Rural round-up

November 22, 2018

Will to live response pleasing -Sally Rae:

“Overwhelming” is how Elle Perriam describes the public response to the rural mental health awareness campaign Will to Live.

Targeting young rural men and women, it was launched following the death of Miss Perriam’s boyfriend, Will Gregory, in December last year.

Her target for a PledgeMe crowdfunding campaign to cover the expenses of a regional Speak Up tour in country pubs next year was $15,000.

But with a bit more than $18,000 raised through that, and more sponsors coming on board, she reckoned the amount  raised was now around $20,000. That meant  the number of events  throughout the country could be extended from 10 to 14. Financial contributions had also been matched by “kind affirmations” about the initiative. . . 

Virtual rural health school plan unaffected by Govt move – Mike Houlahan:

A week-old proposal by the University of Otago and other providers to create a virtual school for rural health remains very much alive despite the Government killing off an alternative school of rural medicine this week.

The lead article in last week’s edition of the New Zealand Medical Journal featured a proposal, driven by the University of Otago, University of Auckland and Auckland University of Technology (AUT), for a virtual rural health campus.

On Wednesday, Health Minister David Clark announced the Government would not support a Waikato University initiative — which dated from the term of the previous National-led government — to establish a $300 million school of rural medicine. . . 

Shortage of vets cause of concern for rural and urban areas – Matthew Tso:

A national shortage of vets has New Zealand’s multi-billion dollar rural sector on high alert. 

Rural veterinary practices are finding it tough to fill vacant roles – and MPI says this could have an impact on biosecurity surveillance issues.

Miles Anderson, Federated Farmers meat and wool industry group chair, says the dairy, meat, and wool industries are dependent on healthy herds. . . 

Dunne in style:

It was once jokingly said that the next most-important job after the All Blacks coach is the head of the Ministry for Primary Industries.

Joking aside, there is some truth in this because MPI plays a largely unsung, yet critical, role in the lives of every New Zealander.

With the prospect of a world war unlikely, the next most-serious threat to NZ is in biosecurity, food safety, trade and people’s perception of how the precious land we live on is farmed. . . 

Cavalier eyes anti-plastic trend :

Cavalier Corp says it is well-placed to take advantage of a growing consumer shift away from plastics.

That trend fits well with the carpet maker’s renewed focus on its high-quality wool products, particularly higher-margin, niche opportunities and the potential of major markets like the United States and United Kingdom, chief executive Paul Alston said.

“Investment in research and development and creating ranges that command a premium is a priority and critical for our success,” he said in notes for the company’s annual meeting. . . 

 

Quality over quantity: climate change affects volume, but not quality of aquaculture – Matt Brown:

Dairy farming would appear to have very little in common with farming mussels.

But now, a Netherlands-born Southland dairy farmer is taking the mussel capital by storm with his enthusiasm for the green-shelled bivalve molluscs.

Much like dairy farming, the Havelock-based business focused on their commodity product “with value add”.

Mills Bay Mussels owner Art Blom said their point of difference was the ‘raw-shuck’.. . 

Feds President spearheads delegation to Uruguay and Argentina:

Farmers, dairy product manufacturers and trade representatives in Uruguay and Argentina are hearing a New Zealand take on current agricultural issues this week.

Federated Farmers of NZ President Katie Milne is engaged in a busy schedule of speaking and meeting engagements in Montevideo and Buenos Aires in a programme put together by the Ministry for Primary Industries (MPI), the Ministry of Foreign Affairs and Trade, and New Zealand’s Ambassador to Argentina, Paraguay and Uruguay, Raylene Liufalani. . . 

Two new faces for Farmlands’ board:

Farmlands’ shareholders have voted two new Shareholder Directors on to the Farmlands Board.

Dawn Sangster and Gray Baldwin join re-elected Director Rob Hewett on the rural supplies and services co-operative’s Board of Directors.

Farmlands Chairman, Lachie Johnstone congratulated the new arrivals to the Board of Directors, as well as thanking the other candidates who put themselves forward for election. . .


Rural round-up

September 29, 2018

Five things to know about the future of farming – Eloise Gibson:

Sir Peter Gluckman issued a flurry of reports in his last few months as Prime Minister’s science adviser. His final report to Jacinda Ardern made some striking points about the future of farming. Eloise Gibson digested the five main issues.

Methane matters

Don’t be fooled by anyone implying that methane doesn’t matter much in the scheme of things – cutting methane is crucial to New Zealand’s efforts to slow climate change. That, in essence, was one of the key messages from Gluckman’s final report to Jacinda Ardern.

Whether to ignore, eliminate or “stabilise” methane, the single biggest climate impact from cattle farming, has been major feature of debate about New Zealand’s proposed Zero Carbon Bill. . .

American farmers don’t need subsidies – Garland S. Tucker III:

Margaret Thatcher is said to have quipped, “The trouble with socialism is that eventually you run out of other people’s money.” New Zealand has discovered that this result may not be all bad. In the mid 1980s, New Zealand faced bankruptcy. The tab for years of socialistic policies had finally come due. The Labour government was forced to act quickly and drastically to cut expenditures. 

The New Zealand economy was — and still is — heavily dependent on agriculture. Farmers and farm prices had been subsidized for years through a multitude of government programs. In 1984, the government eliminated over 30 subsidy programs, not gradually, but overnight. The ruling Labour Party predicted an economic disaster. They foresaw a mass exodus of farmers and fully expected to be forced to reinstate some type of subsidy program . .

Central Otago shearer to receive recognition – Pam Jones:

Central Otago’s shearing industry will honour one of its own in a double-billing today.

Alexandra woolhandler and shearer Pagan Karauria will not only be recognised as a Master Woolhandler at the annual New Zealand Merino Championships, but will also feature in a film about the shearing industry being launched in Alexandra.

Karauria is profiled in the film She Shears, which is about five women working in the shearing industry. It will screen at the Otago Daily Times Theatre in the Central Stories Museum and Art Gallery this afternoon at 4pm.

She will be present for the screening and take part in a question and answer session afterwards. . .

Teddies, a trophy and Trans-Tasman rivalry – Pam Jones:

It features shearing and woolhandling royalty, alongside “teddy bear” novices.

And there is also some “good old-fashioned” transtasman rivalry to boot, as Australasia’s best compete at this weekend’s New Zealand Merino Shearing Championships in Alexandra.

Up to 200 shearers and woolhandlers were competing at the two-day event, including Damien Boyle, of Australia, who had won the event’s open shearing category seven times, event organising committee member Graeme Bell said. . .

NZ export log market hurt by US trade war with China: – Tina Morrison

(BusinessDesk) – New Zealand’s export log market took a hit from the trade dispute between the US and China as the declining value of the yuan crimps the buying power of the country’s largest log market.

The average price for New Zealand A-grade export logs dropped to US$133/JAS from US$141/JAS in August, and US$145/JAS in July, and is now the lowest since June 2017, according to AgriHQ’s Forestry Market Report for September. . .

Renewable diesel – an opportunity for the forest industry:

Most people in New Zealand are not aware that technology has been commercialised in the United States for the production of fully drop-in renewable diesel made from cellulosic feedstocks. This renewable diesel is a direct substitute for mineral diesel and meets all of the New Zealand specifications other than density (kilograms per litre). But it makes up for that by having a high energy density per kilogram so that the amount of energy per litre of fuel is equal to, or in some cases better than, that of fossil fuel diesel. . .

Cavalier to sell scouring interest, focus on carpets: – Gavin Evans:

Sept. 27 (BusinessDesk) – Cavalier Corp is close to selling its stake in New Zealand’s only wool scourer as part of a plan to reduce debt and free up capital to invest in carpet manufacturing.

The firm owns 27.5 percent of Cavalier Wool Holdings, alongside global giant Lempriere Wool, Accident Compensation Corp and Direct Capital. The scourer, known as CWH, operates plants in Napier and Timaru with a combined capacity of 100 million kilograms annually. . .

King Salmon braced for ‘disappointing’ fish farm relocation decision –  Pattrick Smellie

(BusinessDesk) – New Zealand King Salmon hopes it will be allowed to move around half of nine square hectares of its Marlborough Sounds fish farms to better locations, but is braced for a “disappointing” outcome for both the company’s growth and environmental outcomes.

Speaking to BusinessDesk at the Aquaculture New Zealand conference in Blenheim, NZKS managing director Grant Rosewarne expressed frustration at the likelihood of a “sub-optimal outcome”. . .

Coromandel dairy farmers lead the way through new genetics:

In 1995 Andrew and Maree Palmer saw the value of being part of CRV Ambreed’s progeny testing programme so jumped on board and haven’t looked back.

Andrew and Maree have had a hand in developing many generations of daughter proven sires.

Today, they’re still part of the herd improvement company’s progeny testing programme and reckon they’re doing their bit to strengthen the value of the national dairy herd. . .


Rural round-up

August 26, 2018

NZAgbiz launches first electrolyte product:

Developed by NZAgbiz in conjunction with leading veterinary scientists, Novolyte has been formulated to replace fluids lost due to scouring, treat dehydration and exhaustion and help calves recover from stressors such as transportation.

NZAgbiz is a Fonterra business unit that manufactures livestock nutrition products using primarily Fonterra ingredients, and General Manager Greg Cate says Novolyte was the logical next step in their range of scientifically formulated animal health supplements.

“All NZAgbiz products are based on solid scientific evidence and we saw the need for a high-quality electrolyte replacement to help farmers raise calves that thrive,” says Cate. . . 

Farm plans reduce N loss:

Farming practices now piloted by Mid Canterbury dairy farmers Grant and Jan Early could show other New Zealand farmers how they can successfully reduce their environmental impacts.

Earlys’ Mayfield farm is one of a small group in the Forages for Reduced Nitrate Leaching project looking for ways to cut nitrogen losses.

They have so far achieved a 20% cut in one year on their dairy support farm. The research results are made available to help farmers adopt new practices. . .

Milking it: I”m a farmer and I’m a very lucky man: – Craig Hickman:

NZ is known for its dairy products, and is home to one of the biggest dairy companies in the world. In this Stuff special investigation, we examine how the price of milk is set and explore the industry behind our liquid asset.

OPINION: Someone recently asked me why I’m a farmer and I think it’s fair to say it was something of an accident; I don’t’ come from a farming background and I had only a vague notions of what it might be like having spent a few summer holidays working on a deer farm.

I broached the idea with my parents at the end of my sixth form year, saying I would like to skip my final year of college and go work on a dairy farm, ostensibly to earn enough money to put myself through university.

My father, ever the practical man, came back to me with a counter proposal; if the object of working for a year is to save money for university, why not do something that pays real money? . . 

Hill country going well – Peter Burke:

Beef + Lamb NZ director Kirsten Bryant is concerned about the perception that hill country farmers aren’t doing well. Bryant says she and her husband have three hill country farms and financially they have never done as well as they are doing now.

Their properties are returning 5% to 8% on capital. “I don’t know where this perception that hill country farming is not profitable has come from,” she told Rural News. “For a start, let’s not forget about hill country farms that this is where the lambs are bred.

So you start focusing on hill country farming as a negative and talking it down and soon you are going to lose your breeding ewes and total lamb production,” she says. . . 

First NZ company receives Medical Cannabis license:

Hikurangi Cannabis has become the first New Zealand company to secure a license to cultivate medicinal cannabis plants.

The license issued by the Ministry of Health enables Hikurangi to breed cannabis strains that can eventually be used in medicines.

Hikurangi has secured significant investment and will now start building high tech greenhouses and processing facilities near Ruatoria on the East Coast. Hikurangi has commissioned clinical trials to start next year for the first New Zealand made cannabis medicines. . .

A2 Milk reports an a1 result while scientists work on the health benefits – Point of Order:

Revenue up   68%, profit up 116% , cash  on hand up  280% …

Those annual results are the sort most  companies’ bosses  dream of.  They are certainly are the  kind  of  results  Fonterra’s  farmer-suppliers    are  not  likely  to  hear  from  the  co-op’s  board in  this lifetime.

But  for A2 Milk’s  shareholders  they are  real.   Reporting to shareholders  (who  indeed have had a  dream run  this year), the   company this week  said revenue  reached  $922.7m,  annual profit $195.7m,  and  the sales margin  was  31%,  up  from  26% . . 

NZ pipfruit industry heading for a record 2018 crop, MyFarm says – Tina Morrison:

(BusinessDesk) – New Zealand’s pipfruit industry is headed for a record crop this year as it benefits from favourable growing weather, low Northern Hemisphere stocks, market changes, premium varieties, and a weaker New Zealand dollar, according to a report published today by MyFarm Investments.

The vast majority of the 2018 apple crop has been picked and nearly 90 percent has been exported, said MyFarm head of investment research Con Williams, who joined New Zealand’s largest rural investment syndicator last month after eight years as ANZ Bank’s agri economist. Williams said the crop is expected to have increased by 5-6 percent from last year, registering a new all-time high. . . 

Red meat sector confident despite some headwinds – Allan Barber:

Since I attended the 2016 conference, having missed last year’s, several things have changed considerably: two years ago Donald Trump wasn’t President, Silver Fern Farms hadn’t concluded its capital raising with a Chinese investor, alternative proteins and non-meat burgers weren’t on the industry’s radar and there was little recognition of the need for a Red Meat Story.

This year the conference programme acknowledged these changes by focusing on disruption to global trade, the China influence, heightened consumer expectations, the effects of the digital revolution and the importance of building consumer trust by telling our story about product provenance, traceability and environmental credibility. The conference was very well attended by farmers, processors and service providers, all of whom were optimistic about meeting the challenges ahead of an industry which has faced many different threats to its survival in the past 140 years. . . 

Country Life rural wrap from around New Zealand:

Do you know what is happening on farms and orchards around New Zealand? Each week reporters from Country Life talk to rural people about what is happening around New Zealand. Here’s what they told us.

Northland
Younger cattle have been selling well coming into a spring market. An average-to-better yearling steer has been fetching $880 to $950 and decent heifers $800 to $860. Wednesday was one of the worst days this winter – cold and bleak with hail, thunder and lightning. Thursday was sunny and Friday sunnier.

Pukekohe
This weekend’s weather will be like the last – fine. Unfortunately, the work days have been wet. With few exceptions, growers have kept off their fields unless crops were ready to harvest. With heavy supplies of broccoli retailing at unprofitable prices, working in the rain and muddy fields would appear to be a waste of time. . .

Tariff turmoil in times of abundance – Tim Burrack:

U.S. crop export prices dropped like a rock last month, falling by more than 5 percent. That’s the fastest dive we’ve seen in seven years, according to a report issued on Tuesday by the Department of Labor.

Government figures are important for understanding trends, but they cover up a lot of individual stories.

So let me tell you what these export-price statistics have meant for my farm in Iowa, where I grow corn and soybeans and raise hogs. Or, to look at it another way, let me tell you about my farm’s financial snapshot.

We’re facing tariff turmoil in a time of abundance. . .

 

Cavalier turns to profit in 2018, sees continuing improvements in future years –  Tina Morrison:

(BusinessDesk) – Carpet-maker Cavalier Corp turned to an annual profit and improved its debt and cash balances as it benefits from the previous year’s restructuring.

The Papatoetoe-based company posted a net profit of $4.1 million in the year ended June 30, from a loss of $2.1 million a year earlier. That’s above the top end of its forecast range of $3.7 million to $4 million. . . 


Rural round-up

April 7, 2018

Consumers drive winner’s farming – Richard Rennie:

His work has earned him an award that will allow him to mix with Australasia’s agribusiness elite on an equal footing but Thomas Macdonald, now involved in the developing sheep milk sector, never forgets the consumers who make it all possible. He spoke to Richard Rennie.

This year’s Zanda McDonald award winner is no stranger to collecting scholarships and awards for his efforts to look longer and harder at the challenges and opportunities in the pastoral sector.

Thomas Macdonald, business manager for Spring Sheep Milk Company, has been awarded the prestigious Platinum Primary Producer (PPP) Zanda McDonald award valued at $50,000 in recognition of his work in the sector and his continuing contribution to the innovative sheep milk company. . . 

Scenic outlook part of Coop family farm on Mahia Peninsula – Kate Taylor:

A Mahia farming couple won three awards in the East Coast Ballance Farm Environment Awards. Kate Taylor reports.

Okepuha Station has a bird’s eye view of the Rocket Lab launching pad on Mahia Peninsula and Richard and Hannah Coop love farming the windswept Hawke’s Bay coastline.

Richard and Hannah are the fourth generation Coops to farm at Mahia in more than a century. The family’s long association with the peninsula began back in 1905 when land was bought by Richard’s great grandfather.

The 940ha Okepuha Station was farmed by Richard’s parents, Will and Cathy, from the 1970s until recently when Richard and Hannah took over the farm business. . .

Otago University research revives dry-aging of meat – Rob Tipa:

Dry aging meat concentrates the flavour. Rob Tipa reports on a scientist who is working on an electrifying new aspect.

Meat researchers at the University of Otago are reviving an ancient technique to age and tenderise meat by exploring new technologies to make the process more efficient for commercial meat processors.

Tanyaradzwa Mungure, a PhD student in the Department of Food Science at Otago, won an award for his presentation of research into dry aging of meat at an international meat science conference recently in Ireland. . .

Farmers donate hay bales to other farmers in need –  Maja Burry:

Midhirst dairy farmers in Taranaki are donating any hay bales they can spare to farmers in coastal parts of the region who are facing a feed shortage.

The dry summer has had a significant impact on pasture and crops across the drought-hit region, with growth rates estimated to be down by at least 40 percent.

Taranaki Rural Support Trust chair Mike Green said coastal Taranaki had been particularly hard hit, with many farmers having to dry off their herds early and reduce stock numbers as they did not have enough feed. . . 

Book details history of Alexandra basin wine – Yvonne O’Hara:

It will be 30 years this year since the first modern-day wine made in the Alexandra basin was sold.

In his new book Latitude 45.15S – among the world’s southernmost vineyards journalist, Otago Daily Times columnist, bed and breakfast co-owner and author Ric Oram said 2400 bottles of Black Ridge gewurztraminer and riesling and 2000 bottles of assorted William Hill varieties were sold in 1988.

Bill Grant, of William Hill vineyard, and Verdun Burgess, of Black Ridge, sent their grapes to Rippon vineyard in Wanaka to be made into wine by Tony Bish. . . 

NZ carpet maker Cavalier on growth path after emerging from ‘tough’ restructuring – Tina Morrison:

(BusinessDesk) – New Zealand carpet maker Cavalier Corp is emerging from a “tough” period after an influx of cheaper synthetics forced it to restructure its business to compete. It has now streamlined its operations and with most of the pain now behind it, is stepping up investment in innovation and marketing as it eyes rising consumer demand for natural woollen products.

The carpet market has undergone rapid change over the past 20 years, with woollen carpets in New Zealand shrinking to about 15 percent of sales from 80 percent as cheaper synthetics made inroads. In response, Cavalier sold uncompetitive assets like its carpet tile business in Australia, began manufacturing its own synthetic range, and consolidated its woollen felting and yarn spinning operations. . . 


Rural round-up

February 19, 2018

Syrian lamb commands higher prices than ours; alternative proteins are next threat – Sam McIvor:

If you think our meat is premium, export boss Sam McIvor has a wake-up call. Fake meats and other lab-grown alternatives are threatening our farms. 

 The Stuff series “Meat under heat” has led to a robust debate among farmers. I speak with farmers every day and they tell me that while they understand the scale of challenges outlined in the series, they are excited about the future and the opportunities which lie ahead. Farmers certainly do not have their heads in the sand.

They can see for themselves the rise of alternative proteins and I know a number, like me, who have tried an Impossible Burger and other similar products.  I consider myself a bit of a meat connoisseur and cooked well, the Beyond Burger was a realistic substitute.

That’s why we’ve invested in a large research project to better understand the implications of alternative proteins. Early conclusions indicate that alternative proteins are likely to become major competition. It also showed, however, that the same forces driving investment and demand for alternative proteins, including concerns about industrial (feedlot) farming; health concerns arising from the use of hormones and antibiotics; environmental and animal welfare concerns, offer an opportunity to differentiate New Zealand red meat internationally.  . . 

 – Allan Barber:

The global market for New Zealand’s meat exports and exporters is undergoing quite a rapid change, judging by movements in the industry’s latest quota entitlements and market destinations. The differences between exporters and markets over a ten and five year period provide an interesting snapshot of the relative position of the meat companies and the impact of changing market dynamics.

A comparison of quota entitlements over 10 years illustrates some sizeable changes in market share, but also considerable industry rationalisation. A number of smaller exporters have either disappeared or been absorbed by a larger company, but for the most part the same companies still dominate the industry, but with some noticeable changes in share. . . 

My tips for 2018 – Allan Barber:

It’s the time of year for making predictions, some of which may turn out to be close to the mark, but most, like horse racing tips or economists’ forecasts, will end up looking slightly silly, if anybody takes the trouble to remember what they were. The luxury of writing a column is the ability to speculate without being held to account for any inaccuracies.

Before I make any predictions for the year ahead, it’s worth taking a moment to highlight some of the main features of the year that has just finished. Two events of major significance actually had their roots in 2016 – the US election and the BREXIT referendum – but nobody is much the wiser about how they will play out from a trade perspective. As is often the case, what appears to be a seismic event takes longer than expected to have any noticeable impact. . . 

PSA heroes rewarded – Richard Rennie:

Ground-breaking research that helped take the kiwifruit industry from zero to hero in the space of a few years in Psa’s wake has earned Plant and Food Research scientists the country’s richest science award.

The Crown research institute’s multi-disciplinary team collected $500,000 of prize money in the 2017 Prime Minister’s Science Prize for the intensive work they did after the Psa disease incursion in November 2010 as they battled to identify the strain of the disease, develop a test for it and determine replacement cultivar tolerance to the disease.

The disease ultimately laid to waste the original gold kiwifruit variety Hort16a, the up and coming hope for the industry’s future growth.  . . 

Rare sheep music to couple’s ears – Yvonne O’Hara:

Country music singers Ron and Kathleen Gallagher have a small flock of some of the rarest sheep in the country.

There are thought to be about 100 Stewart Island sheep left in New Zealand and the Owaka couple have about 30 on their 8ha lifestyle block.

The Stewart Island sheep are a coloured, feral version of the merino, and are descended from those released by sealers and whalers on to Stewart Island in the 1800s and those which escaped from sheep farming operations.

They look similar to Arapawa sheep and Pitt Island sheep, with black and brown-toned fleeces. . . 

Mycoplasma bovis eradication still on the table as milk testing results flow in:

Initial results from the first round of milk testing from all producing dairy farms for Mycoplasma bovis indicate eradication of the disease remains a viable option as work to contain it ramps up, says Agriculture and Biosecurity Minister Damien O’Connor.

The first round of the joint industry MPI surveillance programme is near completion with no positive detections.

Tests have been completed on the tanker milk from 9100 dairy farms without a positive detection. The remaining tests will be completed early next week. . . 

DIRA Bill a good move for dairy industry:

Federated Farmers is pleased to see that the Dairy Industry Restructuring Amendment Bill (DIRA) has finally made it through Parliament.

“I think most of the industry will agree this is long overdue and should have happened at least six months ago,” says Chris Lewis, Federated Farmers’ Dairy Industry Chair.

The Federation was looking forward to working with the Ministry for Primary Industries (MPI) and the dairy sector on a comprehensive review. . . 

Image may contain: drink and text

Accept no substitutes. 8 0z of real milk contains 8g of protein. 

8 oz of almond beverage contains only 1g of protein.

Cavalier boosts first-half profit on benefits from restructuring – Rebecca Howard

Feb. 15 (BusinessDesk) – Carpet maker Cavalier Corp reported an improved first-half net profit on better margins, after restructuring the business to reduce costs and introduce a more efficient manufacturing system.

Net profit rose to $1 million, or 1.5 cents per share, in the six months ended Dec. 31, from $31,000 in the prior period. Revenue fell to $75.3 million from $84.3 million, reflecting reduced carpet sales in the first half due to market conditions as well as the materially lower wood prices which impacted the revenue of its wool buying business Elco Direct. . .


Dairy trumps wool

January 12, 2013

Fonterra Shareholders Fund units jumped 26% on their first day of trading and will tip wool carpet maker Cavalier Corp out of the benchmark NZX 50 index this month.

The Fonterra fund, which has surged by a third from their $5.50 offer price, has met the ranking and liquidity requirements and will join the benchmark index on Jan. 21, the stock exchange operator said in a statement after the close of business.

Cavalier, which has shed 23 percent over the past 12 months, will leave the top 50 being the lowest ranked stock.

Units in the Fonterra fund, which give investors a slice of Fonterra Cooperative Group’s dividend stream, rose 0.8 percent to $7.31 in trading today, while Cavalier shares gained 1.8 percent to $1.71. . . .

Given Fonterra is New Zealand’s biggest company it’s not surprising it is seen as an attractive investment. Cavalier is a much smaller operation.

However, the fortunes of the FSF units so farand Cavalier on the NZX 50 index is a reflection of dairy and wool farming.

Dairy conversions, while slowing from the peak, are still going ahead and wool is in the doldrums – again.

Wool ticks so many marketing boxes  free range, renewable, sustainably grown. It ought to just about sell itself.

But in spite of initiatives like Campaign for Wool demand is low and the price reflects that.

Fonterra’s forecast payout for this year is down on last year’s but the outlook for dairy is still far better than for wool.

However, Hugh Stringleman thinks Fonterra suppliers might have mixed feelings about the the increased price of shares:

Since Trading Among Farmers (TAF) was launched about $300,000 has been added to the share capital of the average Fonterra supplying farm.

That increases the temptation to redeem all or part of that capital to apply elsewhere in the farming business, where it would earn a better return and perhaps supply a Fonterra competitor.

Also, milk production increases averaging 5% nationwide in the season to date mean Fonterra farmers will eventually have to “share-up” (purchase new shares to match increased production) at the much higher market prices.

This will be especially important for recent conversions with expanding milk production in regions like Canterbury, which is 11% up on last season.

The new three-year rolling average share standard will, however, moderate the compliance cost for established farmers who most-recently increased their share holdings by 10% or more at $4.52/share, following the 2011-12 record milk season.

The high turnover of units, totalling two-thirds of the issue volume in fewer than 30 trading days since launch, shows the depth of investor interest in New Zealand dairying and in Fonterra in particular.

However, it also means the market tail is wagging vigorously, feeding farmers’ concerns over possible effects on the dog.

Is a well-informed market sure that higher world dairy prices are in prospect or is an investment bubble growing?

Will the high unit and share prices reinforce dairy farm values through demand from expanding farming families, corporate farmers and syndicates?

On the other hand, Fonterra’s forecast dividend of 32c reduces in yield as the unit and share prices climb, for farmer-shareholders and unit investors. . .

The international demand for milk is expected to increase and the end of the season looks better than the start did.

But it’s very early days to be drawing conclusions on the future prospects for the share price.


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