Rural round-up

April 2, 2015

MIE plan stimulates debate but won’t fix the problem – Allan Barber:

The Pathways to Long-Term Sustainability document launched earlier this month makes some very valid points about the red meat industry’s shortcomings, but its recommendations are almost certainly impossible to implement.

Even if the processors are willing to consider capacity rationalisation, it won’t be on the scale envisaged by the GHD consultants and judging by Sir Graeme Harrison’s remarks ANZCO won’t be part of it; nor will AFFCO unless the Talleys undergo a St Paul like conversion on the road to Motueka. This leaves the cooperatives, with Rob Hewett prepared to consider merging with Alliance, although he isn’t holding his breath, while Murray Taggart remains very lukewarm.

The common theme evident from all the company chairmen is the fundamental need for any solution to be commercially justifiable from the companies’ perspective. The problem with this particular stance is the conflict with the farmer bias of MIE’s proposals. . .

Wine and Spirit geographical registration coming:

Trade Minister Tim Groser and Commerce and Consumer Affairs Minister Paul Goldsmith today announced that Government will implement the Geographical Indications (Wine and Spirits) Registration Act.

“The Act will set up a registration regime for wine and spirit geographical indications, similar to the trademark registration regime,” Mr Groser says.

A geographical indication shows that a product comes from a specific geographical region and has special qualities or a reputation due to that origin.  Well known products that are identified by geographical indications include Champagne, Scotch Whisky and Prosciutto de Parma.

The use of geographical indications by New Zealand producers is largely confined to the wine industry. . .

Implementation of Act is a big step forward for the New Zealand wine industry:

New Zealand Winegrowers warmly welcomes the announcement that Government will implement the Geographical Indications Registration Act.

Geographical indications identify wines as originating in a region or locality says Philip Gregan, CEO, New Zealand Winegrowers. The Act will set up a registration system for wine geographical indications, similar to the trademark registration system. . .


$7.8m for new sustainable farming projects:

29 new projects have been approved for $7.8 million in new funding over four years through the Sustainable Farming Fund (SFF), Primary Industries Minister Nathan Guy has announced today.

“These are grass-roots projects that support farmers, growers and foresters to tackle shared problems and develop new opportunities. They will deliver real economic, environmental and social benefits.

“For example, one project will develop industry tools for farmers to improve their farm practices to improve water quality and infrastructure, while reducing nutrient loss. . .

Forestry projects identify practical solutions:

New Zealand’s forestry sector will benefit from five new projects in the latest round of the Sustainable Farming Fund (SFF), Associate Primary Industries Minister Jo Goodhew announced today.

“Around $1.2 million has been committed over four financial years towards five new SFF projects involving the forestry sector,” Ms Goodhew says.  “SFF continues to be a great example of government supporting foresters to ensure the sustainability of our primary industries.”

The forestry projects are part of the 29 new SFF projects announced today—following the 2015/16 SFF funding round held last year. . .

New OSPRI Chief Executive appointed:

OSPRI Chairman Jeff Grant has today announced the appointment of Michelle Edge as Chief Executive of OSPRI.

Ms Edge brings a wealth of agricultural industry experience to the position having had an extensive career spanning scientific research, government regulation, policy and industry organisations within the Australian agricultural sector.

She was most recently Chief Executive of Australian Meat Processor Corporation – a levy-funded research, development and extension organisation operating in the red meat sector. . .

IrrigationNZ welcomes OVERSEER 6.2 despite forecast Nitrate loss spike:

IrrigationNZ says any short-term pain for irrigating farmers who end up with worse nitrate leaching results in OVERSEER 6.2 will be out-weighed by the benefits of more realistic irrigation modelling.

To prevent issues arising from OVERSEER 6.2’s introduction, IrrigationNZ and OVERSEER’s General Manager Dr Caroline Read have been working to inform affected regional councils to reduce compliance concerns. The industry body says irrigating farmers also need to be proactive and familiarise themselves with the new software.

The latest version of OVERSEER® Nutrient budgets (OVERSEER 6.2) launches later this month and IrrigationNZ says some irrigators will see increased nitrate loss estimates for their properties due to more accurate modelling. This may impact on their compliance under regional council regulations. . .

Nitrogen dollars dissolving in thin air:

Millions of dollars’ worth of nitrogen is vanishing into thin air, causing losses to farmers and to New Zealand in wasted import dollars.

That’s the conclusion reached in field trials completed as part of the Ballance Agri-Nutrients’ Clearview Innovations Primary Growth Partnership programme to measure ammonia losses from standard urea and urea treated with a nitrogen stabiliser. These losses occur when the nitrogen in the urea volatilises into ammonia.

While farmers try to avoid the loss by applying urea when wet weather is forecast, research by Landcare Research and Ballance has shown a good 5 to 10 mm of rain is needed within eight hours of application to reduce ammonia loss – a finding consistent with research in New Zealand in the 1980s. . .

Rural round-up

March 21, 2015

TPP Opportunity for Dairy Must Not Be Missed:

The Dairy Companies Association of New Zealand (DCANZ) has joined with national dairy organisations from Australia and the United States in appealing for their governments to progress a swift but successful conclusion to the TPP negotiations.

“We have a historic opportunity to remove distortions from the dairy market in the Asia-Pacific region. Our governments must grab hold of this.” Said DCANZ Chairman Malcolm Bailey.

“TPP outcomes must be ambitious, comprehensive and commercially meaningful for dairy along with other products. We understand that progress is being made in the negotiations but that it still falls short of the level of ambition needed. . .

Record beef returns offset impact of a dry season:

Drought and the ratio of sheep to cattle farmed are the two factors with the biggest impact on sheep and beef farmers’ incomes this season.

Beef + Lamb New Zealand (B+LNZ) today released its mid-season update. Six months ago, the organisation’s new season outlook predicted the average farm profit before tax would be around $110,800 for 2014-15. However, B+LNZ Economic Service Chief Economist Andrew Burtt says those predictions were based on the assumption that climatic conditions would be normal – and this season has proved to be far from normal in many areas.

“While the average farm profit before tax has been adjusted slightly downwards, to $109,400, North Island profits are expected to increase 19 per cent, to $117,100, while South Island profits are predicted to decrease 20 per cent, to $100,200. The difference can be accounted for by the ratio of sheep to cattle farmed in each island, with cattle making up greater numbers in the north. .

– Allan Barber:

Tuesday saw the launch of Meat Industry Excellence’s report Red Meat Sector – Pathways to Long Term Sustainability to a relatively small group of invited attendees in Wellington. The audience consisted of MIE farmer members, directors of Silver Fern Farms and AFFCO, MIA chairman Bill Falconer, ANZCO CEO Mark Clarkson, Rick Powdrell Federated Farmers’ Meat and Fibre chair, various industry analysts and commentators, and politicians including the Minister for Primary Industries, Shadow Spokesman and the Speaker.

Rod Oram was the MC with addresses from Alasdair Macleod, leader of the Red Meat Sector Strategy development four years ago, Ross Hyland, principal advisor to MIE, James Parsons, chairman of B+LNZ and MIE chairman John McCarthy.

Ross Hyland gave the most interesting talk, both stimulating and entertaining supported by several overheads to illustrate his key points. Fortunately he did not attempt to summarise the report, but focused on some key points which painted the picture of an industry suffering from declining profitability and livestock numbers. . .

Meat Industry cautious on new report:

Meat company reaction to a newly released report on restructuring the industry has been muted so far.

The study comes from the farmer-led Meat Industry Excellence group, which is pushing for a major revamp of the industry to improve its profitability and lift falling returns to farmers.

It advocates a fresh attempt being made to merge the two big co-operatives, Silver Fern Farms and the Alliance Group, and getting the two other big privately-owned companies, ANZCO and AFFCO, to agree to rationalisation measures as well.

Plant a tree for International Forest Day:

Associate Minister for Primary Industries Jo Goodhew marked United Nations International Day of Forests at the Methven A&P show today, by planting a maple tree with industry representatives.

“New Zealand is a proud producer of sustainable timber products,” Mrs Goodhew says. “Today is a reminder of the contribution New Zealand forests make to both the environment and the economy.”

Our forests cover one third of New Zealand, and remain our third largest export earner.

“Leading into the 2020s, there is the potential for a 40 per cent increase in log production. A challenge to industry is to move wood products out of the commodity basket and up the value chain,” Mrs Goodhew says. . .

21 March International Day of Forests:

Forests and trees sustain and protect us in invaluable ways. They provide the clean air that we breathe and the water that we drink. They host and safeguard the planet’s biodiversity and act as our natural defence against climate change. Life on earth is made possible and sustainable thanks to forests and trees. . .


Kiwifruit Industry Strategy Project on track for record turnout:

On the final day of voting, grower turnout for the Kiwifruit Industry Strategy Project (KISP) referendum has surpassed all expectations and is on track to be the largest voter turnout in the horticulture sector for almost two decades.

KISP Independent Chairman Neil Richardson notes, “Our initial expectations were based around the average turnout for similar referendums across different sectors being 40%, and the NZKGI Levy vote in 2011 reaching 43% of grower turnout.”

“With voter turnout by both production volume and grower numbers already exceeding 50% we are confident that this referendum turnout will be the most significant the entire horticulture industry has seen since the late 1990s,” says Mr Richardson. . .

Team-Focused Dairy Business Takes Top Title in Taranaki Ballance Farm Environment Awards:

Eltham dairy farmers Mark and Jacqui Muller and their manager Conrad Maeke are the Supreme Winners of the 2015 Taranaki Ballance Farm Environment Awards (BFEA).

They received the award at a BFEA ceremony on March 19. Mark, Jacqui and Conrad also collected the LIC Dairy Farm Award, Hill Laboratories Harvest Award, Massey University Innovation Award and the PGG Wrightson Land and Life Award.

The Muller’s business, Gardiner Partnership, is based on 212ha of family land west of Eltham in the Mangatoki district. The operation milks up to 618 cows on a 167ha milking platform, achieving production well ahead of the district average. . .

 Cheese And Beer a Winning Combo for Home Crafted Cheese Maker:

Former corporate high-flyer John Morawski has found that cheese and beer make a winning combination.

The brewer turned cheese maker decided to make use of a discarded cheese-making kit he bought his fiancé. Less than three years later he has won the Curds & Whey Champion Home Crafted Cheese Award at the 2015 NZ Champions of Cheese Awards.

The Home Crafted category gives “hobbyist” cheese makers a chance to showcase their creations. To be eligible, cheese must not be made for retail distribution and the annual volume cannot exceed 100kgs. . .


Taranaki/Manawatu Young Farmers to be put to the test in ANZ Young Farmer Contest Regional Final:

The fifth ANZ Young Farmer Contest Grand Finalist will be determined next weekend, Saturday 28 March at the Taranaki/Manawatu Regional Final held in Palmerston North.

“This contest season is shaping up to be very exciting, every year the calibre of contestants continues to improve and impress,” says Terry Copeland, Chief Executive of New Zealand Young Farmers – organisers of the event.

The eight finalists are contending for a spot at the Grand Final in Taupo 2 – 4 July and their share of an impressive prize pack worth over $271,000 in products, services and scholarships from ANZ, FMG, Lincoln University, Silver Fern Farms, AGMARDT, Ravensdown, Honda, Husqvarna and Vodafone. . .

Rural round-up

March 6, 2015

World dairy prices and New Zealand droughts – Jim Rose:

Here is an image from the recent Westpac Economic Overview. As New Zealand is the world’s largest exporter of dairy products any disruption in the supply from New Zealand can impact on the global dairy prices.

The last few droughts saw world dairy prices increase considerably as milk supply from the rest of the world was unable to adjust to market conditions.

However supply capacity in the US and the EU has increased and with Russia’s import ban there is a much greater supply on the global market. Nevertheless, this doesn’t disprove the possibility that prices rise when supply falls short. The overall signs are that supply and demand are coming into line as Chinese buyers run down stocks.

The drought in New Zealand will further boost prices from current low levels. Westpac expect the milk price to rise to $6.40/kg for the next season. Below is a useful video…

ANZCO’s profit disclosed in Itoham’s statement – Allan Barber:

Japanese food company Itoham Foods announced last week an increase in its shareholding in New Zealand meat processor and exporter ANZCO Foods from 48.28% to 65%. As a result of the transaction it will be able to consolidate ANZCO’s revenues and earnings into its annual accounts.

 $40 million worth of shares are being bought from three entities: another leading Japanese food manufacturer Nippon Suisan Kaisha, chairman Graeme Harrison, and JANZ Investments, owned by Graeme Harrison and ANZCO staff members. The sale will see the minority shareholders reducing their shareholdings on a pro rata basis with Harrison’s effective holding falling from approximately 20% to 14%. . .

BOP Dairy Awards Boosts Careers:

Entering the Bay of Plenty Dairy Industry Awards has helped the region’s 2015 Sharemilker/Equity Farmers of the Year, Grant and Karley Thomson, secure a new position beginning in June.

The couple were the major winners at the 2015 Bay of Plenty Dairy Industry Awards held at the Awakeri Events Centre in Whakatane last night. The other big winners were Jodie Mexted, the Bay of Plenty Farm Manager of the Year, and Jeff White, the region’s Dairy Trainee of the Year.

The Thomsons, who won $10,100 in prizes, are currently 50% sharemilking (with a silent partner) 420 cows for Tom and Tony Trafford at Opotiki. . .


New Zealand King Salmon Success to Feature at Queenstown Agribusiness Symposium:

Aquaculture business, New Zealand King Salmon, will feature as one of the success stories at the second Queenstown Agribusiness Symposium this month.

New Zealand King Salmon successfully launched Ōra King premium salmon in 2012 to the international foodservice market.

The farmed salmon is now on fine dining menus around the globe.

The Queenstown Agribusiness Symposium attracts senior staff, managers and leaders from throughout Asia Pacific horticulture, agriculture, seafood and biotech industries to help them develop new ways to problem solve and grow their business. . .

Prime Minister John Key Visits Manuka Health’s New State of the Art Honey Facility:

New Zealand Prime Minister, John Key, has been given a tour of Manuka Health’s brand new multi-million dollar, purpose-built honey processing and distribution centre on a recent visit to Te Awamutu in the Waikato.

Mr Key was shown through the premises by Manuka Health CEO and founder, Kerry Paul. It is now the largest customised honey facility in New Zealand and combines internationally accredited laboratories, honey-drum storage, blending, packing and distribution under one roof.

Mr Paul, says it was a huge honour to have the Rt Hon John Key visit the new centre. . .

Tasman Young Farmers to be put to the test in ANZ Young Farmer Contest Regional Final:

The third ANZ Young Farmer Contest Grand Finalist will be determined next weekend, Saturday 14 March at the Tasman Regional Final held in Kirwee.

“This contest season is shaping up to be very exciting, every year the calibre of contestants continues to improve and impress,” says Terry Copeland, Chief Executive of New Zealand Young Farmers – organisers of the event.

The eight finalists are contending for a spot at the Grand Final in Taupo 2 – 4 July and their share of an impressive prize pack worth over $271,000 in products, services and scholarships from ANZ, FMG, Lincoln University, Silver Fern Farms, AGMARDT, Ravensdown, Honda, Husqvarna and Vodafone. . .


Rural round-up

August 21, 2014

Increases for fish stocks show success of QMS:

Primary Industries Minister Nathan Guy has announced increases to catch limits for a range of New Zealand fisheries today, thanks to healthy stock levels.

“This shows the success of our world-leading Quota Management System (QMS). It is flexible and driven by science, which means that we can increase take as stock levels improve,” Mr Guy says.

Healthy stocks have led to increased Total Allowable Catch (TAC) limits for:

• Hoki 1 (10,100 extra tonnes across New Zealand)
• Orange Roughy 7A (1155 extra tonnes on the upper West Coast)
• Orange Roughy 3B (525 extra tonnes around the lower South Island) . . .

Just what the doctor ordered, no way or only a matter of time? – Allan Barber:

There are three possible responses to the prospect of an overseas, probably Chinese, investor buying seriously into the New Zealand meat industry: bring it on, not on your life or it’s inevitable.

So far Chinese interests have recently bought a minority stake in Blue Sky Meats and an application to buy Prime Range Meats is with the Overseas Investment Office; ANZCO is just under 75% Japanese owned with New Zealand management and staff holding the balance. ANZCO’s ownership structure has remained like this for over 25 years bringing positive benefits to the company, its suppliers and New Zealand as a whole. . . .

Back to the future? – Andrew Hoggard:

I am going to propose something provocative.  The big long term issue for us isn’t going to be water but will be employment and occupational health and safety. 

While the mention of water and farming gets some people worked up, the truth will eventually break through the spin and I think we are just starting to see this.  When it comes to employment matters though, our industries have been named by the government’s Worksafe NZ as the most dangerous.  Another part of government says a big minority of employers aren’t meeting basic employment law obligations.

If that’s not enough, we’re fully in the crosshairs of the Council of Trade Unions too. . .

It’s a super trim season yes, but milk and disaster, no – Chris Lewis:

Do you know that in the first half of 2014, the amount of global tradable milk grew by an amazing seven billion litres.  That’s enough milk to fill 2,800 extra Olympic sized swimming pools and it was available for export.  It goes to explain why Fonterra cut this season’s forecast payout by a $1 per kilogram of milksolids (kg/MS).

It would be nice if our politicians realised that farmers have good and bad seasons but they don’t.  All the spending promises seem to assume we’re constantly swimming in greenbacks.  We aren’t.  It is also why anyone, whether a Kiwi or a foreigner, who looks at a farm like a get rich quick property scheme will likely end up come a cropper. 

A farm is your business and your home.  This is why farmers are passionate about what we do and that makes us go the extra mile.  It is why I take exception to the line ‘milk and disaster’ being applied to dairy.  It is super trim season yes, but milk and disaster, no. It is great to see the latest GlobalDairyTrade average still in the US$3,000 a metric ton range but that slight 0.6 percent fall means we are on exactly US$3,000. . .

 High pin bones too prevalent in NZ – Yvonne O’Hara:

New Zealand has a rump angle problem, says Holstein Friesian classifier Denis Aitken.

As well as being a dairy farmer who is trying to retire, Mr Aitken, of Maungatua, is a member of the World Holstein Friesian Federation Type Harmonisation working group. He spent some time in Denmark attending its two-yearly meeting in May.

The working group was seeking to standardise or ”harmonise” 18 different physical traits in Holstein Friesians by classifying or precisely defining the ideal of each of those traits and promoting the evaluation system. . . .

Young Agricultural Professionals Are Driving Agricultural Development – Food Tank:

Young Professionals for Agricultural Development (YPARD) is a global network of young agriculture and development professionals who are coming together to create innovative and sustainable agricultural development. YPARD enables its young members to share knowledge and information, participate in meetings and debates, promote agriculture among young people, and organize workshops.

Food Tank interviewed Rebeca Souza, a YPARD representative in Brazil, to discover what YPARD members have been accomplishing.

Food Tank (FT): How did you become a representative for YPARD?

Rebeca Souza (RS): Last year, I was doing an internship at the U.N. Food and Agriculture Organization (FAO). Three other interns and I decided to organize an event calling on young professionals to share innovative ideas to overcome world hunger and malnutrition. YPARD was one of our partners, and Courtney Paisley, the director, was attending our event. I came to her asking if I could be a country representative in Brazil since no one was appointed to this position yet. She said yes! . . .


Labour tries to out-Winston Winston

August 5, 2014

Labour has forgotten that is trying to out Winston-Winston Peters on sales of land to foreigners:

The next Labour Government will keep rural and residential land in Kiwi hands, Labour’s Finance spokesperson David Parker says.

“New Zealanders are sick of seeing their farms and homes sold to overseas buyers with the profits and opportunities going offshore. No overseas person has the right to buy our land.

The opportunities stay here where the land is, so do the jobs which go with it.

The profit is only what’s left after costs – including the purchase price, wages, repairs and maintenance, development and tax – are paid.

A friend is New Zealand manager for overseas investors who own several farms. That company reinvests all its profit in the farms and adds more money from other investments elsewhere for development which includes a very expensive experiment with organic farming.

Their money is making the farms better and they are putting far more into the country than they are taking out.

“In all but the rarest of cases, sales of rural land to overseas buyers will be banned. Non-resident investors will also be banned from buying existing Kiwi homes.

What will those rarest cases be and who will decide?

“Changing who owns what already exists does nothing to increase New Zealand’s output. It just sells off New Zealand’s profit stream and kills off the Kiwi dream of owning our farms and homes.

It could increase New Zealand’s output if the investment improved production.

“Labour will reverse the current approach so that overseas buyers of rural land will have to prove they will create more jobs and exports than any New Zealand investor. Given New Zealanders are among the best farmers in the world it is an extremely hard hurdle to get over.

The hurdles overseas must leap are already very high and include the creation of jobs.  Among other conditions local buyers don’t have to meet but foreigners do is allowing public access.

New Zealand farmers are very good but they often lack the capital to be even better.

“This will ensure our farms are not priced out of the reach of New Zealanders.

If that is the case it would also mean the vendor gets less to invest elsewhere.

“We will also limit the discretion of the minister to ignore recommendations from the Overseas Investment Office.

“Labour will also restrict sales of residential homes to any non-residents unless they intend to move here, helping to keep the Kiwi home ownership dream alive, especially for young New Zealanders currently locked out of the housing market.

“The National Government is ignoring the legitimate concerns of New Zealanders about New Zealand land and houses being sold to overseas interests.

These concerns are largely based on emotion rather than facts.

A very small proportion of farm land is owned by foreigners and the problems with housing are largely a result of planning restricting the supply in Auckland and the earthquakes in Christchurch.

“Instead of accusing New Zealanders of being xenophobic, John Key and Steven Joyce should respect New Zealanders’ desire to keep New Zealand land in New Zealand hands,” David Parker says.

The accusation of xenophobia is because the protest is loud when it is a Chinese buyer and quiet to non-existent when it is from other countries like the USA, Britain, Australia or Germany.

Wee parties can get away with outrageous policies because they can always use the excuse they didn’t have the numbers to get them enacted.

The bigger parties are usually more circumspect.

Labour has forgotten this in trying to out Winston Winston Peters with this dog-whistle to the xenophobic.

It is also ignoring the benefits from the sale:

Stevenson Group, the concrete, quarrying and engineering firm that owns Lochinver Station, ran an extensive tender before agreeing to sell the 13,843 hectare farm to Shanghai Pengxin and says it will reinvest the funds in other businesses. . .

 The Stevenson family has owned Lochinver for 60 years but started as a drain-laying business in 1912, expanding into quarrying and construction in the late 1930s, and making concrete blocks from 1946. The original 5,260 ha Lochinver farm was acquired in 1958 and the family expanded to 16,595 ha “breaking the wild country into farming land” with “an enormous amount of hard work.”

“Farming is not the core business of Stevenson Group,” chief executive Mark Franklin told BusinessDesk. The company is freeing up capital to invest in other businesses such as expanding its Drury quarry, he said.

Franklin said the company had “really intensive discussions with lots of people both domestically and internationally. You can be very clear, anyone who was interested, I have spoken to.”

While Lochinver has a rateable value of more than $70 million, the purchase price hasn’t been disclosed. Still, Franklin said Pengxin’s offer wasn’t necessarily the highest on price alone and his company had considered a range of factors including retention of workers and the future of the property. Lochinver was more a farm enterprise than a farm. “In New Zealand a lot of people own farms but this is part of a supply chain.”

He said Pengxin had a long-term strategy to build a vertically integrated business.

The value in the property was “in its ability to grow a lot of grass,” which made it attractive for both dairy support and wintering stock, he said. Sheep farming was likely to remain a core part of the business. . .

The owner gets a large amount of money to invest in its core business, the new owner will bring money into the country, spend more on running and improving the property which will require employing locals and using local goods and services.

Federated Farmers which supports foreign investment in general has some concerns over the sale of Lochinver.

While Federated Farmers supports positive overseas investment into New Zealand’s farming system, it is concerned the potential sale of Lochinver Station to Shanghai Pengxin Group Co. Limited, may not provide sufficient benefit to New Zealand.

“Since there is no requirement to publicly notify applications to the Overseas Investment Office, Federated Farmers is frankly uneasy about the potential sale of Lochinver Station to Shanghai Pengxin,” says Dr William Rolleston, Federated Farmers President.

“New Zealand absolutely needs foreign investment but it has to be of benefit to the local and national economy. 

“That is why a ‘substantial and identifiable benefit’ test was incorporated into the overseas investment decision tree, further bolstered in 2012 by a High Court decision adding a “with and without” counterfactual test. 

“This was to ensure any investment, such as the one being proposed, has benefit over and above just making a farm work better.  Since Lochinver Station is highly regarded in farming circles there must be something very special and we are keen to know what that is. . .

He might be reassured by a speech Prime Minister John Key made to Federated Farmers in 2010:

. . . I want to take this opportunity to outline the Government’s position on overseas investment and talk about the changes we are making to the approvals regime.

In summary, we recognise the huge contribution that overseas investment makes to Kiwi jobs and Kiwi incomes.

New Zealand benefits from openness, both in trade and in investment.

However, New Zealanders have legitimate concerns about some aspects of overseas investment, particularly when it comes to land.

I share those concerns.

Good policy is a matter of striking the right balance.

We have reviewed the rules around overseas investment. For the most part, we think those rules are appropriate and the overall legislation is sound.

However, we have made a few adjustments to the approvals regime and given ministers increased flexibility to consider a wider range of issues when assessing proposed investments. . .

What I want to say first is that you, as individual farmers, and as members of Federated Farmers, have been right in the middle of recent debates about overseas investment, because a lot of those debates have been about land.

I’m sure that between you, you have some strong views and quite possibly some mixed views about overseas investment.

Unfortunately, much of the debate in recent months has been stirred up by politicians who are more concerned about getting on the news than they are about well-thought-out policy.

We are likely to see more of this tub-thumping and political posturing in the lead-up to next year’s election.

Politicians who were unwavering advocates of trade and investment when they were in government have somehow turned into defenders of Fortress New Zealand while in opposition.

Their views appear to have changed 180 degrees, for the sake of politics.

That is a shame, because at stake here are New Zealand jobs, New Zealand incomes, and New Zealand futures.

The reason we allow investment to flow between countries – both into New Zealand and out of New Zealand – is because it benefits New Zealanders.

We don’t do it for any other reason – we do it because we benefit from it.

In particular, overseas investment in New Zealand creates jobs, boosts incomes, and helps the economy grow.

Overseas capital can make things happen here that wouldn’t otherwise happen, grow businesses that wouldn’t otherwise have the means to grow, create jobs that otherwise wouldn’t exist, and pay wages that are higher than they would otherwise be.

Overseas capital makes New Zealand a vastly more productive country.

So there is absolutely no way we could enjoy the standard of living we do without overseas investment.

And part of that standard of living is being able to afford the education, law and order, and health services that our families want.

A recent study concluded that overseas investment in New Zealand lifted national income by around $5 billion between 1996 and 2006. That is an estimate of the return to New Zealand from overseas investment, over and above the cost of paying interest and dividends on that investment. . . .

He gave examples from the wine industry.

Since the year 2000 the number of wineries in New Zealand has almost doubled, and the industry directly employs 6,000 people.

This expansion of the wine industry into one of our most important export industries has largely happened because of overseas investment.

That investment has not just been into big producers, like Montana, but smaller wineries like Craggy Range, Sacred Hill, Dry River and Te Awa.

Overseas investment has allowed the industry to grow exponentially, and also develop from being a small and family-based sector into a more capital-intensive and technologically-advanced industry with real global connections.

Overseas investment also plays a positive role in New Zealand agribusiness, providing a vital source of capital for ongoing expansion and growth. PGG Wrightson, Synlait, CRV Ambreed and Anzco are good examples of such investment. . .

He also pointed out investment is a two-way street.

New Zealand businesses and individuals are themselves investing abroad.

There has been considerable investment, for example, by New Zealand dairy farmers in overseas farms. Fonterra, of course, has processing facilities in a number of different countries.

A free flow of investment also allows New Zealanders to diversify their savings across different countries and different industries. Most of the savings that are in the Super Fund, for example, and in many KiwiSaver funds, are invested overseas.

In fact, the total amount of equity investment into and out of New Zealand is surprisingly balanced. According to the latest figures, New Zealanders have around $53 billion of equity invested abroad while overseas investors have $61 billion of equity in New Zealand.

So international flows of investment – both into and out of New Zealand – are very important for our standard of living. . .

Then he addressed concerns about foreign investment:

I’m sure most people have these concerns from time to time, because as New Zealanders we have a very real and very profound sense of attachment to the land.

For one thing, our economy is based on agriculture so we recognise and respect that the land has an important economic value.

We also have a strong tradition of aspiring to own land – our own house, section, lifestyle block, farm, or block of native bush. We are not entirely comfortable as tenants – we want to put our roots down and call some place our own.

We also value outdoor pursuits – tramping, hunting, fishing, camping and picnicking – and even when we don’t do those activities, we like the fact that we could if we wanted to.

Our tourism marketing is very focused on New Zealand’s natural beauty, and we’re proud of it.

I have recently said myself that we don’t want to end up in a position where New Zealanders are tenants in their own country.

So I think the fact that people are concerned with overseas ownership is perfectly legitimate.

But we should be careful not to let those concerns get out of hand.

For a start, about a third of New Zealand – including our most iconic land – is protected by being in the conservation estate. So no-one from overseas can come in and buy Mt Taranaki or the Franz Josef Glacier, for example.

Second, it is a simple fact that land can’t change nationality. People can change nationality, of course, and factories can be relocated overseas. But a piece of land in New Zealand will always be here in New Zealand.

Because it will always be here, the use of that land will always be subject to New Zealand laws and regulations. And ultimately we as New Zealanders get to determine what those laws and regulations will be.

Third, and contrary to what some people might think, there hasn’t been an acceleration of overseas sales in recent years.

In fact, as at a couple of days ago, only 11, 203 hectares of land has been sold so far this year. That is certainly well below the peak of 380,000 hectares that were sold in 2006.

Fourth, the issue of whether businesses and properties are owned by New Zealanders or people from overseas, is for the most part, squarely in our own hands.

What I mean is that no-one can be forced to sell their business to an overseas investor, just as no farmers can be compelled to sell their land to foreigners.

Obviously with mortgagee sales or receiverships things get a little more complicated but, in general, people who feel very strongly that New Zealand-based assets should remain in New Zealand hands are free to sell only to New Zealanders.

The problem is that it’s people who don’t own the land who are complaining and wanting to dictate to whom the owners can sell.

Moreover, New Zealanders can always buy land and other assets back. What makes that difficult isn’t the rules around overseas investment, it is the fact that New Zealand has a poor savings record and therefore a relatively small stock of capital available for investment.

If, as a country, we saved more, we would own more of the assets in New Zealand, including land, as well as being less in debt to overseas lenders.

Finally, there are specific safeguards contained in the Overseas Investment Act and in the regulations which the government makes under that Act.

Over the past year or so the Government has been reviewing this system of rules, to make sure we have got the balance right between three key objectives:

welcoming desirable investment, in recognition of the benefits it brings for New Zealanders

providing a stable investment environment, where the rules are settled and everyone is clear about what they are; and

addressing public concerns about overseas investment, particularly in regard to land.

This review has come to three conclusions.

The first conclusion is that the Overseas Investment Act is a fundamentally sound piece of legislation.

The Act makes it clear that it is a privilege for overseas people to own or control sensitive New Zealand assets.

In particular, it lays out that foreign investment in land is only acceptable if it substantially benefits New Zealand, according to a range of factors which include, among other things:

  • the creation of new job opportunities in New Zealand
  • the introduction into New Zealand of new technology
  • increased export receipts for New Zealand exporters
  • the introduction into New Zealand of additional investment for development purposes
  • increased processing in New Zealand of New Zealand’s primary products
  • protection of native bush and other indigenous vegetation; and
  • protection of game species and walking access.
  • In addition, farm land has to be offered on the open market so that New Zealanders can bid for it as well.

These are very stringent criteria.

In fact, these are the very same criteria that Phil Goff was trying to pass off as brand new policy a few weeks ago. I welcome his endorsement of the current provisions of the Overseas Investment Act which, of course, was passed by his government back in 2005. . .

The third conclusion we came to was that a couple of additions should be made to the existing rules.

These additions would make sure that all public concerns about overseas investment, both now and in the future, could be covered off under the rules.

So the Government is adding two more factors that ministers must consider when they assess the benefits of a proposed overseas investment in New Zealand land.

The first new factor is very wide-ranging and looks at whether New Zealand’s economic interests will be adequately promoted by overseas investment.

This will allow ministers to consider, for example, whether any of our key exports are in danger of being controlled by an overseas entity, or whether there are non-commercial motivations driving a proposed overseas investment.

The second new factor is a “mitigating factor” which looks at whether the investor has a meaningful commitment to New Zealand involvement in the running or oversight of the investment.

That could include, for example, part ownership with New Zealanders, appointing New Zealanders to the board, or listing on a New Zealand exchange.

These two new factors will be weighed up alongside all the existing factors when ministers consider applications for investment.

We are also going to outline the Government’s policy on foreign investment more clearly by amending the Directive Letter issued to the Overseas Investment Office.

This will make things clearer for both the Office and for overseas investors.

So in conclusion can I stress that we allow overseas investment to flow between countries – both into New Zealand and out of New Zealand – because it benefits New Zealanders.

With the appropriate checks and balances in place, this investment is good for jobs, wages and growth.

After reviewing the overseas investment regime, and making some amendments to it, the Government is satisfied that we do now have the appropriate checks and balances. . .

National strengthened those checks and balances.

Foreign investors must jump very high hurdles and if they don’t meet the conditions imposed on them by the OIO – conditions which are strictly monitored – they cannot keep the property.

The Overseas Investment Office has yet to make its decision on the sale of Lochinver.

If it does approve the deal, the strict criteria it must apply, made stricter by National, will ensure that the benefits to New Zealand are greater than any which would come from the sale to a New Zealander.

Rural round-up

December 10, 2013

Meat industry looks to tackle over-capacity:

The meat industry needs to keep looking for a solution to its processing over-capacity because it’s an issue that isn’t going to go away, the head of one of the country’s big four meat companies says.

ANZCO Foods has been exploring rationalisation options with the two big meat co-operatives, Silver Fern Farms and Alliance.

They have been focusing on solving the over-capacity issue, as having under-used processing plants erodes meat company profitability – a problem which is worsening due to the ongoing loss of sheep and beef production to dairy expansion.

The Government turned down a request for legislative backing to tackle over-capacity by introducing a tradeable processing rights system, because other companies were not supporting it. . .

More ‘foodies’ less producers

AUSTRALIA’S “foodie” culture might be booming but at the same time, there’s a growing shortfall of young people interested in producing our food.

That’s according to Dr Brian Jones, from the University of Sydney’s Faculty of Agriculture and Environment, who has helped design and will lecture in the university’s new Bachelor of Food and Agribusiness, starting in 2014.

“Exact figures on the employment shortfall are hard to calculate, but in agriculture alone, it has been shown that while there have been around 700 graduates per year Australia-wide in recent years, job advertisements suggest demand for approximately 4500 tertiary qualified graduates per annum,” Dr Jones said. . .

Wandering stock warnings:

THE NZ TRANSPORT Agency and Police are reminding rural property owners particularly in Canterbury to ensure their properties are adequately fenced to contain their livestock.

The reminder comes after a number of reports of wandering stock on state highway road reserve in Canterbury in recent weeks.

The Transport Agency’s highway manager Colin Knaggs says wandering stock poses a serious safety risk to all road users, not only on the state highway network but also local roads. . .

Five-stand shearing record bid – Abby Brown:

Today five shearers are taking on something that has been never attempted before – setting a five-stand, eight-hour lamb-shearing world record.

Odd-numbered stand sheds were uncommon, with most four or six stands, event organiser Emily Welch said.

The five shearers would aim to shear 2800-2900 sheep during the Cavalier Woolscourers record attempt, she said.

Sam Welch, Angus Moore, and Cole L’Huillier would aim to shear 600 or more sheep, while Richard Welch and Peter Totorewa would aim to shear 500-550.

The record attempt will take place at Cashmore Farms, between Clevedon and the Firth of Thames, near Auckland. . .

Prevention best protection for facial eczema risk:

While hot humid weather across the country has provided the perfect conditions for lush pasture cover this spring, farmers need to stay alert for an increased risk of facial eczema through summer.

Dairy and beef cattle, sheep, deer and goats are all susceptible to facial eczema which can damage the liver and cause inflammation of the bile ducts and an accumulation of certain compounds resulting in sensitivity to sunlight.

Ballance Agri-Nutrients Animal Nutrition Product Manager, Jackie Aveling, says even before physical signs appear exposure to facial eczema can have a significant impact on animals particularly cows where it can result in an immediate drop in milk production. . .

PGW talks up farm sales:

LAND SALES should continue to rise through summer, says PGG Wrightson Real Estate.

After what it describes as an “auspicious spring”, PGW’s general manager real estate, Peter Newbold says farmers and their bankers are taking a lead from good weather and market outlooks.

“Climatic conditions this spring have been favourable over the whole country, setting up what should be an excellent growing season. Projected income for the agriculture sector also looks positive,” he notes. Newbold says some vendors have already capitalised on the competition for the limited number of farms for sale. . .

Rural round-up

October 20, 2013

Access big hurdle in China – Tim Fulton:

ANZCO chairman Sir Graeme Harrison took the podium at the China Business Summit to argue the big problem for the meat industry in China was market access.

“New Zealand, like all countries supplying meat to China, is currently caught in the midst of a huge reform process, with food safety and related regulatory changes a very prominent part,” Harrison said.

The process of getting NZ meat plants approved by AQSIQ, China’s inspection agency, had been tortuous.

One ANZCO plant the Ministry for Primary Industries certified for export to China in 2009 was finally officially listed by AQSIQ four years later, he said. . .

Alliance profit but no dividend – Alan Williams:

Alliance Group made a profit in its latest year but not enough to allow pool distribution or dividend payment.

Alliance had achieved good cashflow and improved its equity ratio over the year, chairman Murray Taggart told shareholder farmers in Christchurch last week.

Alliance was cautious about markets for this season but there were several positives, Taggart said.

Detailed results of the latest year would be released soon. . .

Mega-merger of dairy industry was ‘miracle’ – Clive Lind:

It was a miracle the New Zealand dairy industry, with it’s strong-willed people and philosophical conflicts, completed the mega-merger that formed Fonterra, says the author of a new book.

Clive Lind, a Fairfax executive and former daily newspaper editor, spent three years researching and writing Till the Cows Came Home, to be published mid-next month.

Through the eyes of key industry people he interviewed, Lind tells the stories behind the multi-billion dollar industry – from 40 years ago when the single-seller Dairy Board was jolted into an urgent search for new markets when Britain started talks to enter the European Economic Community, to the emergence of added-value products, the economics-driven consolidation of more than 100 dairy companies into less than a handful, to the writing on the Beehive wall for the single-seller producer board and the efforts of the industry to find a structure solution for the future. . . .

Plant & Food Research innovation recognised:

Plant & Food Research had two reasons to celebrate at last nights New Zealand Innovators Awards held at Auckland Museum. The Crown Research Institute won the ‘Innovation in Environment and Agriculture’ category for research into insect sex pheromones, while the Biopolymer Network (BPN), a company jointly owned by Plant & Food Research, Scion and AgResearch, also won the ‘Innovation Excellence in Research’ category.

Sex pheromones, the natural chemicals released by the females of many insect species to attract mates, can be used to disrupt communication between insects, reducing their ability to identify mates and subsequently leading to a reduction in the population and reduced reliance on chemical controls. . .

Raw milk venture renews enthusiasm – Tony Benny:

Selling raw milk direct to the public has allowed a Canterbury farmer to get back to what he loves and that’s milking cows.

Geoff Rountree and his wife, Sandra, gave up dairy farming nine years ago because their hay-making business was growing and the days were not long enough to do everything.

“The contracting was building and it was getting a bit out of hand because the cows weren’t coming first, they were coming second and that shouldn’t have been the case,” he said.

The 105 cow herd went and the seven a side herringbone shed at Oxford was mothballed but Rountree missed being a dairy farmer. “Sandra always said to me, ‘stop pining to milk cows, go and milk someone else’s’.” . . .

Tweeting shows common concerns – Abby Brown:

A world-wide live Twitter discussion, #Agrichatworld, on issues facing farmers was a global first and revealed some recurring concerns, organiser Josien Kapma said.

Those concerns included climate, sustainability, ignorance of consumers, ever fewer farmers and complexity around farms.

The conversation also showed that farmers think the public have the wrong view of farmers’ values which is exacerbated by the rural/urban divide.

One of the questions asked by @AgrichatUK was what farmers wish the non-farming public knew about them.

The respondents’ tweets showed that farmers feel the urban/rural divide is alive and well and growing as the non-farming public tend to think as farmers only being about the bottom line and not also wanting to be environmentally friendly and sustainable. . .


Get every new post delivered to your Inbox.

Join 1,714 other followers

%d bloggers like this: