Rural round-up

May 22, 2017

Rain severely cuts crop planting – Annette Scott:

Waterlogged South Canterbury farmland will lie idle over winter as farmers wait for spring opportunities to plant crops.

Twice the normal rainfall in March followed by four times the normal rainfall in April left farmers battling with sodden ground and unable to meet autumn planting commitments.

South Canterbury Federated Farmers arable industry chairman Michael Porter said to date only about 50% of farmers had managed to get the crops they planned into the ground. . . 

Report shows plenty to work on – Hugh Stringleman:

Lack of progress on mitigating nitrogen losses from dairy farms was evident in an otherwise mainly positive scorecard for the Sustainable Dairying: Water Accord (SD:WA) in year three.

The national average nitrogen leaching loss in 2015-16 was 39kg/ha a year — the same as the year before.

N-loss calculations in Canterbury and Otago (64 and 39 respectively) revealed higher figures than the rolling average of the two previous years of accord measurements (50 and 33).

This was because irrigation effects were included for the first time after a change in the Overseer computer model used to generate the leaching loss numbers. . . 

Dairy farm water report factual, independently audited:

Kiwis can be confident that dairy farmers are ‘walking their environmental talk’, says the chair of the Dairy Environment Leaders’ Group, Alister Body.

Commenting on the latest Sustainable Dairying: Water Accord report, Mr Body says the work being carried out by farmers to help achieve swimmable rural waterways is each year independently audited by Telarc SAI.

The Crown Entity subsidiary is the leading certifier of quality, environmental, food, and occupational health and safety management systems. . . 

Fairton closure unfortunate but inevitable – Allan Barber:

Silver Fern Farms decision to close its Fairton plant did not have much to do with Shanghai Maling’s investment, but was only a matter of time. Even the workforce had apparently come to accept the inevitable after seeing lamb numbers through the plant decline sharply from more than 1 million in 2010 to less than 500,000 last season and 325,000 in the latest six months.

This demonstrated graphically the unsustainability of keeping the facility open when the company’s modernised multi species operation at Pareora is only an hour down the road. In its notice of proposal to close, subject to a two week consultation period, SFF cited declining sheep numbers in the surrounding catchment area as a result of land use change to more profitable forms of agriculture. However not surprisingly the company didn’t mention its substantial loss of market share at the same time, 14% share loss over a six year spell since 2010. . . 

North Canterbury cattle stud makes it through drought and out the other side – Pat Deavoll:

Three years of drought and an earthquake that destroyed three farm buildings and badly damaged another has failed to deter Kaiwara Angus Stud of Culverden, in north Canterbury, from preparing for its annual bull sale in a month’s time.

Stud owner George Johns is in the process of producing the catalogue. “You think you have taken great photos through the year, but where are they when you need them,” he says with a laugh.

The stud was formed in 1971 by George’s father Bruce Johns. At the time the family farmed a property in Waiau but moved to Culverden and Kaiwara Farm 25 years ago. . . 

Trans-Pacific Partnership (TPP) Agreement Ministerial Statement:

Ministers and Vice Ministers from Australia, Brunei Darussalam, Canada, Chile, Japan, Mexico, New Zealand, Malaysia, Peru, Singapore and Viet Nam met today to discuss the Trans-Pacific Partnership (TPP) in the margins of the Asia-Pacific Economic Cooperation (APEC) Ministers Responsible for Trade.

The Ministers reaffirmed the balanced outcome and the strategic and economic significance of the TPP highlighting its principles and high standards as a way to promote regional economic integration, contribute positively to the economic growth prospects of its member countries, and create new opportunities for workers, families, farmers, businesses and consumers. . . 

Get to the heart of decision making:

Heartland Bank and NZX subsidiary AgriHQ have launched a free online livestock finisher tool, AgriHQ Finisher, to assist sheep and beef farmers to calculate the potential trading margin after finishing any livestock they are considering buying.

Heartland Bank’s head of rural, Ben Russell, said the old adage “information is power” is particularly true in this instance.

“With store livestock prices at historically high levels, the arrival of AgriHQ Finisher couldn’t be better timed. . . 

The strange sheep that baffled scientists – Eloise Gibson:

When a farmer in Otago, New Zealand, saw a bizarre-looking lamb in his flock, he first assumed a wild goat had snuck in and impregnated one of his ewes. The newborn had a lamb-shaped body yet was coated with straight, lustrous wool, more like the hair of an angora goat than a typical sheep.

News of the “geep” (or sheep-goat hybrid) soon reached the local papers but, when scientists saw photos, they immediately suspected the baby animal was something else. For decades they had been hoping to study a rare woolly mutant called a “Felting Lustre” mutant: a sheep which has straight, fine wool instead of the usual crimped stuff.

“You can see it when the lambs are born, they have a different sheen,” says Jeff Plowman, a wool researcher at New Zealand’s AgResearch science company. “It doesn’t have a dull look, it’s shiny and bright.”. . 

 


Beyond the Top End

June 26, 2015

The theme for this year’s PPP’s 10th  conference was Beyond the Top End.

This was chosen because it was held in Darwin in Australia’s top end,  but the conference also aimed to:

 . . . explore just how we extend ourselves – in business and in our personal lives. We’ll take a look at how we push through the boundaries, hurdle over the barriers and go beyond where others have gone before. And we’ll ask (and hopefully answer) the question of ‘what does it take?’.

It did all that and more.

Chatham House rules applied which enabled everyone to speak freely but constrains what I can report. However, I can say it gave us the opportunity to hear from a variety of speakers who educated, entertained, informed and inspired us all.

We also visited the world’s newest meat plant and an outback station which gave those of us from other places an insight into the challenges which face those farming in the Northern Territory – crocodiles, dingoes, distance, dust,  drought, floods . . .

We had plenty of opportunity to network and learn from each other too.

An undoubted highlight of the conference was the presentation of the inaugural Zanda McDonald Award.

This honours its namesake, an Australian agri-business leader who died in an accident on his farm aged just 41.

Nominees were expected to demonstrate similar leadership and visionary characteristics to the late Zanda McDonald, including respect, passion, innovation, motivation, dedication, determination, curiosity, a strong work ethic and a desire to improve their industry.

The three finalists were:

* Emma Hegarty who grew up on a merino property in Queensland. She has worked in animal nutrition, and is a Beef Extension Officer with the Department of Agriculture and Fisheries. She also teaches agriculture at her local school, received a UNE Young Distinguished Alumni Award and was listed as one of the 100 most influential women in Australian Agri-business.

* Athol New who is the farm business manager for Purata at Dunsandel Dairies. He is responsible for 4000 cows on two farms with four sheds. He was a regional finalist for the ANZ Young farmer competition this year.

* Luke Wright who is manager of Orr Lake Elk in Quebec, specialising in genetics for antler production. He was manager of Landcorp Farming’s Stuart Farm, a 3000ha deer, sheep and beef property. He and his partner own a small deer farm near Te Anau.

All finalists gave polished presentations which showed how difficult a job the judges must have had to choose the winner.

It was Emma who won and was presented with a bronze award trophy, $1,000 cash, a place on the 2016 Rabobank Farm Managers’ program and an expenses-paid tailored mentoring package.

Rabobank also gave places on the Farm Managers’ programme to Athol and Luke.

You can listen to Shane McManaway, chief executive of Allflex Australasia, speaking to Jamie Mackay about the conference here and Ben Russell GM of Rabobank NZ also spoke of the conference in his interview with Jamie here .

The conference brought together 137 farmers and agri-business professionals from Australia and New Zealand.

We found we had shared concerns for the importance of animal welfare, food safety, recruitment and retention of staff, encouraging young people to consider agri-business careers, environmental protection and enhancement, bridging the rural-urban divide . . .

We also learned about different challenges Australian farmers face. One station in Queensland is in its third year of drought and has received only 65mls of rain this year. On top of that its plagued by wild dogs which kill stock and kangaroos which eat pasture.

This helped us appreciate the gentler conditions at home, even if it was a little harder to wake up to a frost this morning than it had been to wake up to 30 degrees in Darwin.


Rural round-up

June 5, 2015

Central Plains Water moves to Stage II planning:

Central Plains Water is proceeding with planning for an enlarged Stage 2 of the $375m project on the back of fresh funding from the Ministry of Primary Industries’ (MPI) Irrigation Accelerator Funding (IAF).

The $3.5 million investment from the IAF will allow CPW to proceed with the first phase of the Stage 2 design. This investment is one of two that the IAF has committed to CPW, which must match the commitment dollar-for-dollar. . .

Rabobank New Zealand announces appointment of new general manager Country Banking:

Rabobank New Zealand has announced the appointment of Hayley Moynihan to the new role of general manager Country Banking.

Subject to regulatory approval from the Reserve Bank of New Zealand, Ms Moynihan will commence in the role from July 2, 2015.

Reporting to Rabobank New Zealand chief executive officer Ben Russell, the general manager Country Banking will be responsible for leadership of Rabobank’s rural banking business throughout New Zealand.

 

Farmers urged to have their say on future plans for fighting bovine TB:

New Zealand cattle and deer farmers are being urged to get involved in how the fight against bovine TB is carried out, with a review of the Bovine Tuberculosis Pest Management Plan underway.

Since the start of 2000, New Zealand has spent more than $1.2 billion fighting bovine TB and controlling the pests (especially possums) that spread the disease.

Independent Chair of the Plan Governance Group (PGG) Chris Kelly said, “To protect the health of farmed cattle and deer and our good international trade reputation around animal products, it is critical we continue to build on this large investment and maintain the low TB rates we see today.” . .

Research findings a promising start for PhD student:

Preliminary findings from a research project at the University of Waikato could mean good things for farmers dealing with the effects of ongoing drought.

Increasing drought resilience
Doctoral student Jack Pronger’s research focuses on identifying approaches to increase pastoral drought resilience by using more diverse mixes of pasture species. He’s comparing the seasonal water use of mixed-sward pasture systems (a combination of different grass, legume and herb species) with more traditional ryegrass/clover systems under dairy grazing. . .

Healthy thinking workshops for rural people:

A 1980s era ambulance will be on the road soon, helping to bring practical advice to farmers and others in the rural community about looking after themselves.

It is part of a new programme, Farmstrong, that rural insurer, FMG and the Mental Health Foundation have launched.

It is taking a different approach to other rural mental health initiatives, by promoting well-being, with advice on subjects such as nutrition, managing fatigue, exercise, and coping with pressure. . .

Growing value – an uncertain future:

The uncertain future of the dairy sector is currently top-of-mind for many primary sector leaders, reports KPMG New Zealand.

That was a key theme arising from the KPMG Agribusiness Agenda 2015, titled “Growing Value”.

KPMG’s Global Head of Agribusiness, Ian Proudfoot, says conversations about the dairy industry’s future have “changed dramatically in the last year”.

“The extent of the downturn in milk returns for the 2014/2015 season was not expected. The belief that prices had moved to a new plain, driven by insatiable Chinese demand, has disappeared.”  . . .

Farmers score with new DairyNZ app launching at Fieldays:

A tool to allow farmers to perform one of their most important jobs on a smartphone will soon be available when DairyNZ launches its new free Body Condition Scoring (BCS) App at the National Agricultural Fieldays next week in the Waikato.

The app gives farmers the opportunity to body condition score cows on their smartphone using DairyNZ’s Body Condition Scoring Made Easy field guide.

DairyNZ animal husbandry specialist Andrea Henry says condition scoring cows is such an important job, DairyNZ wanted to make it as easy as possible. . .

Blocks help minimise metabolic disorder risks in herds:

It’s the calm before the calving season and a bit of planning now will help herds get through without the risk of metabolic disorders, such as milk fever, which can lead to downer cows or impact future milk production.

The disorders are prevalent just before or after calving, triggered by an inability to mobilise enough calcium. Subclinical cases of milk fever can be hard to pick up, with industry data indicating that for every downer cow it is likely that between 10 and 15 others in the herd will have early stage milk fever symptoms.

“It’s estimated that the cost of a clinical case of milk fever can reach up to $1,500 per cow* – including lost milk production, reduced fertility, and increased likelihood of culling due to other diseases such as mastitis. Not only is the risk a costly one, it’s also unnecessary,” says SealesWinslow Product Development Manager, Jackie Aveling. . .


Rural round-up

May 8, 2015

Moving on at Silver Fern Farms – Keith Woodford:

In recent weeks I have been analysing [here and here]  the GHD data that underpin the MIE recommendations for the meat industry. Those analyses confirm to me that MIE has missed the big picture.

The key MIE recommendation has been that companies must amalgamate, with the most important merger being between the two big co-operatives Silver Fern Farms and Alliance. However, Alliance has been consistent in their position, both before and since the MIE report, that the numbers needed to support an amalgamation do not stack up.

Alliance has taken considerable criticism from parts of the farming community for their lack of interest in joining Silver Fern Farms. Chairman Murray Taggart has been the front man and has had to bear the brunt of this. There are many sheep farmers who are struggling, and it is human nature to blame everyone else, even when financial logic says otherwise. . .

Slow rebalancing in global dairy markets weighs on prices, but turnaround beginning – Rabobank:

Recent decreases in international dairy prices and the 2014/15 milk price payout projection reflect the slow pace of the rebalancing that is taking place in global dairy markets, agribusiness banking specialist Rabobank said today.

Rabobank New Zealand CEO Ben Russell said the current market price forecast will negatively impact New Zealand dairy farmer cash flow and profitability across this season and next, but a turnaround in global dairy markets was beginning, with Rabobank maintaining its expectation of a price recovery to commence during the 2015-2016 season. . .

Synlait’s Akarola – Keith Woodford:

Synlait’s Akarola is about to transform China’s infant formula market. Fonterra’s new partner Beingmate, and all the other marketers of infant formula, are in for a huge shakeup.

On 25 March of this year I foreshadowed that infant formula prices in China were about to become much more competitive [here]. I based my report on information from dairy industry sources within China that New Hope Nutritionals – owned 75% by China’s New Hope and 25% by New Zealand’s Synlait – was about to launch a new brand of New Zealand- made infant formula called Akarola. I reported that the new brand would be sold exclusively online, at prices much less than half of normal prices in China.

A few days later New Hope Nutritionals launched their online campaign on JD.com ,and the foreshadowed price of 99 RMB for a 900 g per can was confirmed. In New Zealand dollars, this is about $21, or $16 in American dollars. . .

Scholarship, showing and study for Braydon – Kate Taylor:

BRAYDON SCHRODER was so tired from a week of working at the New Zealand Dairy Event he barely remembers his answers at the interview for Ravensdown’s annual Hugh Williams Memorial Scholarship.

He had left Feilding, flown to Christchurch for the meeting and then back to Feilding in time to show one of the family’s cows in the afternoon. But he was stoked to get the call the next day from Williams’ widow Adrienne to say he had been successful.

All in all, it was a successful week for Braydon – taking home the Youth Young Handlers title (16-19 years) and winning the youth team challenge at the Black and White Youth event. This is open to junior Holstein Friesian Association members.  . .

Ambassador brings new focus to threatened species:

New Zealand’s vulnerable native species will now have another strong voice for their protection with the announcement of the country’s first Threatened Species Ambassador.

Conservation Minister Maggie Barry says the high-profile new role will be pivotal in educating New Zealanders and raising awareness of our threatened species.

“We all need to know about the unique birds, animals and plants which are our taonga and understand the efforts needed to conserve them,” Ms Barry says. . .

New technology makes predator control easy – Gerard Hutching:

Conservationists might soon be able to know if a predator has been caught in a trap by simply checking their computer or smartphone.

Auckland civil engineer Simon Croft has developed wireless technology that attaches to traps and sends a signal to let people know if a predator has been caught.

The innovative traps will be first rolled out on farms in Hawke’s Bay, saving landowners from the time-consuming task of checking out individual traps.

Auckland civil engineer Croft said he had developed the technology “to make a difference”. . . .


Rural round-up

March 25, 2015

Freeloaders relying on co-ops – Alan Williams:

Using a mathematical formula to work out the level of overcapacity in meat processing won’t work, Silver Fern Farms chairman Rob Hewett says.

And nor would the Meat Industry Excellence (MIE) proposal for a permanent reduction in capacity offset by a reserve processing plant, funded by the industry and used only at times of  very high demand for killing space. That idea, based on the electricity industry model, was too simplistic.

“You’d have hundreds of people just sitting round most of the time, not doing anything. The issue is more complex than that.”

Hewett agreed with farmers who wanted enough killing space available all the time to cope with seasons like the current one, with drought conditions in many areas. . . .

 Rabobank New Zealand 2014 results:

Rabobank New Zealand Limited (RNZL) has further strengthened its position in the New Zealand rural banking market, recording above market rural lending growth, and reporting its highest net profit after tax (NPAT) of $105.49 million in 2014.

RNZL recorded net lending growth of $342 million in 2014, with the bank’s rural lending portfolio growing by 4.5 per cent, slightly ahead of overall rural debt market growth of 4.3 RNZL chief executive officer Ben Russell said the results were pleasing, as they demonstrated Rabobank’s ongoing commitment to New Zealand’s critical food and agribusiness sector, and were consistent with the bank’s goal of supporting clients to both help feed the world and achieve their goals and aspirations. . .

South American beetle introduced to control weeds:

A tiny Chilean beetle has been introduced to New Zealand in a bid to control a weed that if left unchecked could potentially become as big a problem as gorse.

Landcare Research, a Crown research institute which focuses on environmental science, recently provided Environment Southland with about 70 barberry seed weevils to release just north of Invercargill as a biocontrol agent for Darwin’s barberry. The fast-spreading orange-flowered thorny shrub has become a huge problem across the country, threatening to overrun native plants and farmland – particularly in Southland.

It is the first time this species of weevil, a type of beetle, has been used as a biocontrol agent anywhere in the world. . .

Natural pesticides tested:

New Zealand scientists have begun trials to test the effectiveness of some natural pesticides on one of the world’s worst vegetable pests, the diamond back moth.

The moth caterpillar causes serious damage to brassica crops such as broccoli, cabbage, cauliflower and bok choy.

More than a billion dollars a year is spent on trying to control the pest. The moth quickly becomes resistant to whatever chemical pesticide is used on it.

Scientists working under the Bio-Protection Research Centre based at Lincoln University, with the backing of genetic specialists at New Zealands Genomics, have been trying a non-chemical biological approach. . .

Going FAR for farmers – Annette Scott:

It is 20 years this week since formal practical research was initiated for the New Zealand arable industry.

On Wednesday the Foundation for Arable Research (FAR), established in 1995, will mark a number of arable industry milestones as the organisation reaches its 20th birthday.

FAR was set up primarily to do practical research for arable farmers.

Over the past two decades the levy-funded organisation has developed to actively do research and extension on a broad range of grain and seed crops in NZ and Australia. . .

NZ Kiwifruit Growers United In Support For Industry Change:

Following a record voter turn-out, interim results show more than 90 percent of New Zealand kiwifruit growers have supported the outcomes of the Kiwifruit Industry Strategy Project (KISP) to lock-in long-term grower ownership and control of their industry.

KISP’s Independent Chairman, Neil Richardson, said the voter turn-out and interim results were outstanding. They are a clear sign New Zealand kiwifruit growers are united in their vision for the future of their industry, he said.

“Two-thirds of growers, representing 80 percent of production voted in the KISP referendum. This compares to an average voter turn-out in primary industry of around 40 percent. . .

 

Zespri welcomes high turnout and support for positive change in grower referendum:

Kiwifruit growers have made a strong statement about the direction they want for their industry in the Kiwifruit Industry Strategy Project (KSIP) referendum. There is a clear mandate for change with interim results from the referendum showing two-thirds of growers, representing 80 percent of production, voting so far, says Zespri chairman Peter McBride.

“Over 90 percent of growers have clearly stated their desire for change in three areas which affect Zespri – ownership of Zespri shares by growers who have left the industry, the mechanism by which the Zespri margin is calculated and changes to Zespri’s board to formalise the three independent members. . .

 

Memories of the working horse – Mark Griggs:

RON Job, now retired at Parkes, says a lot of memories return as he inspects some of the horse harness and gear stored in the tack room at “The Grange”, Peak Hill.

The tack room was attached to the original stables, which have been converted into a machinery shed and workshop now the work-horse days are long gone.

“The Grange” is owned by the Frecklington family who settled there in the late 1800s.

The property is now operated by Ian and Lyn Frecklington, who have kept the old gear stored in the tack room where it was left as motor vehicles took over from real horsepower, and have been close family friends with the Job family for many years. . .


Rural round-up

March 3, 2015

Bluff oyster season ‘looks promising’:

The Bluff oyster season has opened with predictions it will be a good one.

The season for collecting oysters from one of the world’s last remaining wild fisheries opened yesterday and runs until the end of August.

Niwa says the oyster population has declined from last year because of the shellfish disease bonamia – which is harmless to humans. . .

– Keith Woodford:

[This post was first published in the Fairfax NZ Sunday Star Times on 22 February 2015. It is the fourth of a series of five on Fonterra.  The earlier posts were ‘The evolution of Fonterra’, ‘Fonterra’s jouney’, and ‘Fonterra’s global reach’.]

One of the big challenges for Fonterra has been to determine its overall market position. Is it a marketer of commodities? Or is it a marketer of fast moving consumer goods (fmcgs)? Or is it a marketer of specialist ingredients? Can it be all three?

The challenge of trying to be all three is that the appropriate business culture is different for each market positioning. Commodity marketing is all about logistics, efficiency, and financial discipline. Fmcgs are all about entrepreneurship, creation of brands, being fast on one’s feet, and willingness to take risks. Specialised ingredients require a focus on science and technology. . .

Dairy women look to future – Blake Foden:

New Zealand’s leading female dairy farmers will come together in Invercargill next month to discuss strategies and plan for the industry’s future.

The Dairy Women’s Network will hold its annual conference at ILT Stadium Southland on March 18-19, with a series of workshops and guest speakers focused on the theme of “Entering tomorrow’s world”.

Chief executive Zelda de Villiers said in the wake of a difficult season where most farmers were expecting a low payout, early bird registrations had been lower than anticipated.

While money might be tight, the current conditions made it even more important to attend and look to the future, she said. . .

Rabobank Dargaville celebrates opening:

Rabobank’s newest office in New Zealand celebrated its official opening on Thursday 26 February with a special event held at the Dargaville branch to mark the occasion.

Located in the heart of Dargaville, the new Rabobank branch is located at 94 Normanby Street and has been purpose-built to suit the needs of clients and staff frequently accessing the facility.

Rabobank chief executive officer for New Zealand Ben Russell said he was pleased to see the new premises “come to life”.

“We have been developing our plan to open in Dargaville for some time now and it’s great to see the team open the new building for business,” Mr Russell said. . .

Second Grand Finalist Confirmed:

Matt Bell is the second Grand Finalist to be named in the 2015 ANZ Young Farmer Contest.

The twenty-eight year old contract-milker took first place at the Aorangi Regional Final in Oamaru on Saturday 28 February.

Mr Bell went home with a prize pack worth over $10,000 including cash, scholarships and products and services from ANZ, FMG, Lincoln University, Ravensdown, AGMARDT, Silver Fern Farms, Honda, Husqvarna and Vodafone.
Matt placed third in the 2013 Grand Final and is determined to take out top honours in his final bid to become the ANZ Young Farmer Contest Grand Champion. In his spare time Matt enjoys getting out on his motor-bike, snowboarding and refereeing rugby. . .

Grow your bottom line with new pasture:

 Cost-conscious dairy farmers take heart – even with the lower payout, investing in new pasture remains highly profitable this autumn.

Financial analysis shows spending $1000 on autumn pasture renewal can lead to a gross return of more than $4000 over the next five years, while spending $1000 on palm kernel actually leads to a small loss this season in terms of milksolids.

“Pasture remains the corner stone of feeding cows in the New Zealand dairy industry, and the amount of pasture eaten per ha is widely acknowledged as a key profit indicator,” explains Graham Kerr, pasture systems manager for Agriseeds. . .

 

 


Rural round-up

December 11, 2014

Wellington decision makers get the facts on irrigation:

“Highlighting New Zealand’s international excellence in irrigation practice to urban audiences and dispelling myths is key to getting greater acceptance of water storage and irrigation throughout the country,” said Andrew Curtis, CEO of IrrigationNZ at a breakfast of over 70 politicians, industry and business representatives and NGOs in Wellington this morning.

The breakfast meeting was arranged by the national body representing irrigators and the irrigation industry, IrrigationNZ, as part of its efforts to educate New Zealanders about water storage and irrigation and to emphasise the link to food production.

In his opening remarks, Minister for Primary Industries Hon Nathan Guy congratulated IrrigationNZ for bringing together the capital city’s key decision-makers to learn about the irrigation industry. . .

 

Reduced milk payout challenge to farmers, but recovery likely to commence in 2015-16 – Rabobank:

While the reduced milk price forecast means New Zealand dairy farmers will face significant challenges in the coming 12 to 18 months, the medium to longer-term outlook for dairy remains sound, agribusiness banking specialist Rabobank said today.

Commenting on today’s announcement that Fonterra has further cut its farmgate milk price forecast for 2014/15, Rabobank New Zealand CEO Ben Russell said while the challenges New Zealand dairy farmers would have to deal with in the immediate term were “acute”, farmers should have confidence in the medium and longer-term outlook for dairy, with Rabobank expecting a price recovery to commence during the 2015-16 season. . .

 

Small towns face dairy payout pain:

Small towns which service the dairy sector will be the first to feel the impact of the lower milk payout, Fonterra warns.

The payout has fallen below $5 to $4.70 per kilogram of milksolids – down from $5.30/kg.

It’s the third time Fonterra has lowered its farmgate milk price since the opening forecast for the 2014/15 season of $7, announced in June.

The federation’s chairman, Andrew Hoggard, said it would be midway through next year before farmers felt the impact of the reduced payout. . .

Small dairy farms can still be profitable – Keith Woodford:

Last week I wrote about the changing scale of dairying. Farms are getting bigger and they will continue to do so, driven by the combined power of scale and financial leverage.

Unfortunately the title I supplied for that article (‘The changing scale of dairy’) was changed in the Sunday Star Times to ‘Dairy is all about scale’. This title implied that there was no future for small dairy farms. However, those of us working with farmers know that small farms can indeed be profitable, and there are many factors other than scale that influence that profitability.

The false impression in last week’s Sunday Star Times article was further compounded by a headline sentence, inserted by editorial staff, that there were 1900 farms with 4.8 million cows. The correct number for 2013, as stated in the article itself, is 11,900 farms. . .

Asian markets fuelling growth for NZ mussel industry:

New Zealand’s iconic Greenshell mussels are proving a hit with consumers in emerging Asian economies and fuelling export growth for the sector according to peak governing body Aquaculture New Zealand (AQNZ).

“Asia can’t get enough New Zealand Greenshell mussels,” AQNZ Chief Executive Gary Hooper said.
“The popularity is driven by the quality, purity, taste, health properties and the reputation of the product. Consumers deliberately seek out premium New Zealand farmed mussels because they know they come from pristine waters, are handled with integrity and are guaranteed safe products they can trust.” . .

 

Forest safety brain trainer for Tree fallers – Switchback’s Steven Falk joins International Safety Conference:

The Forest Industry Engineering Association (FIEA) is pleased to announce that forestry teamwork expert Steven Falk from British Columbia, Canada has been confirmed as a keynote speaker for it’s flagship forest safety conference series March 2015. The summit runs at Rotorua’s Distinction Hotel on 3-4th March and Bayview Eden Hotel in Melbourne on 10-11th March.

Steven Falk’s team of trainers at Switchback has worked with manual tree fallers in British Columbia for many years. He reports, “Our feedback shows that 96% of participants thank us for the training/coaching and express a desire for their families to be able to participate in further Switchback training.” . .


The sky isn’t falling

September 25, 2014

The cut in Fonterra’s payout isn’t good news but it isn’t the disaster that many are proclaiming.

Nor was the timing the political conspiracy that Winston Peters suspects:

Just four days after the General Election the true state of the dairy industry is revealed – returns for milk that the New Zealand economy is reliant on have slumped.

“Questions need to be asked by New Zealand voters on why they were not informed about this serious decline before Election Day,” says New Zealand First Leader, Rt Hon Winston Peters.

“The drop in payout is a $5 billion hit to the New Zealand economy and 2 per cent off nominal GDP.

“It appears the government and Fonterra joined forces to keep the facts hidden from voters? . . .

Fonterra makes announcements on its previous season’s final payout and any revision to the current one at this time every year.

The record final payout for last season was no surprise. Nor was the cut in this season’s forecast.

Anyone with even cursory knowledge of the global milk market was expecting it after successive drops in the GlobalDairyTrade price index and with the knowledge that the milk supply here and around the world was outstripping demand.

Lower income will impact on farmers, those who service and supply them and the wider economy but the news isn’t all bad.

The value of our dollar fell after Fonterra’s announcement which will help all exporters.

And while dairy prices are falling, demand and prices for sheep meat and beef are improving:

Rabobank New Zealand CEO Ben Russell said the softening in overall rural confidence was clearly a reflection of the impact of the bearish global dairy outlook and lower milk prices on dairy farmer sentiment.

“Falling dairy commodity prices are the overwhelming factor at play here. At the time of the survey being taken, the globalDairyTrade auction prices fell six per cent, taking them down 45 per cent from their February peak,” Mr Russell said.

“And with global dairy supplies continuing to increase from all key exporting regions, a significant price recovery is not imminent.

“That said though, farm commodity prices move in cycles and, clearly, dairy commodity prices are entering a lower part of the cycle right now. While this is always a difficult time, the important thing to remember is the medium to long-term picture for the dairy industry is strong.”

Mr Russell said dairy farmers were also cautious with the dairy industry approaching a critical time in the year, with the peak production and selling period for New Zealand milk just weeks away.

The dampened confidence among dairy farmers was reflected in their business performance expectations in the coming 12 months.

Dairy farmers had the most pessimistic outlook of their own farm business performance. However, Mr Russell said, it should be noted this was coming off record highs for business performance expectations among dairy producers over the past 12 months.

The latest survey found almost half of dairy farmers surveyed (47 per cent) expect the performance of their own farm business to worsen in the coming 12 months, up from 30 per cent with that expectation in the previous quarter. Just 20 per cent expect an improvement in performance, compared with 27 per cent previously. A total of 32 per cent expected performance to remain stable.

While there was also a tempering in sentiment among beef and sheep farmers, after reaching three-year record highs in the previous survey, confidence in this sector remained at overall strong levels.

Mr Russell said lamb prices were up on the previous season and beef prices were currently hitting record highs due to tight global supply.

In terms of expectations of their own businesses, the number of beef and sheep farmers expecting improved performance declined from 57 per cent last quarter to 48 per cent this survey. However, the percentage expecting their farm business performance to worsen remained stable, at just seven per cent. A total of 42 per cent anticipated business performance would remain at the same level.

Despite the decline in overall confidence, New Zealand farmers’ investment intentions were overall stable, the Rabobank survey showed.

Sheep and beef farmers increased their investment appetite – with 43 per cent indicating they intend to increase investment in their farm businesses over the next 12 months, up from 37 per cent previously. Only six per cent intended to decrease investment (compared with four per cent in the past quarter).

For dairy however, investment appetite had waned, with 21 per cent intending to invest less in their businesses (up from just seven per cent with that view in the previous survey) and 20 per cent expecting to increase investment (down from 27 per cent). This was the lowest level of dairy farmer investment intentions in more than five years (since August 2009).

Mr Russell said this change in sector investment dynamics may be an early indication the decline in the national sheep flock and the rate of dairy farm conversions were slowing. . .

Federated Farmers says farmers will be down but far from out:

Fonterra Cooperative Group farmer shareholders will welcome confirmation that the 2013/14 season has ended exactly as promised with a total payout of $8.50 per kilogram of milksolids (kg/MS).  That good news is balanced by a sharp revision downwards in the 2014/15 forecast.

“The 2014/15 season which offered so much has turned into a breakeven one for not just Fonterra suppliers but the entire industry,” says Andrew Hoggard, Federated Farmers Dairy chairperson.

“Like Synlait’s revision this week, there is a ‘good news and bad news’ dimension in this.   The good news is that we take the 2013/14 confirmed payout and the lowest revised forecast for 2014/15, we are talking an average total of $7kg/MS across the two seasons.

“A $5.30 kg/MS milkprice is also a lot higher than some commentators had expected if the forecast sticks.  If being a little word with a big meaning.

“Losing 70 cents kg/MS on the milkprice is really going to hurt.  Farmers will be kicking capital works into touch and will be pruning herds to rid themselves of any passengers.

“Speaking to DairyNZ, farm working expenses this season, before depreciation and interest payments, are expected to be around $4 kg/MS this season.  Feed, fertiliser as well as repairs and maintenance are going to be cut back.  We’ll only do what needs to be done.

“What we know from DairyNZ is that two-thirds of dairy farms have working expenses of between $3.25 and $4.75 kg/MS.  Of course when you start paying back the bank manager, the average cash costs on-farm head up to $5.40 kg/MS.

“As you can tell from what the forecast currently is, the current surplus is a wafer thin 15 to 25 cents kg/MS.  Expressed as retail milk, that’s about 1.25 to 2 cents a litre this season.

“It means that upwards of a quarter of our guys will be making a loss this season. 

“We also believe that unlike the Global Financial Crisis, dairy farmers have been listening and have focussed on building financial freeboard.  Sadly for some farmers, they’ll have to dip into that big time.

“Federated Farmers’ advice is to watch costs but to keep your bank, farm consultant, accountant and family fully in the loop.  Take a no surprises approach to get through.

“This season has been a perfect one for global milk with ideal conditions everywhere compounded by civil unrest in the Middle East and dislocation of European milk due to what is happening in Eastern Ukraine.

“We can only hope there is no more bad news but I am optimistic we may be back above $6 kg/MS for 2015/16,” Mr Hoggard concluded.

Agricultural prices are always cyclical.

Dairy farmers creamed it last season, now it’s sheep and beef farmers who have a brighter outlook. Both know that what goes up comes down and what comes down goes up again, sooner or later.


Rural round-up

May 11, 2014

Last chance to apply for leading farm business management program – 2014:

Applications are to close at the end of this month for this year’s Rabobank Executive Development Program, Australasia’s well-regarded agricultural business management course for leading primary producers.

Now in its fifteenth year, the prestigious Rabobank Executive Development Program gives leading New Zealand and Australian farmers from a range of agricultural sectors the opportunity to develop and enhance their business management skills.

Rabobank CEO New Zealand Ben Russell said the business of running an agricultural enterprise has become increasingly sophisticated, with farm owners and managers needing to draw equally on their farm knowledge and professional business skills in order to remain competitive and profitable. . .

 Changes lurk below gloss – Andrea Fox:

Dairy farmers enjoying the economic sunshine have been warned a new reality is coming, bringing an end to low global interest rates and a requirement for cash-backed investment.

ANZ chief economist Cameron Bagrie told the DairyNZ Farmers Forum in Hamilton shifts in United States economic policy influenced New Zealand’s long-term interest rates much more than Reserve Bank Governor Graeme Wheeler and some changes lurked under the current export gloss.

“We are transitioning internationally to a fundamentally different economic environment,” Bagrie said.

“The era of low interest rates and low cost of capital is coming to an end. . .

Hone first woman to win Diary trainee award

Ruth Hone, representing the Central Plateau region, is the first woman to take the New Zealand Dairy Trainee of the year title.

Charlie and Jody McCaig from Taranaki were named Sharemilker/Equity Farmers of the Year and Nick Bertram from Hawek’s Bay/Wairarapa became the Farm Manager of the Year at the awards in Auckland last night.

It was fitting the McCaig’s came from Taranaki to take the 25th award because the contest had its roots there, where the idea was born in the 1970s before the first national contest was held in 1990, national convenor Chris Keeping said. . . .

Talent galore at Dairy Awards – Anne Boswell:

New Zealand Sharemilkers of the Year 2014 Charlie and Jody McCaig say competing in the Dairy Industry Awards was the most challenging and rewarding part of their career to date.

The McCaigs, who took out the prestigious title at the National Dairy Industry Awards in Auckland last night, said the award was a culmination of all they had worked toward throughout their five year journey in the industry. They are currently 50/50 sharemilking 500 cows in Hawera for the Taranaki Community Rugby Trust.

“What an honour it is to win, given the calibre of all the entrants,” McCaig said. “They are all fantastic people, doing fantastic things.” . . .

BNZ grabs more agribusiness lending, upbeat on rural sector – Paul McBeth:

(BusinessDesk) – Bank of New Zealand, the local unit of National Australia Bank, continued to grab more market share of agribusiness lending and is upbeat on the prospects for the rural sector.

The lender made a concerted effort to build its capability in rural lending three years ago and continued to lift market share of agri lending in the six months ended March 31, with 22.2 percent of the market, up from 21.7 percent a year earlier, and 19.2 percent in 2010.

Chief executive Andrew Thorburn, who will become chief executive at the NAB group later this year, told BusinessDesk agribusiness is “an important focus for us” after the lender’s decision to boost capability three years ago, with asset quality “improving significantly.”

Growth in business lending and lower impairment charges on distressed loans underpinned a 3.4 percent increase in BNZ’s first-half cash earnings to $400 million. . . .


Rural round-up

December 13, 2013

How we manage incidents still needs fixing:

While it is good news that the inquiry into the whey protein incident concludes there was no failure with New Zealand’s dairy regulatory system it simply confirms what we already knew, said Michael Barnett, chairman of the NZ Infant Formula Exporters Association.

“We do have world best regulations. We are world leaders in whey production. Within the terms of reference of the inquiry to look into our dairy food safety system the report is a good outcome.”

However in our view the incident was never a failure of our dairy regulations. “It was a failure to manage the situation and the reputational damage it caused New Zealand. This report will not fix that failure,” said Mr Barnett. . .

Red Meat Profit Partnership underway:

Beef + Lamb New Zealand has welcomed the announcement that the Red Meat Profit Partnership is underway, acknowledging the significant opportunities it will provide farmers.

Beef + Lamb New Zealand Chairman, Mike Petersen says: “The significance of this collaboration cannot be underestimated as it draws together a big part of the red meat processing industry along with farmers and two banks, with the common goal of improving the profitability of sheep and beef farms. Profitability has been too variable and insufficient in recent years, but through this collaboration there is a significant opportunity to improve it.” . . .

Rabobank welcomes signing of Red Meat Profit Partnership:

Agricultural banking specialist Rabobank has welcomed the recent signing and successful contracting of the Red Meat Profit Partnership (RMPP).

The finalisation of the $64 million dollar partnership has been announced with the Crown officially contracting its support of the initiative.

Rabobank New Zealand CEO Ben Russell said the bank was pleased to confirm its support as a partner of the RMPP alongside the other co-investors. . . .

Week one in a revolutionary fortnight for red meat  – Jeanette Maxwell:

With red meat industry reform a big topic for farmers, Federated Farmers is welcoming the most comprehensive collaboration ever seen in the sector.  With the Federation going out to its members next week on meat industry reform options, this becomes the first week in a revolutionary fortnight for New Zealand’s number two export industry.

“It seems ironic that I am going to welcome 1.3 million fewer lambs being tailed in 2013 over 2012, but the second smallest lamb crop in nearly 60 years is a good outcome following the 2013 drought,” says Jeanette Maxwell, Federated Farmers Meat & Fibre chairperson.

“To be brutally honest, that 4.7 percent decline to a 2013/14 crop of 25.5 million lambs, underscores how vital this week’s announcement of the Red Meat Profit Partnership is. . .

Government Industry Agreements to strengthen biosecurity:

Primary Industries Minister Nathan Guy has welcomed Cabinet’s approval of the GIA (Government Industry Agreement) Deed as an important tool in strengthening New Zealand’s biosecurity.

“Under the GIA, industry organisations and the Ministry for Primary Industries can sign a Deed that formally establishes the biosecurity partnership. Partners will share decision making, costs, and responsibility in preparing for and responding to biosecurity incursions.

“The GIA is important because it will give industries a direct say in managing biosecurity risk. Joint decision making and co-investment will mean that everyone is working together on the most important priorities.

“Biosecurity is my number one priority as Minister because it is so important in protecting our economy. We know that unwanted pests and diseases can have devastating effects on our farmers and growers,” says Mr Guy . . .

Biosecurity Government Industry Agreements a major boost

Winning Cabinet approval for any policy initiative is never easy so the efforts of Primary Industries Minster, the Hon Nathan Guy with Government Industry Agreements (GIA), must be acknowledged for the way it will boost biosecurity readiness and response.

“GIA’s are a positive development for biosecurity,” says Dr William Rolleston, Federated Farmers biosecurity spokesperson.

“Cabinet approval is the roadmap forward and follows Federated Farmers leadership last year, which successfully unblocked five years of stalled talks by bringing together key industry players.

“For the general public, GIA’s are about ‘Readiness and Response,’ which are the two key planks to our biosecurity system.  . .

Forest owners welcome biosecurity deed:

Cabinet approval of the deed that will govern how the government and primary industries respond to biosecurity threats has been welcomed by forest owners.

“The biological industries need secure borders, effective monitoring for possible incursions and a rapid response if an exotic pest arrives here. It is essential that we all know who does what and who picks up the tab,” says Forest Owners Association biosecurity chair Dave Cormack.

“The forest industry, through the FOA, has partnered with government in forest biosecurity surveillance for more than 50 years and has funded its own scheme for the last 25 of those years. We look forward to formalising this relationship in a Government Industry Agreement. . . .

Warwick Roberts elected President NZ National Fieldays Society:

The Annual General Meeting for the National Fieldays Society was held last Thursday night at Mystery Creek Events Centre.

Experienced dairy farmer and local resident, Warwick Roberts, was elected President of the NZ National Fieldays Society and starts his term immediately.

Mr Roberts had held the position of Vice President of the Society since 2012 and takes over the presidency from Lloyd Downing, whose term ran 2010-2013.

In speaking about his appointment, Mr Roberts said he was very proud to be leading such a prestigious organisation. . .

Start date for farm training scheme – Annette Scott:

The farm cadet training scheme proposed for the upper South Island has a start date.

Mendip Hills Station, in North Canterbury, will host the new farm cadet training scheme aimed at the sheep, beef, and deer industries.

Scheme co-ordinator Sarah Barr signed a statement of intent agreement last week with Lincoln University, incorporating the Telford division of the tertiary institution, for the scheme to start in 2015. . .

Amendments to layer hens code of welfare:

Primary Industries Minister Nathan Guy has announced amendments to the Layer Hens Code of Welfare 2012, in a move to avoid a large increase in the price of eggs.

“The final date of 2022 for all layer hens to be out of battery cages remains unchanged. However, the amendment alters the transition dates by two years:
• Cages installed before 31 December 1999 must now be replaced by 31 December 2018 (previously 2016);
• Cages installed before 31 December 2001 must now be replaced by 31 December 2020 (previously 2018).

The amendments have been made after advice from the independent National Animal Welfare Advisory Committee (NAWAC). . . .

The long and the short of it is  . . . – Mad Bush Farm:

I got what I always wanted. I can wake up each morning, have breakfast and get a friendly greeting at the door. He got my toast,  I got my coffee and the company of an equine friend. Animals can do so much for healing a hurt, and helping us forget our troubles. And in turn we can help them get through their troubles. Most of the horses I have on the farm have had sad backgrounds. Ed too had a hard life before he came to me nearly ten years ago. His days are coming slowly to an end. Soon I’ll have to make a decision about his future. . .

New Zealand Young Farmers raises over $1400 for men’s health:

New Zealand Young Farmers was a proud participant in this year’s Movember campaign – and it was a wild and hairy 30 days.

For the month of November the Young Farmers Movember ambassadors Terry Copeland NZYF CEO, Ashley Cassin ANZ Young Farmer Contest Events Leader, and Nigel Woodhead Pendarves Young Farmers Club member, cultivated impressive moustaches all in the name of men’s health.

A charity quiz night was held on the last Friday (29th) of November at the Blue Pub in Methven as a final drive for donations. It was well attended with 13 teams and over 60 people participating. There were top prizes from Silver Fern Farms, Husqvarna and a sell-out raffle for a Vodafone Samsung Galaxy mobile phone.   . .  .


Farmer confidence at 5-year high

November 7, 2013

There’s an air of optimism in rural communities and that’s been confirmed by a Rabobank survey:

Confidence among New Zealand farmers is at its highest level in five years,
buoyed by strong dairy prices and an improving outlook in the red meat sector.

The latest quarterly Rabobank Rural Confidence Survey – completed late last month – has showed New Zealand farmers are increasingly optimistic about the outlook for both their own enterprises and the overall agricultural sector.

After registering a large rally last quarter, confidence in the overall rural economy remained at high levels, with 54 per cent of farmers expecting conditions to improve over the next 12 months (the same as last survey) and only six per cent expecting them to worsen (down from eight per cent).

Farmers’ expectations of their own businesses had also climbed, with 57 per cent expecting their farm business performance to improve over the coming year (up from 55 per cent previously) and only five per cent expecting it to deteriorate (compared with 10 per cent last survey).

Rabobank New Zealand CEO Ben Russell said while spring was typically the time farmer confidence was at its highest, the current favourable climatic conditions, combined with improving product returns across most agricultural sectors, had increased confidence even further this year.

Mr Russell said dairy farmer confidence had remained at similar elevated levels seen in the previous survey, in the wake of a record milk price forecast for the current season (at NZD 8.30/kgMS) and generally very good spring conditions lifting milk production.

“Dairy farmers are reporting the same high levels of confidence we have been seeing in the sector since the middle of the year, with their optimism being driven particularly by high commodity prices, good overseas markets and the current milk price forecast, “ he said.

Mr Russell noted that while dairy farmer confidence was very high, there was likelihood that dairy commodities prices would ease from record high levels into 2014. “And this is something Rabobank believes should be factored into producers’ planning and budgets for next season,” he said.

For sheep and beef farmers, more than half (56 per cent) now reported they were expecting the agricultural economy to improve in the next 12 months, up from 52 per cent with that expectation previously.

The number of sheep and beef farmers expecting their own farm business performance to improve also increased, to nearly half (49 per cent), climbing from 45 per cent.

Mr Russell said improving commodity prices were buoying the red meat sector, with lower stock numbers – particularly less availability of lambs – following last summer’s drought contributing to the positive outlook for commodity prices among farmers.

“At the start of the new processing season, farmgate prices are two to three per cent ahead of the prior year for lamb,” he said.

The Rabobank survey showed New Zealand farmers’ investment intentions remained strong, with 94 per cent of those surveyed expecting to increase or maintain the level of investment in their farm businesses (compared with 92 per cent in the previous survey).

“Sheep and beef farmers’ investment intentions have shown the greatest improvement,” Mr Russell said. “A total of 95 per cent of farmers in this sector reported they intended to maintain or increase investment in their businesses. This was up from 91 per cent last survey and from more than 83 per cent 12 months ago.”

In line with the overall high confidence levels, farm viability was also up – with 68 per cent of farmers considering their business viable or easily viable. This was an increase from 60 per cent in the previous survey.

“Importantly, sheep and beef farmers’ assessment of their own viability has increased to 54 per cent (up from 48 per cent previously), pushing back into net positive territory for the first time in 2013,” Mr Russell said.

Any dairy farmers who aren’t confident now almost certainly have problems of their own making.

It’s not often good production and a high payout happen at the same time, but it is this season.

The outlook isn’t as rosy for sheep and beef farmers but it is still positive.

This is very good for the rural sector, it’s good for the wider economy where at last employment is growing and unemployment is falling.

Latest labour market data shows continuing growth in employment and decrease in unemployment as the economy strengthens, Tertiary Education, Skills and Employment Minister Steven Joyce says.

Today’s Household Labour Force Survey shows employment was up by 1.2 per cent – 27,000 people – in the September quarter and 2.4 per cent in the year to September – 53,000 people.

The unemployment rate fell from 6.4 per cent in the previous quarter to 6.2 per cent.

“While unemployment is still higher than we would like, it has declined from 7.2 per cent a year ago, and the overall trend is of an improving labour market as the economy picks up. The Government is working across a number of fronts to help bring the rate down further,” Mr Joyce says.

“The economy grew at around 2.5 per cent in the year to June 2013, one of the highest rates in the OECD.

“Our participation rate grew to 68.6 per cent, up 0.5 percentage points, and remains significantly higher than Australia’s at 65 per cent.”

Wages continue to rise faster than inflation. Average weekly earnings rose 2.9

per cent in the last year, compared to inflation of 1.4 per cent.

The NEET rate for 15 – 24 year olds – youth not in employment, education or training – continued to fall, to 11.4 per cent over the quarter, the lowest since December 2008. The NEET rate for 20 – 24 year olds fell by 1.8 to 14.1 per cent.

“Momentum in the New Zealand economy is continuing to grow, with September’s trade data confirming the recovery from last summer’s drought is underway, along with the highest increase in permanent and long-term migration in over a decade,” Mr Joyce says.

Business confidence rose to 14 year highs in September’s Quarterly Survey of Business Opinion and in October’s ANZ Business Outlook.The recent Grant Thorndon International Business Report puts New Zealand sixth out of 44 economies in terms of business confidence. . .

These two surveys add another couple of stones to the foundation of good news which is helping to build that brighter future we were promised.

In #gigatownoamaru confidence is building too as the town seeks to become the Southern Hemisphere’s fastest town.


Perfect storm shows sheepmeat challenges

June 5, 2013

A report from Rabobank shows the challenges facing the sheep industry:

The New Zealand sheepmeat industry has been riding a ‘rollercoaster of returns’ in recent years, according to agribusiness banking specialist, Rabobank. A perfect storm of high supply, strong local currency and weak consumer demand has reduced returns and some key challenges must be addressed in order to secure a prosperous future for the sector.

In its recently released report ‘Sheepmeat – riding the rollercoaster of returns’ reviewing the sheepmeat sectors in New Zealand and Australia, Rabobank says in order to capitalise as conditions improve in established export markets, the sector will need to retain sufficient scale and market presence relative to competing meats.

Rabobank CEO New Zealand Ben Russell says the industry has experienced extreme volatility in returns throughout the value chain, and that is likely to continue with an expected supply shortfall looming in the coming season.

“The New Zealand sheep flock has been declining in size for many years with the drought and lower prices last season likely to see that trend continue next year,” he said.

“The shrinking flock has created structural over-capacity that will need to be addressed, however there are risks and practical challenges in achieving this that need to be carefully considered by processing companies.

“Ultimately the path to greater industry prosperity and growth is creating more value for consumers and a more efficient supply chain, including on-farm, procurement, processing and marketing.”

Better returns for sheep farmers depend not just on better prices for meat, it requires better returns for by-products including wool.

New Zealand’s sheep industry started to produce wool. The introduction of refrigeration enabled meat to be exported too but wool was still an important part of sheep farmers’ incomes.

Two or three seasons ago strong wool prices were reasonable but they’re fallen away again and that is one of the reasons sheep farmers’ incomes have slumped.

Notwithstanding the challenges facing the sheepmeat industry, Mr Russell says Rabobank remains enthusiastic about the long-term potential for the sector in New Zealand, and working alongside its clients throughout the supply chain to capitalise on future opportunities.

Report author, Rabobank animal proteins analyst Matt Costello says that, given the sector’s exposure to and reliance on export markets, and the fact that sheepmeat is a higher valued product, the sheepmeat industry is dependent on the economic environment and consumers in these markets.

“Market demand for sheepmeat has been subdued as a result of higher prices and fragile economies, especially in Europe, whereas Asia and the Middle East have emerged as stronger markets and should be cultivated,” he says.

“With an improving outlook in some of the lucrative sheepmeat export markets and with the optimism surrounding the potential of developing markets such as China – New Media Release June 3, 2013 2
Zealand and Australia will be the only countries positioned to supply consumers around the world.

“It is increasingly important that the sheepmeat sector retains significant scale and market presence in comparison to competing meats to remain viable and capitalise on the longer-term growth opportunities.”

Part of the problem in New Zealand isn’t competition from other meats in export markets, it’s competition for land from dairying.

Dairy returns are better and improving which has pushed up farm prices. Growing demand for milk can support the increase in prices, volatile returns for sheepmeat can’t.

The big ‘dip’

The Rabobank report finds that the variation in returns for sheepmeat producers and exporters over the past few years has been significant, with “unprecedented” volatility.

Mr Costello says there is a lack of confidence among producers across the sheepmeat industries in both countries.

“The extreme high and low points over the past few years have not helped anyone, only serving to add to frustration and disillusionment,” he says.

“In simple terms, historically tight supply from both New Zealand and Australia underpinned the initial surge in livestock prices during 2010 and 2011, and the ensuing weak prices through 2012 and 2013 have been driven by higher short-term production due to the extremely dry conditions across both countries.”

While tighter supply in 2013/14 will assist to firm pricing over the coming year, a more sustainable market recovery will need to be driven by improved consumer demand and ultimately a more buoyant global economy.

Sheepmeat isn’t a traditional food in many parts of the world but the demand for protein from developing countries might help that.

Emerging markets

Globally, rising prices have been met by stubborn consumers in the major sheepmeat export markets of the EU, UK and the US. The emergence of developing markets throughout Asia and the Middle East has helped to offset the declines in volumes and, to a lesser extent, returns from the traditional export markets.

Not only is weak consumer demand impacting returns for the industry currently, but a persistently high exchange rate has also been challenging both countries.

Even with a slight fall in recent weeks, the prolonged high dollar in both New Zealand and Australia has been pressuring competitiveness in the global market, resulting in substitution and weaker export demand for sheepmeat, the Rabobank report says.
China, the report says, is a good example of the emerging market demand for sheepmeat.

Mr Costello says China became the largest single sheepmeat export market for New Zealand in 2012, surpassing the UK for the first time ever. Furthermore, China is now Australia’s largest sheepmeat export destination. Media Release June 3, 2013 3
“The emergence of China has seen a much greater utilisation of the whole carcass as demand has grown for items that were once rendered or offloaded at a discount and sheepmeat demand is expected to grow as affluence continues to increase,” Mr Costello says.

Utilisation of the whole carcass helps returns.

If only we could persuade the Chinese to embrace wool as well . . .


Rural round-up

May 15, 2013

Government approves kiwifruit Psa plan:

A national management plan for dealing with the kiwifruit Psa virus has been formally approved by the Government, Primary Industries Minister Nathan Guy has announced today.

“This plan means that the primary responsibility for managing Psa is now moving to the industry themselves as they are best placed to co-ordinate and lead the response.

“As part of this, the Government has approved a levy rate on exported kiwifruit equating to one cent per tray for green fruit and two cents a tray for gold fruit. This will help cover disease management, monitoring, plant material movement and dealing with unmanaged and abandoned orchards.

“The levy has been voted on by growers and will have a shortfall until yields return to pre-Psa levels. Therefore Cabinet has agreed that $3.5 million remaining from the initial Government funding of $25 million will be passed to Kiwifruit Vine Health (KVH) to implement the plan. . .

Enrolments to close for leading farm business management programme:

Applications are to close at the end of this month for this year’s Rabobank’s Executive Development Program, Australasia’s leading agricultural business management course for leading primary producers.

Now in its fourteenth year, the prestigious Rabobank Executive Development Program gives leading New Zealand and Australian farmers, from a range of agricultural sectors, the opportunity to develop and enhance their business management skills.

Rabobank CEO New Zealand Ben Russell said the Executive Development Program is designed to assist farmers improve primary producers’ ability to manage the challenges of agriculture and plan for the growth of their farming businesses. . .

Farm Environment Ambassadors Study Marketing of New Zealand Produce in Asia:

An industry-backed trip to Asia has given Otago farmers Blair and Jane Smith a deeper understanding of the challenges facing marketers of New Zealand meat and dairy products.

National winners of the 2012 Ballance Farm Environment Awards, the Smiths recently returned from South Korea, China, Taiwan and Singapore, where they visited a number of key markets for New Zealand sheep, beef and dairy products.

The purpose of the 16-day trip was to learn more about offshore markets, exchange views on topics of crucial interest to New Zealand farmers and to showcase New Zealand’s stance on agricultural sustainability. . .

Announcement of Intention to IPO:

Synlait Milk Limited (Synlait Milk) advises that it is considering an initial public offering (IPO) of shares and to list on the NZX Main Board.

Synlait Milk is currently 49% owned by Synlait Limited and 51% owned by Bright Dairy & Food Co., Ltd (Bright Dairy).

Prior to any shares being allotted under ny IPO, Synlait Limited has advised Synlait Milk that it intends to distribute to its shareholders, on a pro-rata basis, the shares it holds in Synlait Milk. . .

PGG Wrightson annual earnings to fall by up to 27% on drought, lower livestock values:

PGG Wrightson, the rural services company which fell out of the NZX 50 Index this year, expects annual earnings to fall by as much as 27 percent as dry conditions on both sides of the Tasman and lower livestock values erode prices.

The Christchurch-based company expects earnings before interest, tax, depreciation and amortisation of between $40 million and $48 million in the 12 months ended June 30, down from $55 million in 2012, it said in a statement. The decline was put down to the dry climate in Australia and New Zealand, lower livestock value and falling earnings from its Agri-feeds unit after disposing of its 4Seasons Feeds joint venture. . .

Irrigation Event Needs More ‘Owner Operator’ Irrigator Support:

The irrigation industry is rapidly moving away from a ‘No 8 wire mentality’ as next week’s Great Irrigation Challenge in Ashburton will demonstrate, says IrrigationNZ – but more ‘owner operator’ irrigators need to rise to the challenge.

On May 23 and 24 at Ashburton Racecourse, IrrigationNZ, with the support of principal sponsor Aqualinc, will host a series of hands-on workshops aimed at up-skilling and professionalising both irrigators and their support industries.

While more than 100 irrigators, irrigation scheme representatives and industry advisors from across New Zealand have signed up, IrrigationNZ wants to see more ‘owner-operator’ irrigators attend. . .

Southland’s Morning Milking Roll Call:

Georgia Donaldson discovered some ‘udderly amazing’ facts when she came face to face with about 500 cows on Fonterra Shareholders Allan and Ann Black’s farm in Invercargill this morning.

Each Jersey cow can produce at average 4100 litres of fresh milk a year – enough for more than 20,000 packs of Fonterra Milk for Schools milk.

Georgia was one of several children from 12 Invercargill schools invited to learn about the source of their daily dose of nutrition, and how it can help them concentrate in the classroom and, in this case, outside of it. . .


NZ farmer confidence lower

October 16, 2012

Rabobank’s latest quarterly Rural Confidence Survey shows New Zealand farmers’ confidence is lower.

Results at a glance:

• Farmer confidence has continued to decline and remains in negative territory
• High dollar and lower commodity prices main dampeners on confidence
• Negative sentiment now impacting farmers expectations of their own business performance
• Dairy sector confidence has staged slight lift

The survey which was conducted in September found:

. . .  that 44 per cent of the nation’s farmers expect the agricultural economy to worsen over the next 12 months (compared to 36 per cent with that expectation in the previous quarter and 10 per cent at the same time last year). Just 15 per cent expect economic conditions to improve.

That is a bit gloomier than the rural grapevine suggests, but of course the grapevine isn’t a scientific tool.

Rabobank New Zealand CEO Ben Russell said that while New Zealand farmer confidence had been on the decline since March last year, this survey was the first to show farmers now expected a greater negative impact on their own businesses.

“Farmers’ expectations of their own farm business performance had previously held up better than confidence in the agricultural economy as a whole, however this measure has also now showed some deterioration,” he said.    “This latest survey found 42 per cent of farmers expect their own farm business performance to worsen over the next 12 months, compared to 29 per cent in the previous quarter.”

Mr Russell said the high New Zealand dollar and falling commodity prices were key reasons for farmers’ declining confidence, cited by 50 per cent of farmers who expected conditions to worsen.

“Overseas market conditions and rising input costs were also shown to be a concern,” he said.

Of those New Zealand farmers surveyed who had a positive outlook, confidence was being driven by the expectation of positive flow-on effects to New Zealand agriculture from the drought in the US and tight food supplies globally.

Dairy and sheep farmers I’ve been talking to are expecting returns this season to be down on last year’s and that will impact on budgets and bottom lines.

But this is regarded as a temporary blip rather than a trend. The medium to long term outlook is generally pretty positive.

 


Headwinds expected, will abate

August 10, 2012

Rabobank’s Rural Confidence Survey shows the global economy continues to create headwinds for farmers.

The latest quarterly Rabobank Rural Confidence Survey has shown that while New Zealand farmers remain more optimistic about the performance of their own farm businesses relative to the wider agricultural economy, both confidence indicators fell this quarter. Both indicators are now in negative territory, showing that more New Zealand farmers expect conditions to worsen, rather than improve. . .

Rabobank New Zealand CEO Ben Russell said the further fall in confidence reflects the uncertain global economic environment that New Zealand farmers are operating in, which has placed downward pressure on commodity prices.

“For many, coming out of a season where the planets aligned in terms of climatic conditions and commodity prices, many are pragmatic in their outlook that these conditions are unlikely to be repeated. Farmers have also seen commodity prices come back off their more recent highs, while the New Zealand dollar has remained very strong,” he said.

After a couple of years of high prices there’s no surprise in predictions of softening prices, particularly when the global economy is still depressed.

New Zealand and Australia are generally doing better than our traditional trading partners and we can be grateful for the efforts put into opening trade opportunities in Asia. Growing demand there will off-set some of the fall in demand from Europe and the USA.

Farmers are expecting lower prices this season but the longer term outlook is still good. The growth in the world population and growing demand for protein from developing markets should both ensure good markets for our produce.


Rural round-up

May 7, 2012

Slow down speed bumps ahead! – Dr Jon Hauser:

There’s an old joke that if you ask three economists a question you’ll get four different answers. Despite this, the one thing everyone agrees on is that global milk production over the last year has been going up, up, and up! The million dollar question, and the one that has been causing the dismal science’s split professional personalities, is: ‘will global demand keep pace?’.

The final numbers are in for 2011, so this week we’ve decided to throw our analysis into the ring . . .

“Kaitiakitanga”  nurturing our natural resources and people for a prosperous future – Pasture to Profit:

Kaitiakitanga” in Maori means to nurture our natural resources & people for a prosperous future.

This is one of 5 Farm Business Management values set out by Tauhara Moana Trust, one of three finalists in theBNZ Ahuwhenua Maori Excellence in Dairy Farming Award 2012. Maori Trusts have different business objectives to most other NZ dairy farmers.  . .

Why does wool polarise farmers? – Alan Ememrson:

Derek Daniell’s remit to the Beef + Lamb New Zealand annual meeting regarding a wool levy achieved, if nothing else, a positive plethora of emails to my inbox.

It was an innocent enough remit calling for an “evaluation of the result of the discontinuation of the wool levy and investigation whether a future collective investment would add value for wool growers”.

The problem is, as it seems with all things wool, people are either firmly on one side of the fence or the other.

For the record Derek is a good bloke and a highly successful farmer. His remit is well worded. How it is handled from here by B+LNZ will determine if it is successful. . .

Lincoln honours palm oil alumnus – Tim Fulton:

An executive in the global palm oil industry has been awarded Lincoln’s international medal, backed by an assurance from the university that his company is the “socially responsible standout” in the industry.

Just over 40 years after leaving Lincoln College with a diploma in Valuation and Farm Management, John Clendon was recognised last Friday for his involvement with coconut, cocoa and oil palm production in the south-west Pacific and Asia.

Clendon is managing director of Univanich, a Thai company which Lincoln credits as “the world’s leader in the production of sustainable palm oil”. . .

Tight unit wins Farmer of Year award – Sally Rae:

It was cattle that brought the 2012 OtagoSharemilker/Equity Farmer of the Year winners James and Helen Hartshorne together.   

 Mr Hartshorne, originally from Shrewsbury in Shropshire, was showing Holstein-Friesians at the Royal Welsh Show in 1999,      while his future bride, from Wales, was exhibiting Guernseys .. .

Farm managers of  year love their job – Sally Rae:

Gareth Dawson always knew he was going to pursue an    outdoors career.   

He did not want to be “stuck indoors” and chose dairy farming, after helping a friend herd testing one day “and      just never left” the industry.   

Mr Dawson and his wife Angela, who now manage a 560 cow 186ha property at Clinton, won the 2012 Otago Farm Manager of the Year title.   . .

Rabobank builds rural business:

Rabobank New Zealand Ltd (RNZL) continued to build its rural banking business in 2011, recording net lending growth of $724 million, despite a contraction in the total rural debt market over the same period.  

Rabobank New Zealand CEO Ben Russell said the bank’s rural portfolio growth during 2011 was a positive result which primarily reflected refinance activity rather than organic growth of existing customers. . .

Kiwi avocado comapny wants slice of food service market:

A New Zealand owned avocado company has targeted the billion dollar food service market, with a goal to switch consumers from imported to locally grown produce.

Fressure Foods, a mainly grower-owned organisation, is encouraging Kiwi food trade companies to source locally produced avocados wherever possible to support local farmers and meet with growing consumer demand.

Currently the imported avocado industry in New Zealand is valued at around $1 million and around 200 tonnes of the fruit are brought into the country each year.

The February issue of Country-Wide is on-line here.


Rabobank confirms farmers are happy

April 16, 2011

It doesn’t happen very often – the rural stars are in alignment and it’s official: farmers are happy.

Rabobank’s rural confidence survey shows:

 Farmer confidence has risen for the first time in more than 12 months and is now at its highest level since August 2008.

• Rising commodity prices and improving global markets are the main factors driving confidence.

• Sentiment has improved in all sectors, but is highest among sheep and beef farmers.

• Farmers’ investment intentions have also surged.

I don’t remember farmers being particularly confident in August 2008 but there is no doubt that decent prices for almost all primary produce is having a positive impact this season.

Of particular note is that sheep and beef confidence is at a 10 year high. They’ve had a really rough ride in the last decade, these improved returns have been a long time coming.

The latest survey, taken late last month, shows 52 per cent of New Zealand farmers expect the agricultural economy to improve over the next 12 months, significantly up from the 29 per cent with that view in the previous quarter. Those expecting conditions to worsen had decreased to seven per cent, from 18 per cent previously.

Rabobank general manager New Zealand Ben Russell said this meant net rural confidence had increased to 45 per cent from just 11 per cent in December 2010 (at the time of the previous survey).

“It is clear that for farmers commodity prices and improving global economies are outweighing the expected impact of the higher New Zealand dollar at the farm gate,” Mr Russell said.

We have to get over worrying about the value of the dollar. It’s floating and the government isn’t going to change that.

Besides a high dollar isn’t all bad. If it was lower fertiliser, machinery and other imports would be much more expensive.

Of those farmers expecting the agricultural economy to improve, 74 per cent cited rising commodities prices as a major reason, while 18 per cent attributed their optimism to the improvement in overseas markets and economies.

The survey showed confidence to be high across all sectors, with sheep and beef farmers particularly optimistic.

“In fact, sheep and beef farmer sentiment levels has soared past that of the dairy sector,” Mr Russell said.

It’s a long time since sheep and beef farmers were more confident than those in dairying. This might slow down the rate of conversions.

. . .farmers’ investment intentions had surged, with more than a third (34 per cent) expecting to increase their total farm investment, up from 21 per cent with that intention in the previous survey. Only four per cent planned to decrease their investment, down from 14 per cent previously.

This was the highest level of investment intention seen since August 2008, Mr Russell noted.

“The survey also indicated that 35 per cent of sheep and beef farms expect to up their farm investment in the coming 12 months. This may be an early sign that the declining national sheep flock is stabilising and some rebuilding of the flock will now occur,” he said.

Farmers have been cautious. Most have been paying back debt rather than spending more which means the impact of better returns hasn’t filtered far from the farm gate yet.

This intention to increase investment means that the benefits from higher farm incomes will start spreading through the wider economy.


Finalists announced for Fed Farmers’ Agribusiness Person of the Year

June 27, 2009

Federated Farmers have announced six finalists for its inaugural Agribusiness person of the year Award.

They are:

  • Tom Henderson, Champion of the Environmental Award winning Opuha Dam
  • Jeremy Moon, Managing Director, Icebreaker
  • Craig Norgate, Chairman PGG Wrightson
  • Dr. John Penno, Chief Executive Officer, Synlait
  • Sam Robinson, Chairperson, AgResearch
  • Ben Russell, General Manager for Rural New Zealand, Rabobank

The finalists will be judged by an independent panel and the winner announced at Feds’ national conference next weekend.

My vote goes to Tom Henderson. He’s a grassroots farmer who led the development of the Opuha irrigation scheme.

As a result of that, the positive agricultural, environmental and recreational impacts of the Opuha Dam have transformed South Canterbury and made a significant contribution to the national economy.


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