NZ 3rd for growth but . . .

September 16, 2016

Good news on the economic front:

The third highest growth rate in the OECD shows the Government’s management of the economy is delivering more jobs and opportunities for New Zealanders, Finance Minister Bill English says.

Statistics New Zealand reported Gross Domestic Product grew by 0.9 per cent in the three months to 30 June 2016. This took annual growth to 3.6 per cent – putting New Zealand’s growth rate in the top three among developed economies.

“Despite the tough period the dairy industry has been through, we are in the unusual position of enjoying solid growth, rising employment and real wages at the same time as very low inflation.

New Zealand’s annual growth rate of 3.6 per cent is more than double the OECD rate of 1.6 per cent and compares with 3.3 per cent in Australia, 2.2 per cent in the United Kingdom, 1.2 per cent in the United States and 0.8 per cent in Japan.

The result means the New Zealand economy is now worth more than $250 billion for the first time.

Growth in the June quarter was led by construction which grew by 5.1 per cent over the quarter. Residential construction was up 10 per cent over the last year – reinforcing the fact that New Zealand is in the middle of a significant building boom.

Exports of goods increased 7.6 per cent for the quarter, the highest increase in 18 years. 

But there is a but:

“While this result is solid and the outlook is relatively positive, there are many risks around and we cannot afford to take our current economic performance for granted. That is why the Government is continuing to focus on building a stronger, more resilient economy.

The Opposition and the other wailers have plenty of other buts including too many people not benefitting from the growth.

You could look at it that way but a growing economy is not a magic bullet.

New Zealand has entrenched problems of dependency which leads to and/or exacerbates poverty with all its attendant problems.

There are myriad causes for that none of which have easy or fast solutions.

But the opportunities to address not just the problems but the root causes of them are greater with a growing economy.

That New Zealand not only has one but has the third fastest in the OECD in spite of the dairy prices in the doldrums, is very good news.

 

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NZ’s ‘eye-popping’ recovery gives choices

September 5, 2016

A leading global economist’s view that New Zealand is showing an “eye-popping” recovery from the events of 2008-09, ought to be making headlines across the country.

Instead the only place I could find it  was in the print edition and on-line archives of the NBR.

“Whenever I come down here it feels like I’m entering a different planet,” Standard & Poor’s global chief economist Paul Sheard told a business breakfast in Auckland this week.

Comparing how different countries have recovered since the global financial crisis, Mr Sheard says New Zealand is a standout.

Measuring real GDP growth for different economies since the pre-global financial crisis peak, Mr Sheard says the US economy has grown 10.7%, the UK has grown 7.7% and the euro area has grown 0.7%.

“There are some big variances in the EU, obviously: Real GDP in Germany is up 6.2%. In Italy – and bear in mind Italy is the third largest economy in Europe – GDP growth is -8.4%. In Greece it is -27%. So that’s a huge dispersion rate.

“But when I looked at New Zealand my eyes nearly popped out – it’s up 32.5%.” Not even Australia has matched that – real GDP there is up 21% over the same period.

New Zealand is also in the position of having relatively low government debt, a budget surplus, and a central bank with room to cut interest rates if there is another downturn and/or offshore shock, he says. Few countries are in that happy position. . . 

Up 32.5%. That is eye-popping even without the earthquakes, droughts, floods and dairy downturn the country has faced in that time.

That growth brings both challenges and opportunities, a point Finance Minister Bill English makes:

. . . New Zealand’s economic prospects are good.

There are a lot of events going on around the world that cause concern on any day of the week. We can’t do much about any of them.

But domestically, a diversifying and strengthening export sector, solid growth in the construction sector and the boom in tourism mean that over the next two or three years the outlook for New Zealand households is positive.

One of the things we are trying to get to grips with is the impact of what – now look to be semi-permanent – low interest rates will be.

I’m not talking about the Reserve Bank Governor’s decisions about interest rates. In my view, far too much time is spent in the financial markets on this very short term focus on what central banks around the world are doing.

More important is the impact of interest rates on the real economy; in households and businesses.

So we should stand back a bit from the noise in the financial markets.

The prospect of longer-term low interest rates is only just starting to bed in.

When we were in Zambia in June, farmers we spoke to were paying interest of 25%. That’s similar to rates we were paying during the height of the ag-sag which makes life and business very, very difficult.

High inflation rates at the same time meant that people investing, even at high rates, were having the real value of their savings eroded.

Now we have the much healthier combination of low interest rates and low inflation.

When governments around the world issue debt over 10 to 15 years at interest rates of zero or below, it shows that at least some people think that interest rates are going to be quite low for quite some time.

The impacts of this in our own economy mean we are having to re-learn the relationships between different variables in the economy.

The first one is connected to housing markets.

One of the things that has encouraged the focus on housing in New Zealand has been that those who’ve gone into the housing market have largely been right when they’ve taken the view that house prices will keep rising.

One of the drivers of demand for housing has been what is now a 25 year track of decreases in interest rates.

Apart from the odd blip in the 2000’s, there has been a fairly consistent reduction in interest rates from 20 per cent down to around four per cent today.

That trend has probably continued for five years longer than we thought.

Following the GFC, it looked like interest rates had bottomed and they’d be up again by now to seven to eight per cent for mortgages. Anyone who has bet on them going down further has bet correctly – people are still making money out of government bonds which are being issued at negative interest rates.

When we look at house prices, supply matters a lot, particularly because of the cyclical effects in the housing market – that is, more flexible supply means prices will be less volatile.

But there’s no doubt that the increase in prices that we’ve seen – particularly in Auckland but, now, increasingly around the country – is driven by the fact that interest rates just keep on dropping.

And that affects all asset classes.

The New Zealand stock exchange, for example, has gone up a lot more than the housing market. And our exchange rate is regularly seen by anyone who analyses it as over-valued.

When Steven Joyce was in Oamaru last week he said we all want two dollars – a low one when we’re selling overseas and a high one when we’re buying.

That is, or course, impossible and no matter how strident the calls to manage our exchange rate, we should not go back there.

The value of the dollar is a reflection on the high regard investors have for our economy and while that does make it harder for exporters, it’s like the weather – something we have to contend with and learn to deal with but can’t influence.

If we expect to see interest rates continue where they are – or go lower – over the next 10 years, we will have to rethink the relationship to asset values. All other things being equal, these asset prices will stay up, if interest rates stay low.     

A simple measure of it is the cost of servicing household debt. While house prices have increased, debt servicing costs have remained remarkably stable over the last 20 years. Although, of course, there will be more risk to households who borrowed a lot at the bottom of the cycle, and could see significant interest rate increases over time from where they are now.

Another effect of low inflation and interest rates is that we are having significant real wage increases without people really noticing.

If you go out on the street and ask people, many will logically point to the nominal increase in their wages – and most of their pay rises are two-three per cent but some are less than that.

But inflation has been remarkably low.

It turns out that even though we have lower nominal wage increases compared to, say, the 15 years up to 2008, real wage increases that are significantly higher than they were pre-GFC.

In the past five years, for example, the average annual wage has gone up 13 per cent while inflation has been just 3.7 per cent.

Wage increases were much higher a few decades but their real value was eroded by inflation so people weren’t better-off. Lower increases coupled with low inflation have given significantly better real wage increases.

It does help explain why we’re not hearing a lot about ‘the cost of living crisis’ – it seems everything that is an issue becomes a ‘crisis’ – but it’s not a crisis. In fact, we’re not even having much of a discussion about it because people can see that prices are not moving up every time they go back to the shop.

Along with this increase in asset values, we’re seeing what are, by historical standards, quite high real wage increases. These moderate but consistent increases we’ve seen over the past five years are relatively unusual in the developed world.

Another effect of low interest rates, and the low inflation that goes with them, is the impact on government and fiscal discipline.

Traditionally we have relied on clearing budget deficits by economic recoveries that have generated five or six per cent inflation and, therefore, significant increases in tax revenues.

That’s not happening now and it means we have to try and beat the political cycle of tight fiscal management when things are tough and loosening up when higher inflation drives stronger increases in revenue.

Currently, you don’t have the increases in revenue to cover large increases in spending.

New Zealand experienced a number of decisive events in 2009/10 in the shape of the recession, earthquake and global financial crisis which forced us to change the way we managed government spending.

Those experiences taught us the need to move away from what has traditionally been a short term, ‘annual cash’ mind set which has had a negative effect on the effectiveness and on the efficiency of our agencies.

These are perpetual monopolies. Government agencies don’t have to worry about what’s going to happen to their revenue – they’re conditioned to the fact it will either stay the same or grow – and if they do a poor job, they’re not going to go out of business.

Agencies should be able to take a 10-15 year view of what they’re doing.

We are gradually trying to push the system to take those longer-term views where they consider their capital assets but, more importantly, their human services. That’s because about 25 per cent of the output that drives the economy is the provision of public services.

It’s my view that in a low inflation environment, a government won’t be able to conduct reasonable fiscal management without understanding much better what drives its costs, what drives its services, and what drives the long term impact that it’s trying to have.

With the use of data analytics, we’re now able to get much better insights into our customers – many of whom are with us in a kind of perpetual sense for 20-30 years. Take, for example, a 23 year old female with mild schizophrenia – she could be on our books for 30 years and will only move off to go onto national Super. We can now use analytics to show the need, to then intervene to change her life, and the trajectories of others like her. 

In the pasts governments have thrown money at social problems.

Government interventions have regularly failed to change lives, in fact, worse than that, they have rewarded failure.

As more people have demanded a service, more money has been thrown at it. The departments grow, the ‘business’ grows. They have effectively been servicing the misery.

Servicing the misery – that’s an indictment of failed policies of the past.

This is the wrong kind of incentive, and we’re trying to change it.

Thus far I’ve outlined three ways in which low interest rates are going to have a long term impact on the economy; higher asset values are becoming the norm, New Zealanders are getting real wage increases, and the government is changing its approach to the way it manages its books.

This will have an impact on an election.

The traditional model in a recovered economy is for parties to out-bid each other for showing how much they ‘care’ by using hundreds of millions of dollars of your money on projects or programmes that they have no idea will work or not.

However, we’re trying to reframe that debate away from how much is spent to how much of an impact can be made – and to show a willingness to be accountable for that impact.

A final point around low interest rates is that we shouldn’t let the discussion around central bank rate setting and deflationary risk leave the impression that low interest rates are somehow an inherently bad thing. Deflation certainly is. That’s why central banks around the world are creating the most unimaginable monetary policy that you won’t find in any text book – although, I hope you would now.

For most businesses and households, stable low interest rates are positive, not negative. Households are encouraged by that stability. The question is whether the worry that eventually those rates turn around will mean people hold off from investing and risk-taking to keep growth momentum going.

A little inflation is good for an economy because it encourages investment. Deflation discourages investment. People stop spending knowing whatever they want to buy will be cheaper in the future.

The Government, in the meantime, will focus our economic programme on some of the old fashioned stuff; micro-economic reform.

That includes the regulation of the housing market in New Zealand – it’s been shockingly economically ignorant – and the planning system needs to start understanding the impact of the decisions it makes on households, on costs and on the economy – not just on amenity value.

Another area we’re spending a lot of time on is the balance of environmental quality and economic growth, both through climate change and fresh water quality. Because we are a resource-based economy with an environmentally-based brand, getting these things wrong could cost us a lot of growth opportunity. Getting it right, though, could give us some real dynamism through the next ten years. 

We need environmental quality and economic growth, and with care and good science we can have both.

My final point is this; one of the unique opportunities we have in New Zealand is that we have choices. Most other developed economies are faced with a toxic mix of problems; aging populations, very high public debt levels, and low growth. Because of those factors, there are growing questions about their political institutions.

We, along with Australia, are very fortunate to be among a handful of countries where we have relatively low levels of public debt.

In New Zealand’s case we actually have budget surpluses – which only half a dozen other countries have. We have populations that are aging but not as fast as other countries – and are more open to immigration.

Therefore, we can make active choices about where to invest in more growth and about what we think about inequality and inequity in our country.

That is going to become more and more unique to New Zealand and Australia – and we look forward to being a part of that opportunity. 

 In a debate before the 2008 election Helen Clark and John Key were asked what it meant to be wealthy.

She gave a defensive answer which, from memory, included something about money not being important to her.

He said it gave you choices.

He’s right it does, whether you’re an individual, an organisation or a country.

There are both challenges and opportunities in growth but the government has got its books back into surplus and that gives it choices.


Rural round-up

August 15, 2016

Unreliable rain reduces sheep numbers – Kate Taylor:

The seasons are changing at Patoka Station and less reliable rainfall is affecting the way it’s farmed. Kate Taylor reports.

It looks green but the grass is much shorter than normal for late winter on Patoka Station in Hawke’s Bay.

That picture is about to change, though owners Ben and Suzie Crosse are unaware of it as they discuss their upcoming lambing, starting from August 31. A storm is approaching the central North Island and will dump 190mm of freezing-cold rain on the 1200ha farm.

The farm has monthly records going back to 1948 but the rainfall hasn’t been reliable lately, Ben says. . . 

Biggest year’ ever for avocado growers

With avocados back on the menu, New Zealand growers are gearing up for their best season ever.

That’s according to John Carroll, director of the country’s largest exporter Avoco, who says his firm expects to ship off about 3.2 million trays of the fruit in the coming months.

In total, 5.1 million trays, about 28,000 tonnes, are predicted to depart our shores, mainly bound for Australia and Asia. . . 

Forest industry’s challenge to manage supply fluctuations:

The pan forest and timber processing industry organisation, the New Zealand Wood Council (Woodco) says there is a supply challenge for many regions in the domestic processing industry.

Woodco Chair, Brian Stanley says timber processors are being hindered by a current lack of logs, especially in the higher grades.

He says small scale woodlot owners are being enticed into quick export contracts instead, where the buyers are not providing the domestic processors with an opportunity to purchase these logs. . . 

Deputy PM Bill English visits Blue River dairy factory – Dave Nicoll:

It was a bit surreal for Deputy Prime Minister Bill English to see award winning cheeses named after places his mother grew up.

English made a special visit to the Blue River Dairy factory in Invercargill on Friday as part of a trip to the Southland region.

Blue River Dairy produced a number of award winning cheeses, and milk powder from sheep milk and has expanded into exporting sheep milk baby formula into China. . . 

Fonterra Announces New Palm Products Sourcing Standard:

Fonterra has adopted a new standard for sourcing of palm products as part of its commitment to sustainability.

The standard was developed in consultation with key supply partners, and it follows discussions with Greenpeace that began in December 2015 to strengthen Fonterra’s existing sustainable palm products sourcing procedures.

“The new standard requires us to purchase only segregated supply palm oil by 2018, and to work with suppliers of palm products to ensure that plans are in place for full traceability to plantation by 2018,” said Fonterra’s Director of Social Responsibility, Carolyn Mortland. . . 

Action to help farming productivity in Manawatu-Whanganui:

Primary Industries Minister Nathan Guy says $465,000 towards primary sector initiatives in the ‘Accelerate 25 Manawatū-Whanganui Economic Action Plan’ launched today will make a real difference to the region.

“Manawatū-Whanganui has the largest sheep flock and beef herds of any region in the country, and half of New Zealand’s lamb exports come from within two hours’ drive of Feilding. We need farming to do well to drive economic prosperity here,” says Mr Guy.

Speaking at Ross and Wendy Humphrey’s farm in Cheltenham, Mr Guy says much of the funding will be used for information sharing to lift productivity.   . . 

Report shows good results from flood recovery money:

A report on Government assistance to farmers following the June 2015 Taranaki-Horizons storm shows that good results were achieved, says Primary Industries Minister Nathan Guy.

“These storms had a major impact on the region and caused widespread damage, so it’s pleasing to see that Government funding has made a real difference,” says Mr Guy.

“The storm on 18-20 June 2015 brought widespread heavy rainfall, flooding and erosion to the Taranaki and Horizons regions. Hill sheep and beef farmers were particularly affected by flooding of river margins and damage to tracks and fences, with damage also to dairy land and young forest plantations.” . . 

Wools of New Zealand well set for end of grower-funding

Wools of New Zealand (WNZ) Chairman Mark Shadbolt says the company is making strong commercial progress with an expected maiden profit for the 2016 financial year.

Shadbolt was responding to a recent shareholder comment in a local rural newspaper that the company would “almost certainly fail” without income from farmers’ Wool Market Development Commitment (WMDC).

“To the contrary, WNZ is making investments that are reducing the company’s reliance on the WMDC.” . .

Commission releases draft report on Fonterra’s 2015/16 base milk price calculation:

The Commerce Commission today released its draft report on Fonterra’s base milk price calculation for the 2015/16 dairy season. The base milk price is the price Fonterra pays to farmers for raw milk and it is currently set by Fonterra at $3.90 per kilogram of milk solids for the 2015/16 season just ended. The report does not cover the forecast 2016/17 price of $4.25 that Fonterra recently announced.

The Commission is required to review Fonterra’s calculation each year at the end of the dairy season under the milk price monitoring regime in the Dairy Industry Restructuring Act (DIRA).

Deputy Chair Sue Begg said Fonterra’s calculation of the 2015/16 base milk price is consistent with both the efficiency and contestability purposes of DIRA. . . 


$1b housing help

July 4, 2016

The government has announced a $1 billion Housing Infrastructure Fund to accelerate the supply of new housing where it’s needed most, Finance Minister Bill English and Building and Housing Minister Dr Nick Smith say.

The contestable fund will be open to applications from councils in the highest growth areas – currently Christchurch, Queenstown, Tauranga, Hamilton and Auckland.

Mr English says the Housing Infrastructure Fund will help bring forward the new roads and water infrastructure needed for new housing where financing is a constraint.

“The Government will invest up front to ensure the infrastructure is in place. But councils will have to repay the investment or buy back the assets once houses have been built and development contributions paid.”

Dr Smith says the fund will be available only for substantial new infrastructure investments that support more new housing, not to replace existing infrastructure.

“To access the fund, local councils must outline how many new houses will be built, where they will be built and when they will be available. Ideally, they will have agreements with developers on these issues.

“Funding may also have other conditions attached, such as faster processing of resource consents. All of this will require close collaboration between central and local government.”

Mr English says infrastructure, and its financing in particular, is one of the three key constraints to building more houses – alongside land supply and consenting requirements.

“Councils have strict debt limits which means some lack the headroom to invest in infrastructure now and then wait for future development contributions to recover the costs. The fund will help provide more infrastructure sooner by aligning the cost to councils with the timing of revenue from development contributions.”

Depending on the number and timing of applications, it will require the Government to temporarily borrow up to $1 billion, which will increase net debt until it is repaid.

Dr Smith says the Government is also considering establishing Urban Development Authorities (UDAs) to help further speed up the supply of new housing.

UDAs have streamlined powers to override barriers to large-scale development, including potentially taking responsibility for planning and consenting and other powers.

“These changes are just the latest steps in the Government’s ongoing, comprehensive programme to increase the supply and affordability of housing,” Dr Smith says.

“They will complement the work of the Housing Accords and Special Housing Areas, our social housing build, our emergency housing programme, the expanded HomeStart Scheme for first home buyers, the development of surplus Crown land, the National Policy Statement, RMA reform and the extra tax measures we took last year.

“We are making good progress in facilitating increased investment in housing with a record $11.4 billion of residential building work underway this year. This initiative to support councils with infrastructure provision is the next logical step in this programme.”

The housing shortage is a result of supply outstripping demand.

It takes time to build new houses and it also requires new infrastructure. The costs for developing that is incurred long before councils start collecting enough in rates to fund it.

This new fund will enable councils to borrow the money needed for new infrastructure – roads, water and sewerage – and gives them 10 years to repay it by which the increased rate-take from the new houses will enable them to do.

It’s a good idea and while $1 billion is a very large amount of money, the cost to the taxpayer is the interest only because the fund is for loans not grants.


More feathers more hissing

June 27, 2016

One fact which is rarely mentioned in discussions on inequality: around 40% of people pay no net tax:

. . . A table from Finance Minister Bill English’s office shows 663,000 households – or 40 per cent – receive more in tax credits and other benefits than they pay in tax. Thousands more are neutral contributors, or are close to it. . . 

Households earning less than $50,000 receive more in credits than they pay in direct income tax by about a third.

By comparison, the top 3 per cent of individual income earners, earning more than $150,000 a year, pay 24 per cent of all tax received.

Mark Keating, a senior lecturer in tax at the University of Auckland Business School, said the idea of “net tax” – the amount paid after credits and benefits were deducted – was hard for some people to get their heads around.

But he said people who received any benefit, or superannuation, as well as people who worked and met the criteria for Working for Families tax credits could end up with a net result that was negative or neutral.

“If you are working and earn $1000 a week but have four children, you might pay $200 a week in tax but get back $300.

“They are net receiving. It’s quite a strange system. It’s not common overseas because it’s quite bureaucratic.”

This is income tax. Everyone pays GST too and while poorer people are more likely to spend a greater proportion of their income, wealthier people generally spend more in total and therefore also pay more GST.

Peter Vial, New Zealand tax leader at Chartered Accountants Australia and New Zealand, said some people would be surprised to find they were not paying more than they received.

“It’s not a calculation they would do automatically. In an ideal world it would be good if there was more knowledge about the interaction between the tax and benefit systems.”

Many were unaware how dependent New Zealand was on a small group of high-earning, salaried individuals to pay a large chunk of the tax, he said.

“We never talk about that. It’s always a risk to our tax base because people are mobile and can move. But New Zealanders want a progressive tax system, the more you earn the more you pay.”

This is something those called for higher taxes on higher incomes overlook.

Jean-Baptiste Colbert said, the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing. 

Tax is necessary to fund essential services and infrastructure but there comes a point when people believe enough is enough and the extraction of more feathers will result in more than just more hissing.

If taxes on higher incomes become too high, at least some of the geese laying the golden tax eggs will start looking at ways to minimise their liability which will hit productivity and discourage investment.

It could also encourage flight to countries with less punitive taxes leaving fewer geese to provide more feathers.

 


Before the Budget

May 26, 2016

Finance Minister Bill English will deliver his eighth Budget this afternoon.

Before it’s delivered, Prime Minister John Key offers some briefing notes:

1. More than 200,000 jobs have been created over the past three years – that equates to around 180 new jobs every day.

2. New Zealand has the third highest employment rate in the developed world.

3. We’re on track for annual economic growth of about 3 per cent for the next few years.

4. We’re also on track for rising surpluses and falling debt – we were one of the first developed countries to be back in surplus after the global financial crisis when we posted a surplus of $414 million last year.

5. Budget 2016 will contain $1.6 billion in new spending. We’ve already announced funding for more lifesaving drugs, emergency housing, and to support our thriving tourism sector.

This year’s Budget will further advance our work to support a strong, growing economy. It’s only through a strong, growing economy that we’re able to create more jobs, lift wages and deliver better public services to those who need them most.

Labour’s last Budget in 2008 was forecasting a decade of deficits.

In spite of the GFC, Canterbury earthquakes and other unforeseen hurdles, the government books were back in surplus last year and, with continued careful management, are expected to stay there.

This isn’t about a surplus for surplus’s sake. It’s the only way to sustainably fund public services, reduce debt, look after those who need help and leave us all with more of our own money.


Rural round-up

May 19, 2016

Forging a path for other young Maori women to follow :

Confidence and self-belief have always help Ash-Leigh Campbell achieve her goals in the dairy industry – and she hopes her success will inspire more young Maori women to follow her lead.

“You have to back yourself. If you know you can do it, everyone around you will eventually buy into that too,” she says.

The enthusiastic 25 year-old from Lincoln is one of three finalists in this year’s Ahuwhenua Young Māori Dairy Farmer Awards and has big career ambitions.

“I don’t see myself as an industry leader now but the journey I’m on will hopefully fulfil that in future.

“I definitely want to make an imprint on Maori farming in New Zealand and become an ambassador for others. I especially want to publicise that Maori females can do it.” . . .

Up and coming Agri:

The children are the future, but how well do they know the in’s and out’s of agri? 17-year-old Greer Baldwin, an Agribusiness student at St Paul’s Collegiate in Hamilton, sat down with us to give the inside scoop.

Despite not growing up on a farm, Greer has been around agri her whole life. Her Mum, Karen, works in Agri-tourism and the Baldwin family have been involved at National Fieldays for generations. Karen’s line of work allows overseas visitors to experience a real life Kiwi farm in action and is an interesting line of tourism a lot of young people aren’t aware of.

Thanks to Greer’s experience with her mother’s business, she has grown up fully aware that agri is more than gumboots and milking cows, and now has her sights set on studying agriculture at a tertiary level. Born and bred in the Waikato, Greer is excited to branch away from home and is tossing up between either Massey or Lincoln University where she will study agribusiness and tourism. . . 

New irrigation investments for Canterbury:

Primary Industries Minister Nathan Guy has welcomed three new investments totalling $7.85 million into irrigation projects in Canterbury from the Ministry for Primary Industries’ Irrigation Acceleration Fund (IAF).

“These projects are a real boost to the Canterbury regional economy. A reliable source of water gives farmers certainty and options to invest in such as arable, intensive pastoral, dairy support or horticulture.”

The projects receiving funding are: . . 

Government supports Ashburton water study trial:

The Ministry for Primary Industries (MPI) has allocated $312,000 to a trial project in the Hinds Plains area which aims to improve water quality and restore spring-fed flows.

The funding comes from MPI’s Irrigation Acceleration Fund (IAF) and the announcement was acknowledged by Primary Industries Minister Nathan Guy, during his visit to Canterbury today.

David Caygill, Environment Canterbury Deputy Chair of Commissioners, welcomed the announcement which will allow the Regional Council to carry out the Hinds Managed Aquifer Recharge Pilot Study in an area where groundwater nitrate concentrations are well above the national bottom-line. . . 

Central Plains schemes receive government support:

Government support for the Central Plains Water (CPW) Scheme was announced today by the Ministry for Primary Industries during a visit to the scheme by Minister Nathan Guy.

Through the Ministry for Primary Industries Irrigation Acceleration Fund (IAF), up to $6.64 million has been allocated to CPW to support completion of Stage 2 of their scheme’s development as well as $898,000 for the Sheffield Irrigation Scheme (a sub-scheme of CPW).

CPWL CEO, Derek Crombie has welcomed the latest funding announcements for the two projects. . . 

Change in responsibilities for Crown irrigation bodies:

A change in responsibilities for the Government’s irrigation programmes will help streamline and speed up water storage projects, Primary Industries Minister Nathan Guy has announced today.

From 1 July, Crown Irrigation Investments Limited (CIIL) will take over the responsibility for funding grants to regional irrigation schemes in the early stages of development, which are matched by local backers. This role has previously been carried out by the Ministry for Primary Industries’ Irrigation Acceleration Fund (IAF).

“It makes sense to have a single agency looking after this funding as well as CIIL’s current role of commercially investing in projects which are investment-ready,” says Mr Guy. . . 

Hold on tight farmers, the future is bright – Farmers’ Forum experts:

Leading industry speakers at the DairyNZ Farmers’ Forum held in Hamilton this week reaffirmed the view that while another year of low milk prices is on the horizon, the long-term outlook for dairy remains bright.

Deputy Prime Minister Hon Bill English, Fonterra CEO Theo Spierings and Rabobankhead of food and agribusiness research and advisory, Tim Hunt, all reiterated that global demand for dairy products will continue to grow.

Mr English said in the government’s view, the dairy industry will remain the engine room of growth as the second biggest New Zealand exporter behind tourism. But facing up to the reduced milk price is the current challenge. . . 

Fonterra expected to lift milk price – Tina Morrison:

Fonterra is expected to lift its farmgate milk price payout to farmers next season, although it’s likely to mark the third year of prices below the level required by most farmers to break even.

The company is scheduled to hold a board meeting on Tuesday and Wednesday of next week, and may release its opening milk price forecast for the 2016/17 season early Thursday morning. Analysts in a BusinessDesk survey expect a payout of at least $4.43 per kilogram of milk solids for next season, up from a $3.90/kgMS forecast payout for the 2015/16 season, and from $4.40/kgMS in 2014/15.

DairyNZ estimates the average farmer required $5.25/kgMS to cover costs this season and hasn’t yet finalised a break-even price for next season. . . 

Sharemilkers lose 49 cows and $73,000 to nitrate poisoning – Gerard Hutching:

Waikato sharemilkers Cam and Tessa Hodgson have lost 49 cows to nitrate poisoning, which could cost them up to $73,000. 

Nitrate poisoning happens as animals graze, and often occurs after a drought when there are high levels of nitrogen in the soil, and is exacerbated by humid, cloudy conditions. 

Cam’s brother Matthew Hodgson has started a givealittle page for them, saying their passion is farming “and to see the cows die in front of them is heartbreaking to them”. . . 

Farmers can cope with stress during busy times – Jill Galloway:

Experts suggest the best way farmers can cope with busy times is by exercising, sleeping and eating well and to never stop talking with people.

Wairarapa farmer, phycologist and rural trust co-ordinator Sarah Donaldson gave stress hints to about 50 people, mainly farmers as well as bank people, trust organisers and rural professionals at last week’s Beef & Lamb New Zealand AgInnovation conference in Palmerston North.

She said it was hard to recognise stress. . .

Food Safety Science & Research Centre launched:

Science and Innovation Minister Steven Joyce and Food Safety Minister JoGoodhew today launched the New Zealand Food Safety Science and Research Centre at Massey University in Palmerston North.

Formed as a partnership between government, industry organisations and research institutions, the virtual centre aims to ensure New Zealand’s food safety system remains among the best in the world.

“The centre will use the best science available to protect and enhance New Zealand’s international reputation as a producer of safe and  trustworthy food,” Mr Joyce says. . . 

New Zealand Apple Industry the most competitive in the World:

New Zealand’s $700 million apple industry has again been named the world’s most competitive performer.

The World Apple Report, out this week, ranks New Zealand first over 33 major apple producing countries.

Pipfruit New Zealand chief executive Alan Pollard said it is a great achievement to have a competitive edge over the world and to keep holding the position. . .  

Johne’s disease solutions available:

Help is at hand for dairy farmers facing a problem with Johne’s disease in their cattle.

LIC is reminding farmers of the options available from their herd improvement co-operative to help them manage the disease, including diagnostic testing and a comprehensive Johne’s disease management guide developed by experts.

“We know Johne’s disease can be a stressful and frustrating challenge for many dairy farmers,” LIC GM Biological Systems Geoff Corbett said. “We want to make sure farmers know there are tools available that can help them manage the disease in their stock.” . . 

 


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