Rural round-up

December 15, 2014

Commission releases final report on statutory review of Fonterra’s 2014/15 Milk Price Manual:

The Commerce Commission today released its final report on its statutory review of Fonterra’s Milk Price Manual (the Manual) for the 2014/15 dairy season. The Manual sets out the rules for how Fonterra will calculate the amount it will pay dairy farmers for raw milk this season. This is called the base milk price.

The Commission is required to report each dairy season on the extent to which the Manual promotes the setting of a base milk price that provides incentives for Fonterra to operate efficiently, while providing for contestability in the market for the purchase of milk from farmers.

This is the first of two statutory reviews that the Commission is required to undertake each dairy season under the Dairy Industry Restructuring Act 2001 (DIRA). . .

 

Fonterra back Mymilk for more milk:

Fonterra has today launched a separate milk sourcing subsidiary to grow market share in its New Zealand milk pool, and provide a new pathway to membership in the Co-operative.

Called mymilkTM, it will initially invite applications, from farms in the Canterbury, Otago and Southland regions that are not currently supplying Fonterra, for one year contracts, renewable for a maximum of five years, without the obligation to purchase Fonterra shares. At any time mymilkTM suppliers can apply to join the Co-operative, purchase shares and supply Fonterra directly.
Fonterra Chairman John Wilson said: “It is good for the Co-operative and the country for Fonterra to be the first name on the list for farmers considering their supply options. We know there are farmers who support the co-operative model, but are at the stage of development where sharing up is currently beyond their financial reach. . .

Fonterra Shareholders Council gives nod ‘with caveats’ to new milk supply plan – Fiona Rotherham:

(BusinessDesk) – The Fonterra Shareholders Council is “broadly supportive” of plans for the cooperative to start sourcing milk from South Island suppliers who are not also shareholders, with a couple of caveats.

Fonterra Cooperative Group, the world’s largest dairy exporter, yesterday announced a new milk sourcing subsidiary, mymilk, which would try to get milk in the Canterbury, Otago, and Southland regions where competition for milk supply is most intense from new suppliers on contracts on up to five years without the obligation to purchase shares. The feedback, particularly from new farmers who have recently spent a large amount of money converting farms to dairy, is that they can’t currently afford to now buy shares in the cooperative but would do so at a later date.

Shareholders Council chairman Ian Brown said the competition for milk supply at the farmgate was one of the biggest changes he’d seen in his farming career. “It’s a changed mindset to how to attract suppliers whereas in the old days it was what to do with new supply. That’s a mindset shift.” . . .

 

Mymilk likely to get up noses of Fonterra shareholders – Allan Barber:

Fonterra has launched a new company called mymilkTM which is specifically designed to attract supply from South Island dairy farmers who don’t currently supply Fonterra. The website says it’s cooperative, but that’s a bit hard to see when the supplier has no obligation to buy any shares within five years and only has to sign a one year contract.

The website also says somewhat cutely the company is ‘backed’ by Fonterra, when it is actually a wholly owned subsidiary. This new venture is no doubt directed at tempting Synlait and Westland suppliers to jump ship without having to stump up with any share capital (at least for five years).

It promises competitive payment – competitive with whom? Fonterra or one of the others? But it is not clear exactly how mymilkTM will avoid paying the same price or even a higher one (shades of meat industry schedule premiums) to secure a new sign up. Under Trading Among Farmers, it is expressly forbidden for Fonterra to have different classes of shareholders and under cooperative principles equality of payment is sacrosanct. . .

RBNZ sees 44% bounce in whole milk powder in 2015 – Paul McBeth:

 (BusinessDesk) – The Reserve Bank expects whole milk powder prices to rise by about 44 percent next year as the slump in global prices this year prompts less competitive processors to scale back their production in the face of smaller returns.

The central bank expects whole milk powder, which is New Zealand’s dominant dairy export, to rise to US$3,200 a metric tonne by early 2016, from its current price of US$2,229/tonne as international producers who were lured by record prices last year are squeezed out by this year’s decline, governor Graeme Wheeler told Parliament’s finance and expenditure select committee after this morning’s monetary policy statement.

New Zealand’s advantage is that it’s the most competitive dairy producer in the world and can operate with lower prices than its rivals, he said. . .

 

Sponsors provide choice cuts for Gate-to-Plate competition:

Cabernet Foods is the latest Gate-to-Plate sponsor to offer competition organisers added value – over and above a core contribution.

The Gladstone-based company has said, for every lamb that any 2015 Gate-to-Plate contestant consigns direct to Cabernet Foods (from 21st February 2015 to 20th February 2016), the business will donate $1 to the Masterton A&P Association to help further develop the Gate-to-Plate competition.

Lyndon Everton, Cabernet’s Managing Director, says, “This competition has the ability to showcase the Wairarapa’s primary sector not only on local menus but also nationally.

“The Gate to plate attachment to the A&P show is a fantastic opportunity for the pastoral farmer to win the hearts and minds of their urban cousins.” . . .

Aotearoa Fisheries back in black in 2014 as Sealord returns to profit – Paul McBeth:

 (BusinessDesk) – Aotearoa Fisheries, which manages more than $530 million of fisheries assets for its iwi shareholders, returned to profit in the 2014 financial year after its major investment, Sealord group, was back in black after exiting its unprofitable South American business.

The Auckland-based company reported a profit of $21.9 million in the 12 months ended Sept. 30, turning around a loss of $6 million a year earlier, it said in a statement. That was largely due to a $12.7 million contribution from Sealord, which Aotearoa Fisheries jointly owns with Japan’s Nippon Suisan Kaisha. Sealord posted a loss of $44.3 million in 2013, reflecting a $46.9 million loss on the sale of its Argentine business.

“Aotearoa Fisheries own divisions were ahead of target which is pleasing under difficult operating conditions like the exchange rate and soft demand for paua in Asia,” chief executive Carl Carrington said. “This year our business will ramp up efforts in becoming a leader in sustainability which is wholly in line with our tikanga. There is no question that our long term future hinges on how well we perform in this area.” . . .

Wool Firm For Better Styles:

New Zealand Wool Services International Limited’s General Manager, Mr John Dawson reports that the 6,000 bales of North Island wool at auction this week saw a 95 percent clearance with good style wools holding their ground and poorer styles easing.

The weighted indicator for the main trading currencies was 0.56 percent stronger but had minimal impact on the market with supply/demand factors being the current market driver.

Mr Dawson advises that full length Fine Crossbred Fleece was firm to 3.5 percent dearer with shorter types generally firm to 2 percent easier. . .

 

 


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