Not all milk created equal

Militants vegans and animal rights groups are waging a war against farmers and farm produce.

Their rhetoric tends to be high on emotion and low on science.

It tends to paint the alternatives as being better for the health of people and the environment regardless of the facts.

And it tends to pay less than lip service tow hat’s required for a balanced diet.

A good example is milk, not all of which is created equal. Calling something milk doesn’t give it the same nutritional value as real milk from cows, goats and sheep.

What would you prefer on your coffee? pic.twitter.com/6SB0Ts05Ga

— James Dillon (@jdillon_james) September 29, 2017

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Rural round-up

Whitestone blue wins silver in world champs – Sally Rae,

Whitestone Cheese has got the blues – but in a good way.

The Oamaru-based company has been awarded a silver medal in the blue vein division of the 2016 World Championship Cheese Contest in the United States, the world’s largest cheese, butter and yoghurt competition.

The contest, hosted by the Wisconsin Cheese Makers Association, attracted a record 2948 entries from 25 countries. Judges came from all over the world and included Fonterra research technologist Andrew Legg. . . 

Bankers aren’t farmers – Offsetting Behaviour:

On Radio New Zealand this morning, Andrew Little argued the government should lean on the banks to prevent their foreclosing on dairy farms, warning of that foreigners might swoop in and buy distressed NZ farms. 

• Banks do not want to run farms. If they foreclose, they have to find somebody to run the thing pending auction. There are cows that need to be fed. The bank or the receiver takes on all the health & safety, and animal welfare, liability. The most heavily leveraged ones are the ones that’d be first to go; those are the ones where the banks have the biggest stake, and where the banks would take the greatest share of the loss in a fire-sale. A receiver’s fees will include all the farm-running costs. . . 

Dairy industry needs to stay competitive – DairyNZ:

DairyNZ says it is time to look at how the dairy industry can stay competitive in the wake of a record low Farmgate Milk Price and mounting debt.

It is stepping up its support to farmers and is running workshops across the country this week focussing on sharemilkers and farm owners working with sharemilkers.

Chief executive Tim Mackle said Fonterra has done well since it formed in 2001, and the main challenge for farmers – compared to other tough years – was the mountain of debt that had grown.

“Ten percent of the highest indebted farms have 30 percent of the total dairy debt – that’s $11 to $12 billion or $10 million each. But that doesn’t mean all those farms are at risk,” says Dr Mackle. . . 

Dairy prices affecting over one fifth of NZ SMEs:

More than one-in-five small and medium enterprises across New Zealand are feeling the effects of falling dairy prices, according to leading accounting software developer MYOB.

A snapshot result from the latest Business Monitor research commissioned by MYOB and undertaken by Colmar Brunton, found that 21 per cent of the more than 1,000 SMEs surveyed stated their business’ revenues were negatively affected by the dairy price. Even more concerning is the 25 per cent of SMEs that said general consumer confidence has been directly hit.

Across the country, it means that approximately 100,000 businesses employing upwards of one million New Zealanders are facing reducing revenue because of the dairy downturn. MYOB General Manager James Scollay says that the results show a significant impact on the New Zealand economy. . .

Dairy farming: it’ll be survival of the fittest – Jamie Gray:

Bank analyst has confidence in the sector’s ability to adapt but says that some of those ill-prepared for the downturn will go to the wall, writes Jamie Gray.

The dairy sector may be in for a period of adjustment of an order not seen since the 1980s, when farmers were hit with high interest rates, a high New Zealand dollar, and the removal of subsidies, says Rabobank NZ’s head of country banking Hayley Moynihan.

As dairy farmers prepare to enter what may be their third season in a row of negative returns, Moynihan said there will be casualties, but she has confidence in the sector’s ability to cope. . . 

Stellar vintage predicted for Hawke’s Bay winegrowers:

All signs are pointing towards 2016 being another stellar year for Hawke’s Bay winemakers.

Paul Ham, Managing Director of Alpha Domus Winery, says the 2016 vintage is shaping up to be one of the best yet.

As one of the first wineries in Hawke’s Bay to harvest their early Chardonnay grapes, Alpha Domus is in a unique position to assess the coming vintage. “We’re really excited about the remainder of the harvest,” says Mr Ham. “It’s been a superb season and the grapes are looking outstanding on the vine.” . . .

Quality of NZ wool clip leaves exporters scrambling to fill lower-grade fibre orders – Tina Morrison:

(BusinessDesk) – New Zealand wool exporters scrambling to fill orders for lower-grade wool have driven up the price of what are known as oddments in recent weeks because the season to date has delivered an unexpectedly high-quality clip.

Wool oddments are the shorter parts of the fleece, such as from the belly, second pieces, eye clips, necks and those parts stained or otherwise discoloured. They are often baled and sold separately, but a paucity of lower-quality wool has meant exporters are blending oddments with other higher wool grades to make up orders, said Malcolm Ching, an executive at New Zealand Wool Services International in Christchurch. . . 

China Resources buys stake in NZ’s biggest apple exporter – Jonathan Underhill:

(BusinessDesk) – China Resources Ng Fung has acquired 15.3 percent of Scales Corp, New Zealand’s biggest apple exporter, for about $55.9 million from Direct Capital Investments.

The Hong Kong-based company today entered into an arrangement to buy the shares at $2.60 apiece, with settlement on about March 21. Scales said it welcomed China Resources “as a significant minority shareholder, and as a party who can provide support to Scales in its ongoing initiatives in China.” . . 

Social Media Stars Win Auckland/Hauraki Dairy Awards:

The 2016 Auckland/Hauraki Dairy Industry Awards winners are active among a growing group of dairy farmers turning to social media to support, share and gain information to help progress their dairy career.

At the region’s annual awards dinner held at the Indian Hall in Pukekohe last night, Brad Markham and Matthew Herbert were named 2016 Auckland/Hauraki Share Farmers of the Year, Hayden Kerr became the 2016 Auckland/Hauraki Dairy Manager of the Year and James Doidge the 2016 Auckland/Hauraki Dairy Trainee of the Year.

Mr Markham, Mr Herbert and Mr Kerr are all active and well-known among dairy farmers on Twitter. “We enjoy connecting with other farmers, in New Zealand and overseas, on social media platforms like Twitter,” Mr Markham and Mr Herbert say. “It can be a great way to share ideas. . . 

Accountants Get in Behind New Zealand Dairy Farmers:

NZ CA Limited announces Gold Sponsorship of 2016 Dairy Business of the Year

Improving farm profitability and developing resilient and sustainable farming systems are two of the key drivers behind NZ Chartered Accountants Limited’s (NZ CA) gold sponsorship of this year’s Dairy Business of the Year (DBOY).

Sue Merriman, NZ CA’s chairperson and also partner in Greymouth chartered accountants Marshall & Heaphy Limited, says, “The group is delighted to be a Gold Sponsor of the 2016 Dairy Business of the Year. With so many of our member firms located in provincial New Zealand and having dairy farm businesses as clients, it’s a logical move for the group to be involved in supporting and further developing these businesses. With the continuing slump in milk solid prices this year and the effect of this on farm businesses, it’s more important than ever that dairy farmers get good independent business advice from their chartered accountants. . . 

Fertiliser Company Takes Industry Lead to Identify Fertiliser Efficiency:

Fertiliser Company Hatuma Dicalcic Phosphate has taken an industry lead to identify fertiliser efficiencies for farmers

The company has invested over $1 million in research and is monitoring 12 sheep and beef farms totalling 16,500 hectares in the independent ‘Farming for the Future’ programme.

The programme set out to find how a lower nutrient input system can build both economic and environmental resilience within the farm gate. . . 

TECH Talks a highlight at national primary industry conference:

In two weeks Rotorua will be playing host to over 300 industry representatives from throughout the agriculture, horticulture and forestry sectors. MobileTECH 2016 is a two-day conference focusing on new technologies and innovations designed for our food and fibre industries.

As well as the New Zealand sector, MobileTECH has also attracted a solid contingent from across the Tasman. Some of Australia’s largest primary industry companies will be flying into Rotorua and joining the local industry for this event.

The strength of this programme, boosting over 36 speakers, is in bringing together under the one roof leaders from across a diverse range of primary industries with those who are developing, manufacturing and adopting these new technologies. . . 

 

Farmers don’t want return to subsidies

Finance Minister Bill English has ruled out a Government bailout for struggling farmers to prevent widespread foreclosures.

“The Government has in place a system for dealing with hardship because you are going to see, for a small number of dairy farming families, some real distress.”

That is appropriate, a bailout isn’t.

The Government’s role was to provide a stable framework, such as low interest rates and favourable changes to the Resource Management Act (RMA), he said.

The dairy downturn is a short term problem. A stable framework provides a long term foundation which enables businesses to survive and prosper.

“If the opposition want to support the dairy industry they should vote for the TPP (Trans Pacific Partnership) and the changes in the RMA.” . . 

These won’t alleviate the short term pain of the low milk price but they will improve the medium to long term outlook.

Opposition MPs have other ideas:

Labour leader Andrew Little has called for banks to be “stiff armed” into not forcing dairy farmers off their land, warning that could see more farms fall into overseas ownership.

That is the sort of irresponsible and stupid behaviour you might expect in a banana republic.

Banks and farms are private businesses and government has no business meddling in them.

Some farms were subject to forced sales when the milk payout was above $8.

There will be some now it is so low but that is a matter to be sorted out by the banks, the farmers and their advisers.

His call came amid calculations by the Reserve Bank that in a worst case scenario up to 15 per cent of the $40 billion in dairy farm debt – equivalent to more than $5 billion – could be lost to the banks. . . 

That is very much a worst cast scenario.

Predictions in the mid to late 1980s that large numbers of farmers would be forced off their farms were wrong.

Banks knew that a flood of forced sales would depress land and stock values, further eroding equity and making the situation worse for lenders and borrowers.

That hasn’t changed.

A few of the worst cases will end in forced sales and those businesses which haven’t already acted to reduce costs and/or find other income will be on a very tight rein.

But banks will be prepared to let most businesses get through this. When, as it will, the milk price improves they will start addressing structural issues with those businesses which have them.

Something that appears to have escaped Little, is that small businesses which service and supply farms are probably more at risk than farms and no-one is suggesting they be bailed out.

Subsidies blind producers to market signals

Dairy producers overseas aren’t getting low price signals which have prompted New Zealand farmers to reduce production:

New Zealand dairy farmers’ pay packets continue to be thin because overseas farmers haven’t yet received the price signal to cut milk production on the back of a market glut and low demand, says Rabobank’s top dairy analyst.

“Current global commodity prices in dairy are easily low enough to shut off taps globally. The problem is those low prices have not been passed onto farmers in many regions of the world,” said Tim Hunt, the global agribank’s head dairy strategist on a visit from his New York base.

“(With) these current (GDT) auction results of low US$2000 a tonne, there is no farmer in Europe or the US or Latin America who can make money on that. The problem is that New Zealand farmers are the only ones who are at the moment getting the farmgate signal that reflects that. . . 

New Zealand producers have had the very strong market signal that supply is outstripping demand. The price we’re getting is low, in response to that we’ve cut costs and production.

Subsidies in other parts of the world are protecting farmers from the low prices and blinding them to market signals.

Rural round-up

Passion for irrigation still runs deep – Sally Rae:

Dave Finlay describes himself simply as ”an irrigation man”.

Ingrained in his memory is his time farming a dryland property at Windsor, in North Otago, battling drought and having to sell his sheep in drought sales. It was, he recalls, ”nightmarish stuff”’.

Those challenging times resulted in him later become a driving force behind irrigation development in North Otago.

At 78, Mr Finlay shows no signs of slowing down, as he continues working as a rural sales consultant for PGG Wrightson Real Estate in Oamaru. . . 

Retailers’ revenge could slow dairy recovery:

While wholesale milk prices may be on their way up, we need to be aware of “retailers’ revenge”.

Lincoln University Agribusiness and Food Marketing Programme Director Nic Lees says two things need to happen for the market prices to recover to anywhere near previous levels.

“Retail prices need to fall to stimulate consumer demand and global supply needs to be reduced. Both of these take some time to occur.

“We are starting to see the milk tap being turned off with farmers’ globally selling cull cows and reducing supplement, and plans for future expansion and conversion are being put on hold.” . . 

Farm kids less likely to have asthma:

A new discovery has found that kids who grow up on farms are less likely to develop asthma and have a bigger immunity to allergies than the average city slicker.

It’s the kind of discovery that could completely change how we treat asthma in the future.

Nanotech scientist Michelle Dickinson joined Paul Henry this morning to explain how and why this is.

She says the study shows that farm dust in young children under the age of two can protect them from allergies later in life. . . 

 

Last few days to vote in 2015 Sheepmeat and Beef Levy Referendum:

There is still a significant number of farmers yet to vote in the 2015 Sheepmeat and Beef Levy Referendum before it closes on Thursday this week (10 September).

Beef + Lamb New Zealand Chairman, James Parsons said as of this morning 5,195 farmers (30 per cent of registered farmers) had cast their vote.

“It’s really important for the organisation that it has a strong mandate from farmers if they want Beef + Lamb New Zealand working for them in the next six years. . . 

Members sought for forest levy board:

Nominations are open for members of the Forest Growers Levy Trust board. There are vacancies for two members representing owners of large forests and one representing owners of smaller forests.

This is the first election since a commodity levy was applied to harvested plantation logs in January 2014. The levy raised $7.96 million in 2014 for activities that benefit all forest owners, including research, forest health, safety and training.

“Half of the six elected board members have retired this year after only one year in office. This sets in motion a rotational retirement policy for directors that will see half their number retiring every second year after a four-year term,” says trust chair Geoff Thompson. . . 

Dairy Graziers proactivity will stave off cost:

As the fallout from the steep decline in global diary prices spreads, Crowe Horwath agribusiness specialist Haylee Preston is advising dairy graziers to be proactive to avoid being out-of-pocket this coming season.

“With budgets under pressure from severely restricted cash flows, dairy farmers are moving to cut costs, with many looking to tweak their farming systems accordingly,” says Preston.

“In many farming operations, supplementary feed and grazing are a significant cost when it comes to production,” indicates Preston. “This means they will be some of the most closely scrutinised costs given the current drive to save.” . . 

Farm Environment Competition Pays Off For Young Taranaki Farmers:

Sami and Laura Werder are young and enthusiastic farmers with big plans for improving the sustainability of their new Taranaki sheep and beef farm. So entering the 2015 Taranaki Ballance Farm Environment Awards was a great way to check their plans were on the right track.

The Werders bought their 378ha breeding and finishing property at Huiroa, east of Stratford, two years ago and are currently in the process of developing the farm through subdivision, improved access and a new water system.

“We were both raised on farms and we were lucky to have help from family to get into our own farm,” says Sami, a former rural banker. . . 

Ballance Agri-Nutrients Annual Report 2015:

The Ballance Agri-Nutrients Limited Annual Report for the year ended 31 May 2015 is now available online at http://annual-report.ballance.co.nz/

Our interactive report includes video content and links to additional resources, as well as access to our full financial statements. . . 

Farmers can cut nitrogen loss with new N-Protect:

Farmers facing warm and dry conditions and who need to minimise losses of nitrogen into the air, have a new tool in the toolbox thanks to Ravensdown.

The co-operative’s new N-Protect has a urease inhibitor coating around the urea granule to reduce nitrogen loss to the atmosphere, otherwise known as volatilisation. This can lead to more growth-giving nitrogen kept available for the plant enabling production gains in a critical season for farmers facing El Nino conditions.

“Our advice has always been that there are several ways to ‘skin the N-loss cat’. These range from good management practice to urease inhibiting products like new N-Protect,” explained Lloyd Glenny, Fertiliser Product Manager at Ravensdown. . . 

Be careful with cheap grass seed:

Think twice before buying cheap pasture seed this spring – you may well get more (or less) than you bargained for, and not in a good way.

That’s the advice to farmers looking to save money re-sowing paddocks left bare after winter crop.

With poor germination, high weed content and/or minimal endophyte, cheap seed almost always works out to be anything but cheap at the best of times, pasture experts say.

“It’s even more of a false economy when cash is tight, because farmers need all the good grazing they can get,” says Agriseeds’ Graham Kerr. “No-one can afford paddocks to fail this spring.”

His advice? “Concentrate on sowing a smaller area of land, better. Use proprietary pasture seed which has guaranteed purity, germination and endophyte, so you know what you’re really planting, and do the best job possible of getting it into the ground so it establishes well.” . . 

Keep calm and dairy on

Fonterra will announce a drop in its forecast payout today.

Whatever it is,  it will be below break-even for all but the very leanest of operations.

However, it is important to keep it in perspective. Most farmers will be facing a cash flow problem not an equity one.

There have been eight big drops in payouts in the last 40 years and only three of them have led to significant falls in land values. Those were during the ag-sag of the 80s, the Asian crisis in the late 90s and the GFC when the rest of the country and most of the world were in trouble too.

Providing farmers keep talking to and working with their bankers they will be willing to help them through the next season or two until the milk price improves.

Only then will they will focus on any structural problems because in spite of the rhetoric from the Chicken-Littles, banks aren’t going to be forcing people off their farms if there are alternatives. That would not only be bad for the banks and the troubled clients it would have a depressing affect on land values which would then start biting the equity in other farms.

There’s no doubt this season will be a test of farmer resilience:

The possible milk payout forecast by DairyNZ CEO Tim Mackle, based on Open Country, of $4 per kilogram of milk solids has the potential to hit the average dairy farm by $250K according to KPMG analysis. . .

This projected price level will sorely test farm system resilience and confidence according to KPMG Farm Enterprise specialist Roger Wilson.
“The Individual impacts will vary depending on farm system and debt.” says Wilson, “The outlook is tough but this is the time to apply some science and really examine the options.”

A lot of farms are actually adaptable and resilient and the smart farmers can be very responsive even in the short term. With stronger beef prices farmers may look at incorporating an element of dry stock farming, particularly if dairy herd sizes are reduced.

Where there’s crisis there’s also opportunity.

The KPMG Farm Enterprise team are already seeing proactive farmers using a combination of reducing the use of supplements and fertiliser, and lowering stock numbers and the reliance on off-farm grazing.

The big call is stock numbers where a one off cull of 10-20% of cows post calving might be a good option. Critically this has a one off cash flow benefit, and tightens the operating budget without impacting capacity in 24 months.

Roger Wilson says, “Expect this to contribute to a reduction in milk supply for 2015/16 which is forecast to provide Fonterra with a bit more flexibility at its end.”

The reduction in supply should contribute to improved operating performance for dairy companies in 2014/15. Fonterra is already running at full capacity which limits its product optimisation options. With increased capacity and reduced supply Fonterra will have the flexibility to move a much higher proportion of product into high value streams and drive a much better EBIT number.

It shouldn’t be forgotten that returns across the balance of the industry are still in a good place, 60% plus of the primary sector is booming, this shouldn’t be overlooked.

Red meat, pipfruit, kiwifruit and wine are all selling well and in spite of the hit the economy will take from the dairying downturn, it is still growing.

That said, this season will be difficult.

Sharemilkers are at risk if they have a lot of debt. Farmers who want to retain good people in the industry need to work with their sharemilkers and the banks to help them through the downturn.

The low payout will hurt people who service and supply dairy farms, including other farmers who provide supplementary feed or grazing. Some of these will be able to make the most of good beef prices.

The wider economy will also feel the pinch as farmers reduce their costs and cut back on expenditure where they can.

A banker told me one of his dairy clients regularly uses 80 other businesses, most of them smaller ones, and all of those will be hit as their bigger customers stop spending.

Dairying accounts for a bit more than 20% of our exports and around 5% of the economy.

The downturn has already spread off-farm but unlike the downturns in the 80s, 90s and noughties, the root of this one is one is largely confined to dairying.

Dairy farmers, sharemilkers and those who get most of their income from them will have a lean season.

But the sky isn’t falling and what goes down will go up again, sooner or later.

 

 

Rural round-up

Groser disappointed TPP deal not reached:

Trade Minister Tim Groser is disappointed that the TPP negotiations were unable to reach a conclusion today, but TPP ministers collectively pledged to meet again as soon as possible to finalise the deal.

“Good progress was made this week, but a number of challenging issues remain, including intellectual property and market access for dairy products”, Mr Groser said.

“We will continue to work toward a successful conclusion. This is about getting the best possible deal for New Zealand, not a deal at any cost.” . . .

TPP pressure on Canada, but US is super-star in agriculture subsidies – Lawrence Herman:

Americans provide billions in protectionism to dairy that will have to be given up for trade deal.

We rail against Canada’s supply management system. Rightly so. It’s a Soviet-style regime that is out of step with Canada’s international trade interests and objectives. Every credible Canadian think-tank has said that supply management is a regressive system that distorts the market by guaranteeing dairy, poultry and egg producers a positive return on production, inhibiting competitiveness and, in the long-run, preventing Canada from becoming an exporting agriculture powerhouse. . .

 Groser proves trade credentials by insisting on a good deal:

The Dairy Companies Association of New Zealand (DCANZ) is commending New Zealand Trade Minister, Tim Groser, for standing firm against enormous pressure to concede to a sub-standard deal for dairy. The Minister and his team of expert negotiators have preserved the ability to conclude a good deal in the future.

“What was on the table fell well short of the deal required to deliver the commercially meaningful access that is needed by New Zealand’s dairy industry” says DCANZ Chairman Malcolm Bailey, who has been in Maui, Hawaii, where the negotiations took place over the past week.

Agreeing a bad deal would have consigned New Zealand farmers to many more years under the burden of heavy protectionism. Trade prohibitive tariff levels in Japan, Canada and the United States contribute to a thin global dairy market and exacerbate extreme price volatility. . .

 Concerns over strong El Niño:

NIWA fears this year’s El Nino may be as bad as 18 years ago, when widespread drought cost the country a billion dollars in lost exports.

International guidelines indicated a 97 percent chance of El Niño continuing over the next three months and a 90 per cent chance it will continue over summer.

El Niño typically sees the west of New Zealand wet, and the east very dry.

Niwa forecaster Chris Brandolino said it was looking like it could be as significant as the El Nino in the nineties. . .

Where every day is a good day – Kate Taylor:

Discussion groups, monitor farm programmes, running a Gisborne hill country station and his house burning down couldn’t prepare farmer Ken Shaw for being given a 15 per cent chance of surviving the cancer attacking his body. But survive he did.

“Every day’s a good day,” he says, driving his bike in driving, freezing cold rain on his Matawai farm the day before a big snow storm hits the region and dumps a metre of snow on tops of his hills.

Ken and Kirsty Shaw farm the 709ha hectare Elmore Station (680ha effective) on Rakauroa Road at Matawai near the highest point of the highway between Gisborne and Opotiki. . .

Cut unprofitable production – DairyNZ CEO:

With the continued decline in milk price, DairyNZ chief executive Tim Mackle is calling on farmers to cut unprofitable production from their systems.

“These are extraordinary times. Open Country Dairy’s milk price forecast is under $4 per kilogram of milksolids (kg MS) and all indicators show Fonterra will be forced to lower their forecast on August 7. This price dip is lower and longer than anything we’ve seen in the last decade,” says Tim.

“Assuming a milk price of $4.00 for the average Open Country Dairy supplier, that means a potential deficit of around $250,000 for the year ahead.” . . .

Rural Women as relevant today:

In 90 years, Rural Women New Zealand has grown to a 2700-strong organisation but many of the issues it works on have remained the same.

In July 1925, Florence Polson became the first head of the women’s division of the forerunner of Federated Farmers.

Women’s Division Farmers Union was driven by concerns about health and the effects of isolation for women living on farms. . .