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”. . . .


Dairy price fall affects everyone

May 7, 2015

The fall-out from falling dairy prices isn’t confined to farmers:

. . .there are 7 billion reasons it will affect all of us. Seven billion dollars is the amount that is set to be wiped from the New Zealand economy this year.

Fonterra is forecasting a total payout to farmers this season of $4.70 to $4.80 per kilogram of milk solids ($4.50 forecast payout plus a likely dividend of 20 to 30 cents per share). That compares to last year’s record payout of $8.50 ($8.40 payout plus a cash dividend of 10 cents per share).

The average break-even point for farmers this year is $5.40, after you factor in both the cost of running the farm and the debt interest payments.

It is the reason farmers are cutting costs. That will be felt in towns and cities across New Zealand, from shops in rural towns to cities where manufacturers make equipment used on farms (like irrigation systems).

That will flow through to the taxes that the Government collects, making it even harder to put together this month’s Budget. . .

Although most New Zealanders live in towns and cities, what happens on farms and to the goods they produce still has a very big influence on the wider economy.

When produce prices fall, farmers tighten their belts which affects what they’re willing, and able to buy. That affects everyone who services and supplies them which flows into the wider economy and the tax take.


GDT price index down 3.%5

May 6, 2015

Price’s at Fonterra’s GlobalDairyTrade auction dropped again this morning with the price index down 3.5%.

gDt6.5.15

gdt6515

gdt6.5.15

What goes down can fall further but sooner or later prices will go up again.


Rural round-up

March 6, 2015

World dairy prices and New Zealand droughts – Jim Rose:

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

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

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

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

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

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

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

BOP Dairy Awards Boosts Careers:

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 


Rural round-up

December 7, 2014

Farmers key role in Oroua River’s success:

Federated Farmers congratulates the Manawatu River Leader’s Accord and its signatories on the stunning result with the Oroua River, which received the 2014 New Zealand River Award for the second most improved river in the country.

Federated Farmers Manawatu-Rangitikei provincial president, James Stewart, says “As members of the Accord, Federated Farmers couldn’t be more proud.

“Over the course of five years a Federated Farmers survey tells us that Horizon’s dairy farmers have spent an average of $100,000 per farm on riparian planting, fencing, effluent management and farming precision technology.This, along with other efforts such as the upgrading of the waste-water treatment plants and the Sustainable Land Use Initiative, have all had positive affects on the region’s rivers.” . .

 

The changing scale of dairy – Keith Woodford:

Twenty five years ago, New Zealand dairy farms were genuinely family businesses. The average herd was about 150 cows grazing on 65 hectares. Less than 5% of farms had more than 300 cows. In total there were 15,000 farms milking 2.2 million cows.

By 2013 the average farm size had more than doubled to 141 hectares, and average herd size had increased to just over 400 cows. Nearly eighty percent of national production came from farms with greater than 300 cows. In total there were 11,900 farms milking 4.8 million cows.

The average farm with 400 cows is now worth about $7.5 million. This includes land, cows and Fonterra shares. In dress circle locations such as parts of the Waikato, it can be worth a lot more. . .

Dairy production hits record high:

A farmer-owned co-operative says the past dairy season has been one of the best on record mainly because of very high grass growth rates.

Dairy industry statistics for 2013/14 have shown the country’s 4.9 million cows produced more than 20 billion litres of milk.

Just over 1.8 billion kilograms of milk solids worth $15.5 billion dollars was produced, delivering an average payout to farmers of $8.47.

The national herd grew by more than 138,000 – or by almost 3 percent – and production from each cow was up by just over 7 percent. . .

Plenty of interest in moratorium proposal – Allan Barber:

Although not all parties are in favour of it, the proposed moratorium on chain and plant licences has provoked a lot of debate and reaction from all parts of the red meat sector.

Generally the reaction from the farming side has been cautiously positive, although all groups require more clarification of exactly how it would apply and what it would mean to farmers. Rick Powdrell, Federated Farmers’ Meat and Fibre chairman, said it was important to canvas farmers for their views and hoped other groups, in addition to the Meat and Fibre Council, would discuss it with their members and suppliers. . .

 Moratorium would solve meat industry’s capacity problem – Allan Barber:

Word has got out suggesting some processors are in favour of a moratorium on new capacity as the only means of sorting out the meat industry’s excess capacity problem. It also appears MIE is initially supportive of the proposal, although it would need to be sure it was in farmers’ best interests before endorsing it completely.

My understanding is the moratorium would specifically prevent any new plants or chains operating on beef and sheepmeat around the country. This is where the plan is different from the previously floated concept of tradable slaughter rights (TSR) which proposed to set maximum permitted slaughter volumes for each processor. TSRs were supposed to enable whole plants or even companies to be closed with the costs of closure being financed by the sum paid to the owner. . .

Dairy industry animal database goes live:

The transfer of the Dairy Core Database from farmer owned co-operative LIC to industry body DairyNZ has been completed and is now part of a new Dairy Industry Good Animal Database (DIGAD).

DairyNZ chief executive Tim Mackle says DIGAD is a new database that will hold the New Zealand Dairy Core Database, all the data required for animal breeding evaluation purposes and some additional data for industry research. Access to the core data will continue to be controlled by an independent panel.

“This includes animal performance data from customers of herd recording companies LIC and CRV Ambreed and data collected by breed societies,” he says. . .

NZVA urges farmers to vaccinate stock against leptospirosis at an early age:

Leptospirosis is a significant risk to New Zealand farmers and the New Zealand Veterinary Association (NZVA) continues to reinforce the message for farmers to vaccinate young stock against leptospirosis at an early age and to maintain protection through animal boosters.

Dr Jenny Weston, President of the NZVA’s Society of Dairy Cattle Veterinarians says Leptospirosis is a highly infectious disease that can crossover from animals to humans. Farmers, veterinarians, and meat processors are most at risk of contracting it.

“New Zealand has one of the highest rates of Leptospirosis infection in the world with 120 human cases reported each year. However, the rates may be even higher as there could be many more unreported cases, with recent research suggesting there could be up to 40-50 undiagnosed cases for every case that is reported.” . .


Rural round-up

November 18, 2014

Aussies eye fairer fight with NZ dairying  – Matthew Cranston & Tim Binsted:

As an exporter of 40,000 litres of milk to China a year, Lemontree Dairy has had to wait 11 years for the same treatment in China as New Zealand dairies.

“We have been fighting with one hand behind our back for years now with New Zealand but with this free trade agreement being equal to New Zealand will make the fight fairer,” said director James McNamee.

“It’s about time they got it over the line.”

Australia’s free trade agreement with China is set to provide A$630 million in savings from 2016 to 2025 as the tariffs are wound back, according to Australian Dairy Industry Council. . .

Black market for messy mutton  – Tracey Chatterton:

Sheep carcasses are being dumped on Hastings streets as thieves continue to target livestock.

Meat continues to be sold on the black market despite suspects having already been arrested in recent months, Flaxmere community constable Greg Andrew said.

Ratepayers were footing the bill for the mess sheep rustlers were making.

Hastings District Council contractors collected and cleaned up the dumped carcasses and offal at a cost of between $100 and $300 per carcass. . .

Milk price variability – what it means for dairy farm businesses  – Grant Rowan:

It may not appear to be, but the milk price is trending upwards.

It is also becoming more and more volatile, with the past 18 months a good case in point. In May 2013 global Whole Milk Powder (WMP) prices peaked at US$5600/tonne. The average WMP price at Fonterra’s most recent Global Dairy Trade auction was US$2522/tonne.

The question for anyone interested in the health of NZ’s biggest export industry is how are dairy farmers faring?

This edition of Farm Investment Insight explores milk price variability and the tools farmers can use to generate operating profits in times of negative price shocks. . . .

Is Our Food Safety System as Strong as We Think. Private Sector vs Public Sector – Milking on the Moove:

Is our food safety system as robust as we think it is? And are we better served by the public or private sector?

Last week I blogged about my issues getting the mobile cowshed evaluated by inspectors.

The way the food safety system works, is the government agency via The Ministry of Primary Industries (MPI) set the food standards. When a company sets up a food business, the verification services are provided by the private sector.

In New Zealand we have AsureQuality, which is a state owned enterprise, but it operates as a for profit business. There seems to be only two other providers, Eurofins & SGS in NZ who can offer dairy evaluation services. . .

Cut fees for Ag degrees:

GETTING YOUNG people into agribusiness is critical for New Zealand’s future, says ANZ chief economist Cameron Bagrie.

 He told the recent Zespri conference that he is concerned to see the right people enter the agri sector in the numbers required. For example, the kiwifruit industry will soon be producing 30 million more trays of product and will need more people to cope with that trend.

Bagrie is convinced that most young people do not understand the long term future they could enjoy in some primary industries. . .

$18mln payday for Rural Women NZ in sale to Green Cross Health – Jonathan Underhill:

Green Cross Health has agreed to pay around $18 million for Access Homehealth, a not-for-profit home healthcare services company owned by a grass-roots charitable organisation, Rural Women New Zealand, which will gain representation on the Green Cross board as part of the deal.

The purchase will add to earnings immediately, said Green Cross, formerly known as PharmacyBrands and the owner of the Life Pharmacy and Unichem pharmacy chains. Access has annual sales of about $85 million and employs about 4,000 people, the Auckland-based company said.

The purchase price, which includes assumed debt, will be funded from existing cash and bank funding, Green Cross said. . .

 Grow your own with a hand from Ballance science:

With cashflows tight on dairy farms, pasture comes out on top as the cheapest feed source and getting the best grass for the least cost can be achieved with a hand from science.

Ballance Science Manager, Aaron Stafford says the “grow your own” approach of using nitrogen fertiliser to boost pasture growth provides the most cost-effective supplementary feed, but with cash-strapped farmers working within very tight budgets, they want to be confident of a good pasture response to money spent on nitrogen.

“There is nothing more frustrating than seeing a poor or variable pasture response nitrogen fertiliser to boost feed availability. We can help farmers get the best results by enabling them to tailor application rates to areas which are likely to produce the highest pasture response.” . . .


Delay for dairy at China ports

August 26, 2013

Another week, another problem with our food exports to China:

New Zealand dairy products ranging from milk powder to mozzarella cheese are being held on the wharves at Chinese ports as officials debate what form of additional testing should be applied following Fonterra Cooperative Group’s whey protein scare.

The Ministry of Primary Industries in Wellington confirmed to BusinessDesk late last week that exporters other than Fonterra are experiencing delays.

However, it appears the problem is not a blanket ban or evidence of anything more than the fact that authorities at each Chinese port are interpreting centrally issued orders to apply caution to dairy imports into China with additional caution. . .

Soundings in China by BusinessDesk suggest demand for Fonterra’s ingredients by Chinese food manufacturers and demand in supermarkets for New Zealand-sourced infant milk formula have been unaffected after a sharp, initial reaction when the issue was first revealed. . .

Trade officials are at pains to stress the issue reflects the fact that while China issues regulations from Beijing, these are interpreted autonomously by officials operating at each port. While delays to a wider range of New Zealand dairy products may persist for some time, they reflect caution rather than a punitive attitude, despite early Chinese media coverage deeply critical of Fonterra’s third Chinese food scare since 2008. . . .

There might be some politics and protectionism in the mix here but you can’t blame them for being cautious.

That caution reinforces the importance of the investigations being undertaken in the wake of Fonterra’s precautionary recall of products containing a small batch of whey protein concentrate.

They need to find answers to many questions about how the issue was handled which reassure customers and officials that our standards of food safety are as high as they can be.


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