Rural round-up

August 25, 2019

Powering up well-beings could power up costs :

Federated Farmers is concerned the call on councils to “power up” the four well-beings re-introduced into local government legislation will pile on more costs for ratepayers.

“Councils up and down the country have lost the battle to keep rates increases in touch with inflation, and debt levels are soaring.  Many can’t keep up with the costs of activities and infrastructure maintenance/replacement that most residents would count as core – water, stormwater, flood protection, local roads, rubbish and recycling collection,” Feds President and local government spokesperson Katie Milne says.

“Yet Local Government Minister Nanaia Mahuta has just exhorted councils to power up ways communities can realise their ambitions for social, economic, environmental and cultural priorities.”  . . 

Food giant Danone signs deal to grow Waikato sheep milk industry – Andrea Fox:

New Zealand’s emerging sheep dairy industry has graduated to the big league with the launch of a sheep milk toddler formula by global food giant Danone.

Nutricia Karicare toddler sheep milk powder will be 100 per cent New Zealand sheep milk from Maui Milk, which operates two farms on the western shores of Lake Taupo.

And Danone plans to launch a full sheep milk formula range next year under the Nutricia brand. . . 

‘Learn so much about yourself’ at dairy awards – Yvonne O’Hara:

One of Bridget Bell’s goals was to place in the top five of this year’s Southland Otago Dairy Industry awards.

She first entered the farm manager of the year section in 2018 and did not place, but she tried again this year and came second, which she was thrilled with.

Mrs Bell also won three merit awards: The Shand Thomson leadership award; the AWS legal employee engagement award and the Fonterra dairy management award.

”I really wanted the Fonterra award,” Mrs Bell said. . . 

Master farrier keeps his foot in the industry after 51 years – Gordon Findlater:

Brian Wilson (85) is a name anyone in the horse racing industry will recognise. The former farrier can still be found at Riccarton as the club’s plating inspector. On Saturday, August 10, race three in the Grand National Festival of Racing’s first event was named ‘Brian Wilson 51 years a farrier’ in his honour. Gordon Findlater catches up with him

Can you remember the first time you shoed a horse?

I would have been 14 or 15 on the West Coast and one of the guys that did have a horse was Jock Butterfield, who played for the Kiwis, and he wanted to put some shoes on this horse, so they gave me some tools and to this day I feel sorry for the horse. That was my first experience of shoeing a horse.

What was it like growing up on the West Coast back then?

I quite enjoyed it, but there wasn’t a great future. You worked in the forestry or the bush as we called it, or the mines. I came over here in 1951 and that’s when I really got involved in the horses. My brother was an apprentice jockey, so I thought, well, I’ll see how I go, but it wasn’t to be. . . 

IHC hopes for sheep farmers’ support:

This spring, IHC is launching its new Lamb Programme, urging sheep farmers to join with dairy farmers to support people with intellectual disabilities and their families in rural communities.

IHC’s Calf & Rural Scheme was hit hard last year by Mycoplasma bovis, losing half its usual income, in what was an incredibly difficult year for many dairy farmers.

IHC National Fundraising Manager Greg Millar is hoping farmers will now pledge a lamb or sheep to support children and adults with an intellectual disability in rural communities. . . 

The average US farm is $1.3 Million in debt, and now the worse farming crisis in modern history is upon us – Michael Snyder:

We haven’t seen anything like this since the Great Depression of the 1930s.  Leading up to this year, farm incomes had been trending lower for most of the past decade, and meanwhile farm debt levels have been absolutely exploding.  So U.S. farmers were desperate for a really good year, but instead 2019 has been a total disaster.  As I have been carefully documenting, due to endless rain and catastrophic flooding millions of acres of prime farmland didn’t get planted at all this year, and the yields on tens of millions of other acres are expected to be way, way below normal.  As a result, we are facing the worst farming crisis in modern American history, and this comes at a time when U.S. farms are drowning in more debt than ever before.  In fact, the latest numbers that we have show that the average U.S. farm is 1.3 million dollars in debt

Debt-to-asset ratios are seeing the same squeeze, with more farms moving into a ratio exceeding 80%. Barrett notes each year since 2009 has seen an increase in the average amount of total debt among farmers, and 2017 was no exception. Average debt rose 10% to $1.3 million. The biggest increase was in long-term debt, such as land.

Farming in the 21st century has become an extraordinarily risky business, and countless U.S. farmers were already on the verge of going under even before we got to 2019.

Now that this year has been such a complete and utter disaster, many farms will not be able to operate once we get to 2020.

Minnesota farmers Liz and Bob Krocak were hoping for better days ahead as this year began, but things have been really tough and their debts have become overwhelming.  During a recent meeting with their creditors, Liz was so distraught that she literally burst into tears


Rural round-up

August 8, 2019

Meat industry concerned by education shake-up :

A shake-up of vocational education could be a backwards step for training in the meat industry, the sector’s leaders say.

Last week, Education Minister Chris Hipkins announced seven key changes in store for on-the-job training and apprenticeships, which included the creation of a “mega-polytech”.

Up to seven industry-governed Workforce Development Councils would also be created to “replace and expand” Industry Training Organisations (ITOs). . . 

Consumer trust is key for future success of NZ food industry:

Consumer trust has never been more valuable to the New Zealand food industry and is set to play a key role in its future success, a visiting international agricultural expert has told the horticulture sector. Yet winning and sustaining this trust has also never been more complex.

Speaking at the New Zealand Horticulture conference in Hamilton last week, the Sydney-based general manager for RaboResearch Australia and New Zealand Tim Hunt said consumer trust was becoming an increasingly precious commodity for New Zealand food producers.

“New Zealand’s emerging markets, like China and South East Asia, place a high value on food safety and the process of food preparation, while more mature wealthy markets are willing to pay for sustainability, animal welfare, fairness and attractive provenance,” he said. . . 

‘No ordinary job’: Dairy farmers put in the hard yards over calving – Esther Taunton:

Most calves are born like Superman, with their front legs up over their heads, but sometimes even Superman needs a hand, Taranaki sharemilker Jody McCaig says.

McCaig and her husband, Charlie, farm at Te Kiri, inland from Opunake, and like dairy farmers around the country, they’re headed into another busy calving.

At the height of the season, up to 50 calves a day will be born on the 1000-cow, 320-hectare property. . . 

Stop pigeonholing farm systems– TIm Fulton:

Support for regenerative agriculture is building across New Zealand and Australia. As Crown-run Landcare Research seeks state funding to test the principles and practice Tim Fulton spoke to Australian soil science leader Professor John McLean for an assessment of the movement.

At home with a newborn in southeast Queensland Associate Professor John McLean recently read a an article on regenerative agriculture in the special Fieldays issue of Farmers Weekly.

Bennett is a principal research fellow at the university’s Centre for Sustainable Agricultural Systems and the immediate past president of Soil Science Australia. . .

New Zealand’s first carbon neutral milk plant – Nigel Malthus:

French global food company Danone says it will spend NZ$40 million on its Nutricia spray drying plant at Balclutha to achieve net carbon neutrality there by 2021.

NZ operations director Cyril Marniquet says it will make the Balclutha plant NZ’s first carbon neutral one of its kind.

A NZ$30m biomass boiler will reduce the plant’s CO2 emissions by 20,000 tonnes per year – the equivalent, the company says, of removing 60,000 cars from NZ’s roads. And a more efficient waste water treatment plant will meet Danone’s stringent global clean water standards.  . .

China confirms it is suspending agricultural product purchases in response to Trump’s new tariffs – Kate Rooney:

China confirmed reports that it was pulling out of U.S. agriculture as a weapon in the ongoing trade war.

A spokesperson for the Chinese Ministry of Commerce said Chinese companies have stopped purchasing U.S. agricultural products in response to President Trump’s new 10% tariffs on $300 billion of Chinese goods.

“This is a serious violation of the meeting between the heads of state of China and the United States,” the Minister of Commerce said in a statement Monday that was translated via Google. . . 


Rural round-up

June 13, 2018

New faces take on arable roles – Annette Scott:

Wairarapa cropping farmer Karen Williams made history as she took up the reins of the Federated Farmers arable section at its annual conference.

The first woman to head the section, the 2017 biosecurity farmer of the year and former Ballance Farm Environment Award winner takes on the job with a bundle of enthusiasm.

“I am excited about the opportunity. 

“For me this role gives me the opportunity to continue to work in biosecurity and engage in that space in Wellington. . . 

Drones prove worth on farms – Richard Rennie:

Drones initially welcomed as great novelties are now fixtures as business tools and on farms they can have multiple uses. Richard Rennie talked to farmers who have used them and found a new drone firm setting up shop here as their use becomes more widely accepted.

IN THE heady early days of drone deployment many promises were made about how they would revolutionise some of the grinding daily farm jobs, often all from the comfort of the farm kitchen table. 

A few years on they have proved to be more than a flash in the pan. 

For some farmers they are now an established tool but still as dependent on the technology they take into the sky as the inventiveness of farmers using them. . . 

Meat company results only average for 2017 – will 2018 be any better?  – Allan Barber:

ANZCO’s lacklustre result for 2017, posted last month, concludes the financial reporting for last year by the three major processors which publish their results. ANZCO’s pre-tax profit was $1.8 million which compares disappointingly with Alliance Group’s $16.7 million profit and Silver Fern Farms Cooperative’s 15 month profit of $7.8 million.

None of the three companies achieved a particularly good return on their investment in the business, but both Alliance and SFF showed improvement on the previous year which was in each case the result of substantial changes in the business structure and balance sheet. The $261 million investment by Shanghai Maling in acquiring 50% of SFF had an immediately positive impact on the company’s balance sheet strength and interest bill. During its year to September Alliance was able to reduce debt and make increased investment in plant upgrades at the same time. . . 

Danone adds to investment in NZ infant formula with proposal to buy up to 49% of Yashili New Zealand – Jonathan Underhill

(BusinessDesk) – Danone plans to increase its investment in New Zealand infant formula manufacturing by acquiring up to 49 percent of Yashili New Zealand Dairy Co, the local unit of China Mengniu Dairy, according to a filing in Hong Kong.

Terms of the transaction haven’t been finalised, including the price and method of payment, Yashili International said in a statement to the Hong Kong stock exchange. “The consideration, the payment method and the payment schedule shall be determined after arm’s length negotiations and mutual agreement between the parties,” it said in a statement to the Hong Kong stock exchange. . .

Changes on board of Young farmers – Sally Rae:

Experienced Dunedin marketer Sharon Angus has joined the board of New Zealand Young Farmers as an appointed director.

Ms Angus (54), who is former general manager of marketing at Silver Fern Farms, has extensive experience with food brands.

The marketing consultant was excited about joining the board as she felt New Zealand Young Farmers “represents the future”. . . 

Process vegetables industry signs up to GIA:

Today, Horticulture New Zealand signed a Government Industry Agreement (GIA) for Biosecurity Readiness and Response on behalf of Process Vegetables New Zealand (PVNZ).

PVNZ chair David Hadfield says robust biosecurity should be seen as an investment for growers.

“Committing to the GIA enables us to have closer, more informed interactions with the Ministry for Primary Industries (MPI) and other GIA industry partners around biosecurity. This includes planning for potential incursions and taking a leading role in collective biosecurity management where it impacts our members,” Hadfield says. . . 

Knitted with love:

How Fonterra is helping keep Gore’s newest residents warm and cosy this winter.

It’s a rainy Wednesday afternoon in Gore and Lois Shallard’s knitting needles are working over-time. Beside her on the table is a pile of tiny knitted baby socks, singlets and hats and at her feet are balls of wool – hot pink, lime green, lavender and a “lovely mottled blue”.

Lois is 70 this year and she’s been knitting since her teens. She knitted clothes for all her children back in the day and now she’s moved on to knitting for her town’s new mums.

“I love knitting the little socks the best, they are just so tiny and cute.” . . 


Fonterra forecast down, shares up

December 2, 2017

Fonterra has dropped its forecast payout after being ordered to pay Danone $183 million in compensation:

Fonterra Cooperative Group has cut its forecast for 2018 earnings per share after an arbitration tribunal in Singapore ruled it must pay 105 million euros ($183 million) to Danone in the wake of 2013’s whey protein recall.

The award for recall costs suffered by Danone comes after the French company launched arbitration proceedings in Singapore and a legal suit in the New Zealand High Court, estimating the cost of recalling the whey protein concentrate to be about 350 million euros. At the time, Fonterra said it expected any court action would show it wasn’t liable under the contract. The recall was recognised as a $14 million contingent liability in its accounts.

In 2013, Fonterra quarantined several batches of whey protein concentrate amid fears it was contaminated with a potentially dangerous form of the clostridium bacteria. The whey protein was ultimately cleared as a false alarm. Fonterra cut deals with seven of the eight customers affected.

“We are disappointed that the arbitration tribunal did not fully recognise the terms of our supply agreement with Danone, including the agreed limitations of liability, which was the basis on which we had agreed to do business,” Fonterra chief executive Theo Spierings said in a statement. Fonterra was “reviewing the tribunal’s findings closely, but recognised that there was likely to be limited options for challenging the decision of an international arbitration.”

Fonterra had assessed the potential financial implications of the decision and made “a prudent decision to revise its forecast earnings per share range for the 2017/18 financial year to 35 to 45 cents, down from 45 to 55 cents,” the company said. The decision wouldn’t impact the company’s forecast farmgate milk price, currently at $6.75 per kilogram of milk solids.

“Fonterra is in a strong financial position and is able to meet the recall costs,” Spierings said. As at July 31, Fonterra had $3.8 billion in undrawn lines of credit and $393 million of cash.

Earlier today, Danone said it “welcomes this arbitration decision as a guarantee that the lessons from the crisis will not be forgotten.” The arbitration “underscores the merit of its legal actions against Fonterra, including to champion the highest standards of food safety across the industry,” it said. Food companies and their suppliers “can only work together through a solid relationship based on trust, transparency, and accountability. Danone will continue to build that relationship with its suppliers across the world.” Danone’s New Zealand subsidiary Danone Nutricia ceased doing business with Fonterra in the wake of the dispute.

Fonterra had its shareholders’ fund units and listed bonds halted from trading today ahead of a media conference at 3pm in Auckland.

“While there was never any risk to the public, we have learned from this experience and as a result have made improvements to our escalation, product traceability and recall processes, and incident management systems,” Spierings said. “We operate in a fast-changing and complex industry, and will always prioritise food safety and quality in our commitment to be the world’s most trusted source of dairy nutrition.”

Since Danone ended its supply contract with Fonterra, it’s sourced product from Synlait Milk and other manufacturers and bought two Kiwi dairy processing companies, Sutton Group and Gardians, with the latter providing access to milk supply from 18 farms owned by Grant Paterson of Dunedin. 

While the forecast payout has dropped, Fonterra shares gained in price:

Fonterra Shareholders Fund units gained 0.6 percent to $6.40. . . 

The award for recall costs suffered by Danone comes after the French company launched arbitration proceedings in Singapore and a legal suit in the New Zealand High Court, estimating the cost of recalling the whey protein concentrate to be about 350 million euros. At the time, Fonterra said it expected any court action would show it wasn’t liable under the contract. The recall was recognised as a $14 million contingent liability in its accounts.

Fonterra had assessed the potential financial implications of the decision and made “a prudent decision to revise its forecast earnings per share range for the 2017/18 financial year to 35 to 45 cents, down from 45 to 55 cents,” the company said. The decision wouldn’t impact the company’s forecast farmgate milk price, currently at $6.75 per kilogram of milk solids.

“In the share price you’ve seen an element of relief, albeit on low volume” said Rickey Ward, NZ equity manager at JBWere. “There’s an issue that had been overhanging the company, which could be enormously material, which has been resolved, and it doesn’t appear there’s any desire to pursue recourse on this.”

“It’s full and final, it provides clarity and therefore investors can start to analyse or take a view of the company on fundamentals now, rather than this issue that’s been lurking in the background,” Ward said. “It could have been quite stressful for them if it had been at the upper end of what some people were suggesting. The company would have been capable of addressing it, but they would have had to find a way of addressing it which might not have pleased the unitholders in the shareholders’ fund.”

The market must have been expecting worse news.

Farmers have been anticipating a drop in the farmgate milk price in the wake of price falls in several successive GlobalDairyTrade auctions. However, it’s the earnings per share forecast which has been lowered, not the farmgate milk price.


Rural round-up

November 9, 2015

Alliance in good shape, Donald says – Sally Rae:

He’s been sitting around the board table at Alliance Group for 24 years but Murray Donald has finally called time.

Come December 17 and the Southland farmer will be gone, as he is standing down as a supplier representative at the company’s annual meeting in Oamaru.

Mr Donald (54), who farms near Winton, and fellow long serving director Doug Brown, of Maheno, who was elected in 2001, have decided not to seek re election. . . 

Exit from EU could cripple UK agriculture – Allan Barber:

A new report by agricultural consultancy Agra Europe entitled Preparing for Brexit suggests leaving the EU, to be determined by a referendum in 2017, could destroy the British farming sector. The authors have based their forecast on the Coalition government’s 2013 Fresh Start Policy document which theorised that British agriculture could imitate New Zealand and Australia’s success in surviving, even flourishing, in a post-subsidy world.

Not surprisingly there is plenty of scepticism about the realistic prospect of either of these scenarios eventuating. If British voters chose the Brexit option, it is most unlikely any government would eliminate all subsidies, while a cursory glance at the proportion of farm income from EU Common Agricultural Policy payments shows how laughable it would be to expect them to become suddenly profitable. . . 

Contest continues to hold appeal – Sally Rae:

Chris Pemberton was just a lad when he competed in the Young Farmers Contest.

It was 2005 and, at 17, Mr Pemberton was one of the youngest regional finalists in the contest’s then 36-year history.

He was still at boarding school at St Kevin’s College when he competed in the Aorangi regional final.

While unplaced, he performed creditably and was a favourite with the crowd. . . 

Spaans new DairyNZ head – Stephen Bell:

Waikato dairy farmer Michael Spaans has been elected the new chairman of DairyNZ.

The industry-good body held a special meeting of the board this weekend.

Spaans will serve an annual term as chairman, leading an eight-member board made up of five farmer-elected and three independent directors.
He replaced long-serving chairman and former Cabinet minister John Luxton who retired from the DairyNZ board last month after 12 years of service on dairy industry bodies. . . 

Yashili New Zealand’s Pokeno factory opens – Gerald Piddock:

Yashili New Zealand Dairy Co has opened its new state-of-the-art infant formula manufacturing plant in Pokeno, south of Auckland.

The 30,000m2 plant will employ 85 staff and have an annual production capacity of about 52,000 tonnes of formula product. It will produce formula under the brand ‘Super Alpha-Golden Stage Infant Formula’ with shipments to China expected to begin in early 2016.

Yashili New Zealand is a leading producer of infant milk formula for the domestic market in China. It was founded in July 2012 and is a subsidiary of Yashili International Holdings and Mengniu Dairy Co.  The new factory took three years to build and cost $220 million. The company’s goals were to produce the highest quality infant formula and raise the healthiest babies in China. . . 

Yashili, Arla and Danone sign agreement – Gerald Piddock:

Yashili International along with European dairy producers Arla and Danone have entered into global strategic cooperation agreement.

Signed at the opening of Yashili’s new infant formula plant at Pokeno on November 6, the agreement will see the three companies work closer together in supplying products into Arla and Danone’s markets.

“It is a significant agreement between these two great dairy producers who are each committed to the highest standard of food quality and safety,” Yashili International Holdings president Lu Mingfang said. . . 

 


Rural round-up

August 7, 2015

Rabobank Report: Moving Globally; What role will China play in the global beef market?:

Rabobank sees great potential in China’s beef market, and believes that Chinese investors will play an influential role in the global beef market over the next decade. According to Rabobank’s latest report, Moving Globally: What role will China play in the global beef market?, China’s beef demand will grow an additional 2.2 million tonnes by 2025. Driven by the weak domestic production, but with strong demand, the beef sector will likely become the first agricultural sector where China has high integration with the rest of the world and Chinese investors are expected to play an influential role in the global beef market.

In addition to the volume gap, China’s beef market also demonstrates potential for value-added and branded beef products. Strong demand from the food service and retail market channels provides opportunities for both Chinese and foreign companies in the further processing sector. . .

 

Fonterra’s restructure more about poor strategy than milk price – Allan Barber:

When Fonterra was formed back in 2001, there was a great sense of optimism about the potential for a New Zealand dairy company to compete on a truly global scale. The industry’s infighting and parochialism would be a thing of the past and the clear intention was to use the greater efficiencies and scale to create a substantially better performing business model.

The big question 14 years down the track is whether that objective has even remotely been achieved. Fonterra is the world’s leading exporter of milk products and the fourth largest dairy processor, so achievement to date appears consistent with the objective. But for many observers there was another, more ambitious expectation: to establish an internationally competitive value added business to compare and compete with Nestle and Danone. . .

Dairy sector needs to work together to manage downturn:

National accounting and business advisory firm Crowe Horwath is calling on all stakeholders in the dairy industry to work together to help the sector get through the current difficult period of lower milk solid prices.

On the back of dairy companies announcing a string of forecast milk price downgrades and prices continuing to plunge at the Global Dairy Trade (GDT) auctions, predictions are the current hard times for the dairy sector could potentially last another 18 months to two years.

Crowe Horwath says given the scale of the challenge now being faced by the industry, doing nothing is not an option for anyone involved, including farmers, banks, farm consultants and business advisors. . .

 

Fish & Game Calls for Fonterra to Lift Its Game After Pollution Conviction:

Fish & Game says Fonterra needs to lift its game after the dairy giant was fined $174,000 for several pollution offences under the Resource Management Act.

The Bay of Plenty Regional Council prosecuted Fonterra for polluting the and other waterways after several wastewater system failures at Fonterra’s Edgecumbe dairy plant.

The offences occurred several times between September 2014 and April 2015.

Fonterra pleaded guilty to six charges and was sentenced in the Tauranga District Court by Judge Smith. . .

 

I’m worried! I’m sympathising with organic farmers over a land use conflict! – Jim Rose:

Writing this blog of sound mind and sober disposition, I still have considerable sympathy with two organic farmers over a land use conflict they have with the neighbouring gun range.

Local land use regulations allows a gun club to set up 600 m away with competitive shooting days all day for 88 days a year. That is a voluntary self restraint. They could hold shooting competitions every day of the year. The local land use regulations allow the use of guns on rural land. The gun club used this absence of a prohibition on the use of guns in the frequency of use to set up a gun range to fire guns all day long on rural land. . . .

Market Continues to Show Strength:

New Zealand Wool Services International Limited’s General Manager, Mr John Dawson reports that a continuing upward trend at today’s South Island wool sale saw prices increase.

The weighted indicator for the main trading currencies decreased from 0.6314 to 0.6181, down 2.1 percent. The US dollar rate was down to .6520 from .6670 which meant increased prices in NZC terms.

Of the 5,564 bales on offer 5,260 sold, a clearance of 95 percent. . .

 

Matariki Forestry Group announces recapitalisation:

Matariki Forestry Group (“Matariki”) today announced a NZ$242 million capital infusion from Rayonier Inc., its largest shareholder. This injection of capital will be used for the repayment of all outstanding amounts under its existing NZ$235 million credit facility and for general corporate purposes.

Upon completion of this capital infusion, Rayonier’s ownership in Matariki will increase from 65% to approximately 77% and the Phaunos Timber Fund ownership will be reduced from 35% to approximately 23%. The capital infusion is subject to certain closing conditions including New Zealand Overseas Investment Office approval and is expected to close by year end. Matariki will realise interest cost savings of approximately NZ$15 million annually as a result of the recapitalisation. . .

 

NZARN says strategic feed approach key to farmer viability:

Nutrition experts have entered the milk price payout debate saying that a strategic approach and optimising home grown and supplementary feed resources are key to long-term viability.

The New Zealand Association of Ruminant Nutritionists (NZARN) urges farmers, in an article published on their website (www.nzarn.org.nz) to benchmark themselves against the best performing farms to identify areas for improvement.

Dr. Julian Waters, NZARN Chairman says, “Maximising utilisation of home grown resources such as pasture, silage and crops should be the basis for a profitable business, with a sound strategy to incorporate supplements to increase efficiencies when home grown feed is limited.” . . .

 Internet Provider Puts Farmers’ Wellbeing First:

New Zealand internet provider, Wireless Nation, further demonstrates its commitment to the rural sector in a new agreement with Farmstrong, an initiative to promote wellbeing for all farmers and growers across New Zealand.

Wireless Nation’s zero-rated data agreement means that its Satellite Broadband customers can access Farmstrong’s website without the data counting towards their data cap.

Wireless Nation’s technical director, Tom Linn says he is passionate about making internet connectivity easier for people living in rural areas. . .

New Forests agrees to purchase Marlborough timber plantations from Flight Group:

New Forests today announced that it has reached agreement to purchase approximately 4,200 hectares of freehold land and softwood plantations from the Flight Group. The plantations consist of radiata pine and are located in the Marlborough region of New Zealand’s South Island.

The agreement forms part of a larger transaction by Flight Group, including the purchase of the Flight Timbers sawmilling assets by Timberlink, an Australian timber products processor that is also an investee company of New Forests. Completion of the plantation purchase by New Forests is subject to approval by the Overseas Investment Office. . .

 


Fonterra holds 4th place in global dairy rank

July 16, 2014

Fonterra has held fourth place in Rabobank’s global dairy rankings:

  The latest annual Rabobank survey of the world’s largest dairy companies highlights the giants of one of the world’s most valuable food sectors.

The last 18 months have seen most of these players battle challenging conditions, with weak economies and supply constraints undermining sales growth in key markets. Againt this backdrop, mergers and acquistions have become an attractive route to growth and profitability. But with billion dollar deals increasingly hard to come by, dairy giants will need to acquire or tie up with more companies to sustain the same rates of growth in future. Those adept at acquiring and embracing new businesses will remain well positioned to survive and thrive. 

“Once again, giants Nestlé, Danone and Lactalis top the list, showing that the world’s largest dairy companies are reasonably entrenched,” commented Rabobank analyst Tim Hunt. “We continue to see some companies outperform their peers in sheer growth terms. In particular, the Chinese giants Yili and Mengniu, which saw their sales expand by 14% and 20% respectively, with Yili entering the top 10 for the first time ever”. 

Saputo continued its march up the list to push to eighth place, in part due to several recent acquisitions. Meiji and Morinaga slipped down the list largely due to the sharp decline in the value of the Yen (in which most of their products are sold).  

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2013 was a challenging year for most of the world’s major dairy companies, with stagnant sales volumes in most OECD dairy markets. Acquisitions have become a more attractive route to grow sales and in 2013, there were 124 dairy transactions, up from 111 in 2012 and the highest since 2007.

Positioning for maximum effectiveness in the expanding Chinese market remains prominent. In 2013, joint ventures were announced between Mengniu and Whitewave and COFCO and Danone while Yili announced a partnership agreement with Dairy Farmers of America.

Mengniu took a stake in China Modern Dairy to secure raw milk supply. A further joint venture is pending between FrieslandCampina and Huishan. Despite the increase in transactions, the dairy sector saw no billion dollar deals in the 12 months to 30 June 2014.

While underlying growth will pick up in coming years, many markets will not return to the rapid growth rates seen before 2008. In this context, mergers, acquisitions and joint ventures will remain a key avenue to growth and profitability.

“The catch is that the number of attractive targets is shrinking and multiples have risen,”  explained Hunt. “With billion dollar value deals harder to come by, dairy giants will need to acquire or tie up with more companies than in the past to sustain the same rates of growth”.

Fonterra made a record pay out to its suppliers last season but that was overshadowed in the media by its poor handling of the whey protein concentrate debacle.

However, it maintained its 4th place in the rankings.


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