who’s eating New Zealand.

New Zealand produces enough food to feed about 40 million people but given our population is just 5 million, who are these people we’re feeding and what are they eating?

And in the land of milk and honey, how much is left behind for Kiwis?

RNZ has looked at some of our biggest merchandise export earners and some of our highest profile products to see who has been eating and drinking New Zealand over the past 30 years. . . 

Cannasouth to buy out cultivation and manufacturing joint venture partners:

Leading medicinal cannabis company, Cannasouth Limited has today entered into two conditional agreements to acquire the balance of the stakes that it does not already own in its cultivation and manufacturing joint venture businesses.

Acquisition of outstanding interest in Cannasouth Cultivation Limited

Cannasouth has entered into a conditional agreement with Aaron Craig and his family interests (Craig Family Interests) to acquire the remaining 50% stake in Joint Venture business Cannasouth Cultivation Limited that Cannasouth does not already own.

Cannasouth Cultivation has built a state-of-the-art growing and processing facility that will produce medicinal cannabis flower biomass at highly competitive production cost. It is energy efficient and more environmentally sustainable than indoor cultivation operations. . . 

Large rural land holding teed up to sell:

A substantial rural land holding in one of Mangawhai’s high growth areas has been placed on the market for sale.

The 50.14 hectare farm, is located near the internationally renowned Tara Iti Golf Course, and within a short drive to the Mangawhai Central development and the area’s famous surf beach.

The property at 213 Black Swamp Road is being marketed for sale via a tender process (unless sold prior) on 21 July, by Bayleys Country property specialist John Barnett. . . 


Rural round-up

06/02/2019

Could turning aquifers into managed reservoirs prevent water shortages and seawater contamination?  – Nikki Macdonald:

It seems the neatest of solutions: take the winter water that rages, unneeded, to the sea, put it in a great underground tank, and drag it out again as the summer dry threatens to brown the grass and suck the life out of parched apples, lettuces, peas.

Managed aquifer recharge is the new buzz phrase in the search for answers to New Zealand’s twin problems of increasingly scarce water and weed-choked rivers toxic enough to kill fish.

Proponents tout it as a potential solution to everything from aquifers being sucked dry by irrigation to nitrogen pollution to seawater contamination of drinking water supplies. But critics say it could actually worsen New Zealand’s water pollution problems. . .

Slaughtered cattle dumped in WhanganuI puts spotlight on stock theft bill  – Liz Wylie:

The remains of two slaughtered cattle have been found dumped at Languard Bluff in Whanganui following numerous reports of livestock thefts and moves to introduce tougher penalties for those convicted of such crimes.

Spotted by passersby early yesterday morning, the remains appeared to be fresh and there was still a considerable amount of meat on the bones.

Stock thefts have long been a concern for Rangitīkei MP Ian McKelvie who has introduced a private member’s bill in Parliament to seek tougher penalties for those caught. . .

NZ commodity prices have strong start to 2019  – Rebecca Howard:

New Zealand commodity prices rose in January, arresting the downward trend of the past seven months, ANZ Bank’s monthly commodity price index shows.

The world price index rose 2.1 percent last month but was down 2.1 percent from a year earlier. In local currency terms, the index rose 2.9 percent on the month and 3.8 percent on the year. ..

Vertical farming is not the answer: New Zealand food security in jeopardy at current urbanisation levels – Pearly Neo:

A New Zealand report has revealed that the country’s horticultural industry and food security could face increasing challenges if it intends to rely on vertical farming to replace crops lost to a lack of land post-urbanisation.

This is mainly because vertical farming requires high investment costs, particularly when it comes to paying for electricity to provide suitable artificial conditions for crop growth. . . 

Honey NZ commits to 5 year Manuka planting programme:

One of New Zealand’s largest producers of Manuka honey has committed to plant at least 360,000 Manuka seedlings in the first half of this year, creating what it claims will be one of the biggest privately-owned Manuka plantations worth millions to the country’s future economy.

Auckland based Honey New Zealand has recently added 4,000 acres of land to its owned supply chain in a remote region of native bushland near the town of Taupo. . . 

Nelson Forests’ acquisition of Manuka Island estate confirmed by Overseas Investment Office:

OneFortyOne (OFO) has received confirmation that the Overseas Investment Office has approved Nelson Forests’ acquisition of Manuka Island estate in New Zealand. The completion date for the purchase will be mid-late February.

The Manuka Island estate, currently owned by Merrill and Ring, is approximately 2000 hectares of forest in the Wairau Valley near Blenheim. . .

Comment from Grant Rosewarne, CEO of New Zealand King Salmon:

I stand by the statement that finfish aquaculture has the potential to become New Zealand’s most valuable industry and its greenest primary industry. Salmon farming is one of the most efficient forms of animal food production in the world, and we categorically affirm that our farms are managed in balance with the environment.

The NZ Federation of Freshwater Anglers have misunderstood a lot of New Zealand King Salmon’s farming practices and have made the mistake of assuming that fish farming in other countries can be directly compared to New Zealand. The article makes allegations about our farming practices that are unsubstantiated and incorrect. . .


Rural round-up

13/01/2017

Global milk production downturn bodes well – Simon Hartley:

The global downturn in milk production bodes well for New Zealand’s dairy farmers for much of 2017 and is increasing the likelihood of a boost in estimated payouts.

Between the key whole milk powder prices rising 45% during the past six months and six of the seven major dairy-producing countries reporting production declines, Rabobank’s dairy quarterly report paints a reasonably positive outlook for 2017.

However, recovery may become the catchphrase of the current season, as opposed to outright profitability, and the US currency may yet have a major impact, and on various markets.

Co-author Rabobank dairy analyst Emma Higgins said the recent rally in global dairy prices heralded further positives as global efforts to increase overall production would take time. . . 

A woman valued and connected within the dairy industry – Anne Boswell:

Anne Boswell talks to an Atiamuri dairy farmer who can’t sit still, busy with family, friends, land and organisations helping farming women succeed.

Connection – to one’s family, friends and like-minded people – is fundamental to personal wellbeing but can be challenging for farmers, says Atiamuri dairy farmer and Dairy Women’s Network trustee Karen Forlong.

“Fundamentally we are hard-wired to need to belong to something, to feel a connection to something over and above ‘I am what I work at’,” she says. 

“Farming’s a business, but it’s so much more than that, and equally, the success of my farm does not define me as a person.” . . 

Ryan looks forward to challenges:

The New Zealand Farm Environment Trust’s new General Manager James Ryan is looking forward to the challenges the new job will bring.

Christchurch-based James Ryan, a former policy manager with DairyNZ, was appointed in October this year.  

He says the Trust will play a crucial role in guiding farmers through an era of increasingly complex sustainability issues. . . 

Fonterra & LIC Set to Release Farm Performance System – Agrigate:

Fonterra and Livestock Improvement Corporation (LIC) are in the final stages of developing an online tool, Agrigate, designed specifically to help farmers improve their farm performance through the use of their existing data.

Agrigate has been developed by the two farmer-owned co-operatives to make it easier for farmers to:

• access key information about their farming business in one place

• identify areas where they can benchmark their performance on a scale that they have not been able to in the past

• make smarter and faster decisions

• manage their environmental information (e.g. nutrient management) . . 

NZ commodity prices rise for eighth month, buoyed by dairy recovery – Rebecca Howard

(BusinessDesk) – New Zealand commodity prices rose in December, the eighth consecutive monthly gain, as dairy prices continued to improve.

The ANZ Commodity Price Index advanced 0.7 percent in December to 277.3 and was up 16.5 percent on an annual basis. In New Zealand dollar terms the index increased 2 percent in the month and rose 9.4 percent on an annual basis as the kiwi eased against the greenback and the British pound.

Dairy was the standout performer as tight global milk supplies and improved Chinese import demand continued to be the main drivers, said ANZ agri economist Con Williams. . . .

Comvita expects to realise $30M from sale of Medihoney, shares in US partner – Sophie Boot:

(BusinessDesk) – Comvita, the manuka honey products company, has sold its Medihoney brand to US partner Derma Sciences for about $19 million, and will reap a further $11 million selling Derma shares in a takeover offer of the Nasdaq-listed company.

The gross proceeds of the Medihoney deal will amount to US$13.25 million, with a US$5 million earnout payable on sales milestones being achieved, Comvita said in a statement to the NZX. Comvita also owns 1.1 million shares in Derma Sciences, which announced on Jan. 10 that it will be acquired by Nasdaq-listed Integra LifeSciences for US$7 per share by the end of March. That values Comvita’s stake at about $11 million, it said. . . 

Fonterra extends sway over Aussie dairy industry with Bellamy’s ‘poison pill’ – Brian Robbins:

Fonterra is in the box seat to control the future of Australian company Bellamy’s Organic under an effective “poison pill” arrangement that can be triggered if a shareholder group controls more than 30 per cent of Bellamy’s capital.

The troubled infant formula group outlined details on Wednesday of a new arrangement with Fonterra that allows the New Zealand group to terminate a key supply deal if a shareholder group controls more than 30 per cent of the Tasmanian company’s capital.

The disclosure, along with news of the replacement of Laura McBain, the chief executive of Bellamy’s, by another senior executive, Andrew Cohen, on an interim basis, came as part of a trading update to investors. . . 

Tasmanian dairy company Bellamy’s CEO Laura McBain to leave after price plummet – Caitlin Jarvis:

Launceston-headquartered dairy company Bellamy’s has replaced chief executive Laura McBain.

The embattled baby formula company announced to the Australian Securities Exchange (ASX) that Andrew Cohen has been appointed acting chief executive.

The announcement was made by the organic dairy company’s chairman Rob Woolley. . . 

Bid to heritage list Brumbies – John Ellicott:

Brumbies may be protected for their cultural heritage value in new legislation being drawn up and already, according to the proponents, met with approval by NSW Nationals leader John Barilaro.

With  the expected release soon of the new Wild Horse Management Plan, lobby groups are fighting to preserve substantial brumby populations in national parks, especially  in Kosciuszko National Park.

The Snowy Mountains Bush Users Group wants to prevent a culling of brumbies, which may form part of the new management plan – with ground shooting touted as the most likely form of control. . . 

North And South Island Wool Auctions Receive Varied Support:

New Zealand Wool Services International ltd’s CEO Mr John Dawson reports that the wool auctions in the North and South Islands this week produced considerable price variations for comparative types with the North Island levels well below the South’s.

Of the 19500 bales on offer, 7804 percent sold with the weighted currency indicator, compared to the last sale on 21st December was 1.62 percent higher, adding more downward pressure on local prices.

Mr Dawson advises that the South Island sale compared to when last sold on 15 December saw; . .. 

Image may contain: one or more people

Only a farm kid ‘gets’ this.


Rural round-up

03/11/2012

European farmers surprisingly upbeat – Gerald Piddock:

European farmers are surprisingly upbeat about the future of their industry despite the continent being still very much in a recession, Beef+Lamb chairman Mike Petersen says.

Speaking from Brussels, Mr Petersen said he expected to see “doom and gloom” as a result of the recession.

“I have been pleasantly surprised at the mood of the farming population over here. They are very optimistic about the future and quite optimistic about the coming season.”

Petersen has been in Europe, meeting with counterparts and discussing their expectations for the coming year. He outlined his observations in a Beef+Lamb conference call. . .

Water priorities come up trumps – Jon Morgan:

The elephant in the room analogy is becoming a bit overworked, but I like it. Lately, the elephant has been really showing off. In the debate about freshwater quality the elephant is nitrogen leaching.

It was brought into the room by conservationists a few years back but attempts to prod it into life largely failed. It just sat stinking in the corner.

But a few weeks ago Judge Craig Thompson of the Environment Court climbed aboard and hit it with a big stick.

The elephant reared back on its hind legs and let out an ear-splitting roar, loud enough to be heard in every milking shed and dairy factory throughout the land. . .

NZ Commodity prices rise 1.3% in October, led by wool, cheese:

New Zealand commodity prices rose for the third straight month in October, led by gains in wool and dairy products while aluminium fell.

The ANZ Commodity Price Index rose 1.3 percent last month with 12 commodity prices gaining two declining and three unchanged.

A slightly firmer New Zealand dollar meant the gain in the ANZ NZD Commodity price Index was a slightly lower 1 1 percent. . .

Fonterra’s Trading among farmers launches but I still don’t understand it – Milking on the Moove:

I’ve blogged about TAF before here and here. We now have a bit more information on how it will play out in practice. But to be fair, I still don’t really understand it and this view has been expressed by many observers in the media and the industry. It is not fully understood and some of the reason for this is Fonterra themselves don’t know exactly how the governance will work, as they are still undertaking a review.

My thoughts;

Will farmers sell some of their shares into the fund?
I think they will, there are lots of farmers who have very high debt levels, the drop in the forecast payout is making many farm budgets drop into the red. I think many of these farmers would sell 25% of their shares into the fund and use the proceeds to pay off debt.

The dividend portion of the shares is estimated to return net 4.2%-5%, farmers will be paying 7%-8% interest on their debt, so they make a greater return by reducing their debt.  . .

New director shows youth and wisdom
THE RISING average age of farmers creates succession problems not only for farms and orchards; it is also seen in the boardrooms of primary producer businesses.

That’s why Zespri’s newest director Nathan Flowerday is pleased an Agmardt scheme which helped him get elected to Zespri’s board will be extended to others. 

Flowerday was the successful candidate in 2011 for an associate board trustee position created by Agmardt on its own board to give young farmers or growers governance experience. He believes that experience gave Zespri voters the confidence in him to elect him in July this year to the Zespri board. 

As a result, he and Agmardt are urging other agribusiness organisations to pick up the idea of creating an associate board-membership position, or at least establish observer positions on their boards. . .

Record Early Entries in Dairy Awards

There’s been a record-breaking response to the number of entries received in the 2013 New Zealand Dairy Industry Awards, since entries opened just yesterday.

National Convenor Chris Keeping says 33 entries were received online at www.dairyindustryawards.co.nz yesterday – the first day people could enter the New Zealand Sharemilker/Equity Farmer of the Year, New Zealand Farm Manager of the Year and New Zealand Dairy Trainee of the Year competitions. . .

Babich Wines Look to Expand in Marlborough

The 96 year old New Zealand wine company, Babich Wines Limited, announced today the sale of their 50% share of the Marlborough winemaking facility, Rapaura Vintners Limited to Treasury Wine Estates.

Rapaura Vintners Limited, an integrated winery, packaging and warehouse facility has been invaluable for Babich over the last 12 years as they have continued to grow production and sales of their Marlborough wines.

Babich Wines will now look to build their own state of the art facility in Marlborough – a move that will give the family owned wine company full control over their future winemaking in the region, where over 80% of the company’s production comes from. . .


Commodities one bright spot amid economic gloom

05/04/2011

Among all the grim news about the economy there is a bright spot – the ANZ commodity price index hit a record high in March when it increased by 4.7%.

This represents the seventh consecutive monthly rise in the index, with the latest month also being stronger than any of the preceding six monthly increases.

Fourteen commodity prices increased in March and three were unchanged. For the first time in seventeen years there wasn’t a single decrease in the price of any individual commodity in the basket of 17 commodities that we monitor.

Last month was the first time in 17 years there wasn’t a single decrease in the price of any of the 17 commodities the ANZ monitors. Prices for

Fourteen commodity prices increased in March and three – wood pulp, kiwifruit and apples – were unchanged.

The price of wool strengthened 12 percent in March, with prices having doubled in the past 12 months. Whole milk powder prices also rose 12 percent, ahead of a 7 percent rise in skim milk powder prices. Lumber and skin prices also increased by 7 percent rise in the month. Beef and log prices grew 3 percent in the month; lamb, casein, butter and aluminium prices lifted 2 percent; venison and cheese prices rose 1 percent; and seafood prices increased by ½ percent. The export prices of wood pulp, kiwifruit and apples were unchanged over the month. 

The value of the New Zealand dollar weakened in March. Consequently the rise in the locally priced ANZ NZD Commodity Price Index was magnified, lifting 8.1 percent from the preceding month, to an all time high. The NZ dollar priced commodity index is 25 percent higher than its level a year ago, and nearly double the low point recorded in February 2009, which followed the global financial crisis.

 The New Zealand economy is poised to benefit from the increased rural income that will inevitably filter through the economy. Soft rural land values and a strong focus on the balance sheet has curtailed the benefit to the broader economy. This will not continue indefinitely. It is only a matter of time before this rejuvenation spills over into other pockets of the economy.

Farmers are cautiously optimistic after the best season many of them can remember. However the caution means they are paying off debt and keeping costs down which means the benefits of the commodity boom haven’t spread far from the farm gate – yet. 

The Lincoln Field Days last week attracted about 21,000 people, a similar number of people as the last Field Days two years ago but sales were higher.

That is a positive sign that better prices farmers are receiving will start spreading further through the economy.


Dairy beats tourism for export earnings

04/11/2009

Dairy has overtaken tourism as New Zealand’s biggest export earner, contributing nearly $10 million to the economy, company chair Henry Van der Heyden said in a newsletter to suppliers.

He also passed on the good news that the price for Whole Milk Powder went up 13.7% in this morning’s globalDairyTrade auction, to US$3,437 per tonne.

dairy 10004

The graph for WMP prices from 2004-2009 shows prices are above the long term average again, though still well below the 2007 bubble.

dairy 10007

An 8.3% increase in dairy prices contributed to a 4. 6% gain the ANZ Commodity Index in October, the seventh month in a row to record an increase.

The gains in international prices have somewhat offset a soaring kiwi dollar, which is up more than 45% from its sub-50 U.S. cents low in March. The currency’s continued strength in October largely wiped out the increase, expressed in New Zealand dollars, with kiwi-denominated commodity index easing 0.4% last month.

Sawn timber rose 6.1% on a global price basis, and wood pulp prices advanced 4.2%. Wool prices increased 7.1% and the price of skins gained 3.5%. Beef prices slipped 3.9% and apples declined 1.7% over the period.

The increase in dairy prices has outpaced the rise in the value of the dollar which means there isn’t a risk to the forecast payout for the season – yet.


Commodity prices up but so is $NZ

05/05/2009

The good news is that the ANZ Commodity Price Index showed an increase for the second month in the row.

Unfortunately that 2.5% % increase was counteracted by an increase in the value of our currency which meant commodity prices fell 2.8% in New Zealand dollar terms between March and April.

The price of eight commodities rose last month, two were flat, and apples, seafood and logs fell.

The largest rise was for aluminium, up 6.6 percent for the month, followed by lamb, up 6.4 percent to a record high.

Beef prices rose 3.2 percent, dairy was up 3.1 percent, skin prices rose 2.3 percent, venison was up 1.6 percent and the price of wool rose 1.3 percent.

That’s encouraging for sheep and beef farmers, especially those in drought-hit areas who’re being forced to sell stock who might get some small comfort that they’re selling on a strong market.

The increase in skins and wool, though small, is a welcome change from what looked like a permanent downward trend.


Commodity prices down again

07/01/2009

Apples were the only commodity not to drop in the ANZ international commodity price index  last month.

The ANZ’s index of international commodity prices last month recorded its broadest fall in prices since the series started more than 20 years ago.

Every commodity, except apples, recorded a fall in December, ANZ economist Steve Edwards said today.

. . .  The ANZ commodity price index recorded a 7.4 percent fall in the price of the basket in December, the fifth consecutive monthly drop in the series. The index is now 27 percent below its peak last July.

Pelt prices recorded the largest drop in December, slumping 62 percent from November to a new record low, Mr Edwards said.

Aluminium prices fell 20 percent to a five-year low, while wool and dairy prices both fell more than 12 percent.

Dairy prices were now at the level they were two years ago, before the start of the much heralded surge 18 months ago.

Wool prices had dropped for six successive months and were now only 2 percent above the lowest level recorded by the series since 1986, Mr Edwards said.

Log prices were down 4.4 percent, wood pulp prices down 3.7 percent and sawn timber prices down 2.2 percent.

Seafood and lamb prices both eased 2.4 percent, while venison and beef prices each dropped 1.4 percent.

In New Zealand dollar terms the index fell 6.1 percent last month, but is just 8.1 percent down on its peak of four months ago, and is now back to its level of a year ago.  


Ag commodities down but will lead 2009 rebound

04/12/2008

The ANZ Commodities Price Index fell 7.2% in November, contributing to a 21% fall in four months.

Prices for dairy products fell 12% and have almost halved from their record levels a year ago. Prices for pelts tumbled 41%, the biggest decline among products tracked in the index. Beef, wool, lumber and aluminium all fell more than 10%. Seafood prices dropped for the first time in 18 months, sliding 0.6%. Lamb rose 4.3% and kiwifruit gained 0.3%.

Producers were cushioned from the slide in commodity prices by the weakening New Zealand dollar and the ANZ New Zealand Dollar Commodity Price Index was down only 1.8% in the latest month.

“Although the currency softened further in the month, it failed to match the drop in value of the commodities that we monitor,” ANZ economist Steve Edwards said in a statement. “It is clear that a weaker currency is acting as a buffer to falling commodity prices.”

Prices in yesterday’s on-line auction by Fonterra continued to slide with an average price of $4203.50 ($US2223) a tonne, 14% lower than last month’s auction and a fall of 49% since July.

Fonterra commercial director of GlobalTrade Guy Roper said the economic crisis had resulted in a significant drop in the demand for dairy commodities and a continued decline in prices had been expected.

“There will continue to be downward pressure on prices, until either the supply of product declines, or buyers have confidence that the global economic situation will improve,” Roper said.

Fonterra has been criticised for its auction which some feel is leading the market down. The Bull Pen disucsses that here.

However, the news isn’t all bad. Stock & Land  expects agricultural commodities to rebound next year.

After the dust settles from the sell off across commodities triggered by the global financial crisis, agricultural commodities will benefit from a secure demand outlook and tight supplies to outperform metals and oil in 2009.
Regardless of the gloomy macroeconomic outlook people still need to eat; therefore agricultural commodities will be more resilient during the economic downturn.

“Demand for agricultural commodities tends to be less elastic, less responsive to economic factors, more responsive to population,” said Lawrence Eagles, a commodities analyst at J.P. Morgan.

 

That’s encouraging because the MAF Briefing to Incoming Ministers warns the outlook is uncertain:

 

Over the next 20 years, New Zealand’s food and fibre producing capability will become increasingly important. Globally, rising population and economic growth is expected to increase demand for agricultural and forestry products. At the same time land and resources, such as freshwater, available for food and fibre production worldwide is likely to decline.

Despite this favourable long-term outlook for New Zealand’s primary production sectors, our industries, environment and broader society face a complex set of challenges to reap future opportunities. These challenges are exacerbated by the current global financial crisis that continues to unfold with uncertain impacts and duration.

Added to that is the growing threat of drought.

The contrast between irrigated and dryland in North Otago increases by the day, showing how badly we need rain and most of the east coast of both islands is similarly desperate for rain.

 


Dairy prices at 18 month low

05/11/2008

Commodity prices are at an 18 month low after a  record fall of 7.4% last month.

The ANZ Commodity Price Index had its largest decline last month since it was launched in 1986, and was down nearly 11 per cent on a year earlier.

Nine of the 13 commodities recorded lower world prices in October.

Beef had the largest fall, down 17.7 per cent from September, followed by skins (16.2 per cent), aluminium (down 16 per cent) and wool (down 12.6 per cent).

Dairy prices had a smaller decline – down 9.9 per cent – but dominated the index.

The fall in dairy prices reflected softer commodity prices in general as investors lost confidence amid world market and economic turmoil.

Also depressing dairy prices was increased production from “fringe” dairy exporting nations, such as the United States, which were starting to increase production, said ANZ economist Steve Edwards.


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