Rural round-up

The answer is in the soil – Annette Scott:

Regenerative agriculture flies in the face of conventional farming wisdom with soil management the key to profiting from nature, Canterbury cropping farmer Simon Osborne says. Annette Scottvisited him onfarm to learn what it’s about.

Farming for yield is not farming for profit, Simon Osborne, who is passionate about his stewardship of the land, says.

He has a clear focus on farming for profit from natural resources and biodiversity with the firm belief that a paradigm shift in agriculture can hugely boost farmer profits and crop diversity, curb pests and eliminate the need for tilling, pesticides and herbicides. . .

Report shows dairy’s role in economy – Hugh Stringleman:

The dairy industry has commissioned and released a valuable report on its scale and importance that should be widely used by dairy leaders, Federated Farmers dairy chairman Chris Lewis says.

Facts and figures from the wide-ranging report by NZIER would be used for making submissions to local and national government.

“Dairy farmers know just how inter-dependent we are with local suppliers, tradespeople, and employees, and this report highlights that,” Lewis said. . . 

Fewer herds but more milk – Sudesh Kissun:

New Zealand’s dairy sector is evolving, with the latest data showing a shift to fewer herds and a greater focus on their performance.

According to the New Zealand Dairy Statistics 2017-18 report, published by DairyNZ and LIC, there were 11,590 dairy herds last season – 158 fewer than the previous season. This was the third year of decreasing herd numbers, but the average herd size increased by 17 cows to 431.

The total 2017-18 cow population was 4.99 million, an increase of 2.7% from the previous season but still below the peak population of at least 5.01m cows in the 2014-15 season. . .

Dairy expanison over as farmers look to other sectors – Gerald Piddock:

The days of endless dairy growth fuelled by farm sales appear to be over as farmers look to elsewhere instead of chasing the white gold.

Dairy expansion, whether it’s from land conversions or farmers buying existing farms appears to have slowed from the heady days of 2014’s dairy land price boom.

Instead, latest figures show an easing of land values and large numbers or properties remaining unsold throughout the spring and summer – traditionally the busiest period of the year for farm sales. . . 

My version of coffee & 6am only hr of day not windy @TheMusterShow @PhilipDuncan pic.twitter.com/xJpQ9PwkZ6

— Olivia Ross (@rossag4life) January 10, 2019

Female ranchers are reclaiming the American west – Amy Chozick:

As men leave animal agriculture for less gritty work, more ranches are being led by women — with new ideas about technology, ecology and the land.

Hundreds of years before John Wayne and Gary Cooper gave us a Hollywood version of the American West, with men as the brute, weather-beaten stewards of the land, female ranchers roamed the frontier. They were the indigenous, Navajo, Cheyenne and other tribes, and Spanish-Mexican rancheras, who tended and tamed vast fields, traversed rugged landscapes with their dogs, hunted, and raised livestock. 

The descendants of European settlers brought with them ideas about the roles of men and women, and for decades, family farms and ranches were handed down to men. Now, as mechanization and technology transform the ranching industry, making the job of cowboy less about physical strength — though female ranchers have that in spades — and more about business, animal husbandry and the environment, women have reclaimed their connection to the land. . .

Big tomo in the ground attracts tourists – Benn Bathgate:

First came the tomo – then the tourists.

Speaking eight months after a huge tomo developed on the Tumunui South farm he manages outside Rotorua, manager Colin Tremain said he didn’t regret posting on social media about the huge hole, even though the reaction took him by surprise.

Shortly after posting photos of the sinkhole Tremain said the media arrived, then the scientists, then the locals, then the tourists. . .

 

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

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. . .

 

Rural round-up

Red meat prices forty years ago – Allan Barber:

We could be forgiven for thinking nothing has changed in the last forty years with regard to meat schedule setting, if not actual price levels. But an address to the Ruakura Farmers Conference in 1975 by then chairman of the New Zealand meat Producers Board, Charles Hilgendorff, gives an interesting perspective on the industry at that time.

The Board’s overriding concern was price stabilisation whereby it sought to avoid excessive short term highs and lows, but it was not in favour of absolute stability because this would provide a misleading impression to producers. The Meat Board had been involved in price support for the past 20 years and, funded as it was by farmer levies, it saw the need to use levy funds to smooth prices within a range. When prices exceeded a certain trigger, the surplus would be withheld from producers to provide a buffer when prices dropped. . .

 Managing the dairy downturn – Keith Woodford:

It is still far from clear whether we have reached the bottom of the dairy price cycle. The Chinese seem to be coming back into the market but no one much else is. But even if prices do start to rise in the next few months, down on the farms things will be tight at least until Christmas.

There are considerable lags in the system between prices at the Global Dairy Trade auction, and the milk cheques that farmers receive. Hence the financial crunch is just coming on. . .

Scanning and tracking stock is key for Gypsy Day moves:

The key risk for farmers during this year’s June 1st Gypsy Day is ensuring that stock are accurately identified and tracked, says Michael Lee, Principal with Crowe Horwath in Invercargill.

One of the biggest days in the dairying calendar, Gypsy Day marks the start of the new season when farms are bought and sold, stock is transferred to new owners and new sharemilking contracts are signed. This year it will again fall on a Monday public holiday.

“Stock is the second-biggest investment for farmers after the farm itself,” said Mr Lee. . .

Farmers wanted to help NIWA:

NIWA is looking for farmers to help fine tune its latest development.
The National Institute of Water and Atmospheric Research has developed new tools that can help farmers decide when to irrigate or fertilise. But it needs farmers to test out the tools to ensure they are as practical and easy to use as possible.

The first new tool is called NIWA IrriMet and will be demonstrated at the NIWA stand in the main pavilion at this year’s National Agricultural Fieldays. IrriMet follows the successful launch of FarmMet at last year’s Fieldays.

FarmMet is a tailored weather forecasting tool that provides accurate up-to-date forecasts specific to individual properties. It works by capturing data from climate stations closest to an individual farm and using that to tailor a forecast to farmers delivered straight to their computer. . .

Ballance farewells Warwick de Vere after 45 years:

Fertiliser industry stalwart, Warwick de Vere will leave Ballance Agri-Nutrients Mount Maunganui site for the last time on today [29 May], closing the door on a 45-year career with the co-operative.

Known by colleagues as a legend who “lives, breathes and eats fertiliser”, he joined the industry as a laboratory technician in 1970 at New Zealand Farmers Fertiliser, Te Papapa, one of Ballance’s legacy companies. That was the start of a career which spanned a number of technical and management roles spanning manufacturing, safety, distribution, sales, human resources and IT, culminating in various General Manager roles with the co-operative in the last 15 years. . .

Vet Club Merger Confirmed:

A merger between two of North Island’s Veterinary Clubs has been confirmed. Effective 1st of June, Anexa Animal Health and Farmers Vet Club (FVC Veterinary Services) will operate as one practice called Anexa FVC.

Chairman Brian Gordon said, “This merger provides a sustainable Vet Club model in the Waikato-Hauraki region for the future. Farmers Vet Club (t/a FVC Veterinary Services) was established in Ngatea in 1923 and the Morrinsville Vet Club (t/a Anexa Animal Health) was established in Morrinsville in 1939. These clubs were established by farmers, for farmers and the Boards of both clubs wish to ensure strong competition remains in the market for local farmers.” . . .

Rural Business Network Hub launches in Northland:

Rural business professionals in Northland will have an opportunity to develop their businesses and strengthen their networks with the launch of the Northland Rural Business Network Hub on June 16. Whangarei will host the inaugural event on Tuesday June 16 at the Whangarei Barge Showgrounds Events Centre.

The Rural Business Network provides an opportunity for rural-based business people to participate in events that will help them grow their business through networking and learning from others. RBN aims to connect innovative, motivated people from across the range of primary industry sectors with successful, experienced businessmen and women creating opportunities to share ideas, be inspired and learn by example. . .

Seeking new Holstein Friesian Genetic Leaders:

Holstein Friesian New Zealand and CRV Ambreed will team up again this year to select New Zealand’s next generation of top Holstein Friesian bulls for their joint sire proving programme, ‘Holstein Friesian Genetic Leaders’.

Recently celebrating 20 years, the joint venture was set up to source, prove and sell high merit genetics within New Zealand’s Holstein Friesian population and has helped to advance and develop the breed ever since. . .

Rural round-up

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

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

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

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

Rural round-up

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

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

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

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.

Rural round-up

X-ray transfer system offers biosecurity boost:

Primary Industries Minister Nathan Guy has welcomed the beginning of trials for the use of x-ray images to screen airline baggage before it arrives in New Zealand.

The trials are a world-first and involve the transfer of aviation security x-ray images from Melbourne Airport to Auckland for passengers on Air New Zealand flights, while the passenger is on the flight. Passengers will still be subject to clearance requirements prior to boarding the plane.

“This technology will allow biosecurity staff to assess the x-ray images before the plane touches down. Any bag containing biosecurity risk items will then be matched with the passenger, who will face further scrutiny by officials upon landing,” says Mr Guy. . .

Plenty of hope but no solutions yet – Allan Barber:

The Red Meat Sector Conference, held in Auckland on Monday, was very well attended by 320 people from all parts of the industry.

There were interesting presentations from overseas and local speakers. The former spoke eloquently about the outstanding global prospects for the red meat sector, while the latter had plenty of statistics to illustrate their concerns about sheep and beef farming debt and shrinking livestock numbers.

The Prime Minister opened the Conference with an upbeat talk about an $8 billion industry of great importance to the country. While acknowledging farmer dissatisfaction with the status quo, he said it was up to the industry to drive change, but the government was sympathetic and supportive. . .

New Zealand red meat sector welcomes Economic Cooperation Agreement with Taiwan

Beef + Lamb New Zealand (B+LNZ) and the Meat Industry Association (MIA) say the signing of the Economic Cooperation Agreement (ECA) between New Zealand and Taiwan is a significant outcome for the New Zealand sheep and beef sector.

Eliminating all tariffs on beef within two years and sheepmeat within four years is important news B+LNZ Chairman, Mike Petersen and MIA Chairman, Bill Falconer said.

“This ECA will eliminate tariffs with Taiwan and it complements New Zealand’s existing free trade agreements with China and Hong Kong,” Petersen said.  .  .

ExportNZ welcomes economic cooperation agreement between New Zealand and Taiwan:

ExportNZ welcomes the announcement that New Zealand and Taiwan have signed an economic cooperation agreement.

Executive Director of ExportNZ, Catherine Beard, says this will be positive for both economies since they are very complementary, with Taiwan’s exports to New Zealand being dominated by high tech manufactured goods and New Zealand’s top exports to Taiwan being agricultural products. . . .

New Zealand – Taiwan Economic Cooperation Agreement positive for seafood trade:

Seafood New Zealand welcomes today’s announcement of the signing of an Economic Partnership Agreement (ANZTEC) between New Zealand and Taiwan and congratulates the Trade Minister, Tim Groser, and his team of negotiators for completing a negotiation that first started under the watch of the previous Labour-led administration.

All of New Zealand’s seafood trade interests with Taiwan have been fully included in the Agreement. All seafood items will be able to enter Taiwan tariff free within eight years – with many products benefitting much earlier. . .

‘ASEAN tigers’ offer growth opportunities for New Zealand’s dairy sector:

Burgeoning demand for dairy among consumers in the ASEAN-6 group of countries is creating substantial trade opportunities for dairy export countries including New Zealand, according to a new industry report.

In the report Dairy – Milk for the ASEAN-6 Tigers, global agribusiness banking specialist Rabobank says the ASEAN ‘six majors’ (the six largest economies of the Association of South East Asian Nations – Indonesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam) should be part of all dairy exporters’ global growth strategies, but particularly for New Zealand given its competitive advantage in these markets. . .

Latest Agreement gives New Zealand wine tariff-free access to Taiwan:

New Zealand Winegrowers welcomes the signing of the Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC). The Agreement will give New Zealand wine tariff-free access to the Taiwan market as soon as it comes into force.

“This is an important trade advantage for New Zealand wine exporters. Taiwan is a small but developed market that is well suited to the premium wine styles that New Zealand offers. Asia is an increasingly important destination for New Zealand wines. This Agreement will make New Zealand the only wine exporter with tariff-free access to China, Hong Kong and Taiwan.” said Dr John Barker, general manager advocacy and trade for New Zealand Winegrowers. . .

Latest research delivers encouraging signs for oyster industry ahead of AGM:

A collaborative research programme to breed oysters resilient to a virus that three years ago devastated New Zealand’s Pacific oyster industry is starting to deliver promising results.

Scientists at Cawthron Institute, together with industry partners, have been working towards breeding Pacific oysters resilient to the ostreid herpes (OsHV-1) virus that almost wiped out the country’s Pacific oyster stocks in 2010.

Cawthron Institute has today reported promising results from the latest research trials which it will present at the New Zealand Oyster Industry Association AGM this weekend (6 July).

“We have identified oyster families with a very high survival rate when exposed to the oyster virus, which decimated stocks in 2010,” Cawthron Institute Chief Executive Charles Eason says. “These recent findings are most encouraging. They suggest that selective breeding has great potential to address the current crisis.” . . .

Dirty birds

Towards the end of last year a report from the Otago Regional Council raised concerns about deteriorating water quality in the Kakanui River.

One of the contributing factors was an increased level of E.coli.

Dairying was blamed although the council couldn’t find the source.

One of the dairy farmers decided to do his own research and canoed down the river.

He found a couple of dead sheep caught in submerged branches then he came on a large colony of seagulls nesting in a canyon.

He reported this to the council which sent a helicopter up the river and found the source of the problem.

. . .  a large colony of nesting gulls – was found in rugged terrain, about 5 km above the Clifton Falls bridge.

Water quality samples were taken immediately above and below the colony, with widely divergent results Upstream of the colony, the bacteria concentrations were 214 E.coli/100ml, whereas immediately downstream, the concentration was far greater at 1300 E.coli/100ml .

ORC manager of resource science Matt Hickey said that according to Government water quality guidelines for recreational swimming areas, those with less than 260 E.coli/100m should be safe, whereas water with more than 550 E.coli/100ml could pose a health-risk.

Mr Hickey said six colonies of gulls were found in total, on steep rocky faces, where they clearly favoured the habitat for nesting.

While they had gone undetected up until now due to the inaccessible nature of the gorge, it was likely the gulls returned each year to breed in the same places.

“Unfortunately, these nesting gull colonies are likely to continue to cause high E.coli concentrations in the upper Kakanui River, particularly during the breeding season,” Mr Hickey said.

“Bird activity, river flow, or even whether it is a cloudy or sunny day, (as E.coli often died quickly in clear water when exposed to sunlight) will influence actual bacteria numbers at Clifton Falls bridge. With hindsight, it reflects the random nature of the historical bacteria results at this site.”

Mr Hickey said the E.coli concentrations reflected a large number of birds congregating in a small area and we are fortunate this situation was not common in Otago. Historically E.coli concentrations in the lower Kakanui River have been very low, despite the gull colonies being found upstream.

The council is warning people against swimming in the river but we’ve had no warning about drinking the water, presumably because it’s treated.

Locals are very keen to solve the problem but it’s not necessarily a simple matter:

Coastal Otago biodiversity programme manager David Agnew said the Department of Conservation would look into the situation and try to identify which species of gull were nesting in the area.

Mr Agnew said the species involved would determine what could be done to remove them.

”Black-backed gulls are not protected so that’s not a problem as far as if they are causing a problem. They are not rare or threatened, they are not even protected, whereas red-billed gulls and black-billed gulls both have their own conservation concerns.”

There’s no concern about conservation with cows. If they were causing water quality problems farmers could face prosecution and would have to act quickly to address the cause.

Some gulls have a special status and if they’re the ones fouling the water the clean up will take some time.

Milk up 2.4% in GDT auction

The trade weighted index increased 2.4% in this morning’s GlobalDairyTrade auction.

This is the fourth price gain in succession.

The increase is particularly good news as this was the first auction since news broke of tiny traces of the nitrogen inhibitor DCD being found in some milk products.Even though there was no food safety risk there was a perception risk but that doesn’t seem to have impacted on demand.Price changes:  Anydrous milk fat was up 7.2%; butter milk powder increased 3.7%; cheddar was down .1%; milk protein concentrate was up 1.2%; rennet casein increased 3.3%; skim milk powder increased .5% and whole milk powder, which has the biggest impact on the farm gate price, increased 5.4%.

Dairy trumps wool

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.