Rural round-up

May 8, 2017

Finding alternatives to dairy – Keith Woodford:

New Zealand dairy production has increased by 80% since Year 2000. This has come almost equally from both more dairy hectares and more production per hectare. However, the limits to pastoral dairying in New Zealand have largely been reached. Where do we go from here?

First, there is a need to recognise the two reasons why pastoral dairying has largely reached its limits.

The most important reason is that society is no longer willing to accept the effects of cow urine leaching from pastures into waterways and aquifers. Huge progress has been made in fencing off livestock from waterways, and in tree planting alongside the streams, but that does not solve the problem of the urine patch. This 2013/14 year is therefore the last year of large-scale conversion of sheep and beef farms to pastoral dairying. New environmental regulations have effectively closed that door. . .

Lifting water quality and profit too – Nicole Sharp:

Southland farmers are continuing to be proactive when it comes to changing regulations within Environment Southland’s Water and Land Plan. Mid-Oreti and Hedgehope farmers held a catchment field day recently to discuss the plan and what more they could do on farm to continue to improve water quality. Nicole Sharp reports.

How can you make looking after the environment profitable?

That was the hot topic at the mid-Oreti and Hedgehope catchment field days recently, where farmers gathered to discuss Environment Southland’s Water and Land Plan and what more they could do. . . 

Farmers hold back wool from auction in weak market  – Tina Morrison

(BusinessDesk) – Less wool than forecast was offered at New Zealand’s weekly auction as farmers held back bales from sale in a weak market.

Just 6,821 bales were put up for sale at yesterday’s South Island auction after 11 percent of the expected bales were withdrawn before the sale started, according to AgriHQ. Even with the low number of bales on offer, the clearance rate fell 2 percentage points from last week’s auction to 73 percent, lagging behind last year’s levels, AgriHQ said. . . 

Comvita shares slump 9.4% on Deutsche Bank downgrade, news of Myrtle Rust in NZ  – Paul McBeth:

 (BusinessDesk) – Comvita shares sank 9.4 percent as investment analysts cut their valuation for the manuka honey products maker, coinciding with yet another problem out of the Te Puke-based company’s control with the discovery of Myrtle Rust in the Far North.

The shares fell as low as $6.07 in early trading today, the lowest since Jan. 23, and were recently down 65 cents to $6.25 after Deutsche Bank cut its price target for the stock to $7.05 from a previous target of $9. Deutsche Bank owns a stake in broking and research firm Craigs Investment Partners, whose executive chairman Neil Craig also heads up Comvita’s board. .. 

New South Wales agricultural region showcased to leading New Zealand and Australian farmers:

Puketapu beef finisher Rob Pattullo was one of nearly 50 leading farmers from across New Zealand and Australia to tour North-western New South Wales recently.

Hosted by specialist agricultural bank, Rabobank, the tour group gathered to visit some of the region’s most progressive farming businesses. . . 

Harraway Sisters Help Celebrate 150 Years of Harraways Oats

New Zealand’s iconic oats company, Harraways, is celebrating 150 years of providing Kiwis with delicious oats.

Since 1867, Harraways has been operating from its original site in Green Island, Dunedin and remains privately owned.

With humble beginnings as a small family business producing flour for the growing population of Dunedin, oats weren’t the company’s sole focus at the time. Replacing the old method of stone grinding flour with an oat roller milling plant in 1893, a thousand tonnes of oats were produced in the first year, expanding Harraways into the breakfast cereal producer that they are well-known as today. . . 

Star gazing tours and new pools are ‘hot’ attractions at Tekapo Springs:

The introduction of star gazing tours married with the launch of new pools have put Tekapo Springs firmly on the global tourism map. 

Star gazing tours in one of the world’s top ‘clear sky’ locations was launched by Tekapo Springs in New Zealand’s Mackenzie country just two months ago, taking viewing the Southern night sky to whole new levels. . . 

 Manuka Health unveils $3.5 million Wairarapa Apiculture Centre
Minister for Food Safety officially opens state of the art processing plant:

Leading honey manufacturer Manuka Health has today officially opened its expanded national apiculture business after a $3.5million build that will significantly expand the organisation’s export capacity.

Joining CEO John Kippenberger, the Minister for Food Safety Hon David Bennett opened the Manuka Health Wairarapa Apiculture Centre in an event attended by MP for the Wairarapa, Alastair Scott; Mayor John Booth of Carterton District Council; Chief Executive of Carterton District Council, Jane Davis; industry and government representatives; neighbours; beekeeper partners; site design and build companies; and Manuka Health staff. . .


Rural round-up

March 30, 2014

Deutsche Bank keeps ‘sell’ rating on Fonterra, seeks more transparency – Pattrick Smellie:

(BusinessDesk) – Fonterra Cooperative Group needs to make it far clearer to farmers and other investors how its business model operates, says Deutsche Bank after the dairy exporter shored up a slump in half-year profits by intervening in the regulated price it pays for milk at the farm gate.

Deutsche Bank retains its ‘sell’ rating on Fonterra Shareholders Fund units, with a 12-month target price of $5.64. The units slipped 0.2 percent by mid-afternoon to $6.08, and have fallen from a closing price of $6.15 on March 26, when the result for the six months to Jan. 31 was declared.

Fonterra posted a 53 percent fall in first-half net profit to $217 million, a result that would have been far worse if the cooperative had not taken the unprecedented action last December of deciding to reduce the regulated Farm Gate Milk Price (FGMP) to farmer-shareholders by 70 cents per kilogram of milk solids. . . .

New Zealand dairy farmers are responding to high prices by cranking the handle on their production to cash in on record payout – Jeff Smith:

Our dairy farmers are “cranking the handle” on production in response to high prices they are receiving for their milk.

As a result nationwide dairy production is expected to be up by 11% this current season.

Strong dairy prices have “handed the baton” to strong dairy volumes, ASB says in its economic update released today.

Volumes would be higher than normal this year as farmers had bought extra feed to increase milk production in anticipation of higher prices, ASB Bank rural economist Nathan Penny told interest.co.nz today. . . .

Farmer lands $30,000 in prizes – Elliot Parker:

Hard work has its merits.

Hinakura farmer Donald McCreary can attest to this after winning the award for the Beef and Lamb Wairarapa Farm Business of the Year and in the process scoring himself $30,000 in prizes.

McCleary has been farming in Hinakura, east of Martinborough, since 2004 on a 1375 ha property which is predominantly steep, hill country.

The property contains 6700 ewes and 225 breeding cattle.

McCreary says his approach to good farming is to be well versed in all areas of farm management. . .

Meat industry on the rise – Carmen Hall:

Higher lambing percentages and export carcass weights are helping offset a dramatic drop in sheep numbers.

Numbers have almost halved since 1991, but the amount of product being exported has remained stable as farmers focus on improving their systems.

Negative publicity has overshadowed the fact farmers have made significant gains in productivity and the industry has the potential to cash in on future growth, industry leaders are saying. Beef and Lamb New Zealand chief executive Scott Champion says the organisation focused on “best practice behind the farm gate”. . .

Finance support adds up for farmers :

Tauranga HR company Teaming Up hopes to connect accountancy firms with farmers in an economic development project that could generate millions of dollars.

The company spearheaded the Beyond Reasonable Drought inaugural road shows in the Bay of Plenty and East Coast last month, which attracted nearly 1000 people.

Marlborough sheep and beef farmer Doug Avery, who was on the brink of disaster 15 years ago after consecutive droughts, presented the seminars. He overcame adversity by adopting a scientific approach to agriculture and introducing deep-rooted, drought-tolerant lucerne. He employs six full-time staff, including son Frazer, and his business is a profitable operation that promotes high-reward, low-impact farming. . .

Honey lovers could get stung:

Honey prices could rise as much as 20 percent due to one of the worst seasons in decades.

Beekeepers say lower than usual temperatures in January meant the insects stayed inside their hives during the peak season and produced less honey. . .


Watering down the milk payout

May 27, 2009

The floating dollar usually insulates us from the extreme peaks and troughs of global commodity prices because when prices fall the dollar does too.

That’s not happening at the moment though, global milk prices have fallen and the dollar has strengthened and that’s one of the reasons Fonterra is forecasting a disappointing $4.55 a kilo of milk solids for the 09/10 season.

Fonterra Chairman, Henry van der Heyden, said a volatile currency and continued uncertainty in international dairy markets made forecasting extremely difficult and a constant challenge in the current environment.

“We were looking at a forecast over $5 when the Kiwi was at 50 cents but the rebound means we’re now working with a dollar that’s 10 cents higher. And, just this week – at a time when we’ve been seeing some tentative signs of recovery in the global dairy market – the US Government has announced export subsidies for their farmers, which is bad news for our farmers,” he said.

. . . Mr van der Heyden said: “We had expected dairy prices to be bouncing along the bottom at the moment, but the exchange rate has been a big negative. It has a huge influence on the Milk Price forecast when you go into the new season with a large chunk of your sales unhedged, which is always the case at this time of the year.”

“Our hedging policy is designed to take out the volatility and provide as much certainty for our farmers as possible. But as a rule of thumb a 1 cent movement in the exchange rate realised over a year has an impact of about +/- 10 cents per kgMS in the Milk Price, with everything else being equal.”

Federated Farmers Dairy section chair Lachlan McKenzie said the numbers were bleak.

“In the 2006/07 season, it was estimated it took $4.54 to produce one kilogram of milksolids before a farmer turned a single cent in profit.  There’s very little margin.

Input costs followed the payout price up since the 06/07 season and some have come back a bit in the last few months.

Interest rates are lower and so is the price of fuel; Ballance announced a fall in the price of its fertilser last week and Ravensdown followed with a similar announcement this week  so the three big costs on dairy farms have fallen.

However, wages and salaries shot up in the last few years as a steep increase in conversions led to a labour shortage. The shortage has eased but it is very unlikely that wages will have dropped. Employment contracts on dairy farms usually go from June 1 and most will already have been negotiated anyway.

Deutsche Bank thinks Fonterra is being pessimistic:

Fonterra Cooperative Group’s forecast payout for the 2010 season could be overly pessimistic because the kiwi dollar may retreat from a seven-month high, while the global economy slump may be past its worst, according to Deutsche Bank. . .

Deutsche Bank chief economist Darren Gibbs said dairy payouts had come down significantly from the NZ$7.60 peak last season, and that although the dairy cooperative would see weaker revenues, farms would also benefit from cheaper operating costs.

“It could be Fonterra under-promising and over-delivering,” Gibbs said. “The kiwi has extended a long way ahead of commodity prices” and any pull-back would give the dairy exporter more breathing space, he said.

Other commentators are saying the same thing.

Fonterra had to revise its forecast payment down twice this season so the company may be taking a very conservative view so that any change they make will be upwards.

But sensible farmers won’t be banking on that when the revise their budgets for the coming season.

Farmgirl notes its not the news the government would have wanted on the eve of the Budget and that retailers in agricultural servicing towns were already noticing a drop in spending.


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