Rural round-up

31/03/2020

Resuscitating a virus-ravaged economy – the answer lies in the soil and the exports it generates – Point of Order:

Westpac is forecasting 200,000 jobs will be lost in NZ as a result of the response to the coronavirus pandemic.  Chief economist Dominick Stephens estimates economic activity during the four week lock-down would decline by a third, despite the government and the Reserve Bank having “done a lot to calm financial markets”.

Stephens said his feeling was that GDP in the three months to June would fall by more than 10%— “which is completely unprecedented in our lifetimes”.

The  Westpac  diagnosis  reinforces  the argument  advanced  by  Point of   Order   in  one of  its most intently  read  posts:  “After the lock-down the  economy’s  recovery  will be  dependent on dairy farmers and  their  milk”. . . 

Covid 19 coronavirus: It’s essential that agriculture does its bit – Chris Lewis:

To beat Covid-19 those working on the land must do their bit on-farm and off, writes Federated Farmers dairy chairman Chris Lewis.

Just like our hard working medical and emergency services, communications and infrastructure teams, the next four weeks will see farmers and their supporting services continuing to work while most of the country is locked down.

Being away from the high populations of our urban centres is an advantage in a time when we need to limit people contact and for many, business on the farm will largely feel like usual.

But for all of us to beat this, those working on the land must do their bit on the farm and off. . . 

Protocols present harvest challenges – Richard Rennie:

As Covid-19 protocols for essential industry staff become clearer, the kiwifruit sector is facing some tough decisions on how realistic they will prove for this year’s harvest to be successful.

Growers have only one day to go for registration as an “essential business”, and all growers and contractors with over five staff will be required to be registered with Ministry for Primary Industries (MPI). 

Businesses have until 5pm on Friday March 27 to be registered.

Doug Brown NZKGI chairman said he could not reiterate enough the importance of registering under Level 4 Covid-19 rules. . . 

 

Whanganui meat business Coastal Spring Lamb wins another food award – Laurel Stowell :

A second food award is a ray of sunshine amid a time of drought and pandemic for Turakina farmer Richard Redmayne.

He founded and, with farming partners, owns the Coastal Spring Lamb brand. Its lamb backstraps have won a gold medal in the Outstanding New Zealand Food Producers Awards, announced on March 24. Other gold winners in the category were beef and chicken products, and eggs.

The awards are judged 75 per cent on taste, 15 per cent on sustainability and 10 per cent on brand. Judges said the lamb backstraps were “a real class act”, with sustainability built in, consideration for animal welfare and care for the land. . . 

Raw milk rings alarm bells – Richard Rennie:

The increasingly popular and often controversial choice to drink raw milk has had alarm bells ringing among public health officials in recent years. Richard Rennie spoke to veterinarian and researcher Genevieve Davys about her work with Massey University disease experts on the link between raw milk and campylobacter.

Research has revealed children under 10 are most likely to contract campylobacter disease by drinking raw milk and account for 29% of the raw milk-related cases notified in the MidCentral Health district from 2012 to 2017.

The study collected data on all cases of campylobacter notified in that period. It then dug deeper into raw milk campylobacteriosis cases, comparing the demographics of them to other campylobacter cases where raw milk was not drunk.

Raw milk was linked to almost 8% of the notified cases.  . . 

New protocols to keep the shears clicking during the coronavirus emergency – Vernon Graham:

Shearers and shed hands should travel to work in separate vehicles, according to new wool harvesting protocols.

They should only travel together if the vehicle (eg, a bus) is big enough to allow the recommended 1.5 metres spacing between them.

The protocols have been developed in a collaboration between AWEX, WoolProducers Australia, Sheep Producers Australia, the Shearing Contractors Association of Australia and the WA Shearing Industry Association. . .

 


Where will milk price go?

22/05/2014

Fonterra will announce its forecast payout for the 2014/15 season next week.

This graph showing the relationship between GlobalDairyTrade auction prices and the payout give a good indication of where it’s likely to go:

milkgdt

 

 

 

 

 

 

 

The milk price has shadowed the GDT price index until the last few months when the index has fallen but the payout has remained higher.

Even the most optimistic forecasts for the coming season indicate a fall from the 2013/14 record payout.

This graph reinforces that and there’s speculation the new season’s inaugural forecast could be down by more than $1.50, to $7 per kilogram of milk solids (kg ms).  

. . . BNZ economist Doug Steel said a lower payout forecast was unlikely to surprise farmers, given highly visible declines in world prices to date.

Given current price and currency conditions, a milk price forecast somewhere around the $7 kg ms mark seemed plausible, Mr Steel said.

”This [latest decline] fits within our view that dairy prices would be lower this year,” he said in a statement.

Westpac chief economist Dominick Stephens also believed the new season payout forecast next week would be well down, at around $7.10kg ms, while also picking the present season forecast would be downgraded, from $8.65 to $8.50kg ms.

Because the dairy sector carried the majority, or about 65% of all agricultural debt, and half the dairy debt was held by about 10% of all farmers, the Reserve Bank was watching the sector closely, he said. . .

Wise farmers have used this season’s record payout to reduce debt and have been budgeting on a lower payout for the coming season.

 


Employment optimism rising

01/04/2014

Optimism about jobs is at its highest since the GFC:

New Zealand employment confidence has risen in the first quarter, suggesting the labour market is starting to reflect a general upturn in the economy.

The Westpac McDermott Miller Employment Confidence Index rose to 109.4 in the first three months of 2014, from 103.4 in the final quarter of 2013.

The index is now at its highest level since the global financial crisis and ensuing recession although it is still weaker than before the recession hit, according to Westpac chief economist Dominick Stephens.

While households’ perceptions of job opportunities improved to the best reading since December 2008, it is still deeply negative at a net -32 percent from -46.9 percent.

“The fruits of New Zealand’s economic upturn are increasingly becoming apparent to workers and jobseekers,” Mr Stephens said. . . .

Confidence is still weaker than before the recession but the trend is upwards which is encouraging and GDP growth means it is likely to get better.
• Real GDP grew by a robust 0.9% in the December 2013 quarter, and the current account deficit narrowed sharply.
• All signs remain consistent with the economy maintaining significant momentum in the first half of 2014.

• International economic data were broadly positive, despite financial market jitters.

 


Consumer confidence at 4 year high

17/12/2013

The good news continues:

New Zealand consumer confidence rose to its highest level in about four years in the fourth quarter as kiwis turned positive about their own finances and more optimistic their own circumstances will improve in the year ahead.

The Westpac McDermott Miller Consumer Confidence Index rose to 120.1 in December, the highest since the third quarter of 2009, from 115.4 in the September survey. Asked about their own financial situation, of those polled a net 0.4 percent said things had improved, up from -9.4 three months ago. Those expecting further improvement in the next 12 months rose to 12.1 from 9.6.

“With the construction sector ramping up, jobs on the rise, house and share prices soaring, and dairy prices sky high, we would have been surprised to see otherwise,” said Dominick Stephens, chief economist at Westpac Banking Corp. “Households haven’t been this positive about their own finances, or optimistic for the wider economy, in many years.”

The survey results come less than a week after the Reserve Bank gave a clear signal it will start raising interest rates early next year in the face of increased momentum in the domestic economy. The Westpac survey follows the ANZ-Roy Morgan consumer confidence index last week, which recorded the highest reading in almost four years. Business confidence is near a 15-year high.

“If any more evidence was needed that the New Zealand economy is picking up, this is it,” Stephens said.

 The Westpac survey shows the present conditions index improved to 113.1 from 107.6, while the expected conditions index climbed to 124.8 from 120.5

The one-year outlook for the economy as a whole showed the biggest gained between the third and fourth quarters, surging to 27.8 from 14.1. The five-year outlook slipped back to 34.4 from 37.8.

Those deeming it a good time to buy a major household item rose to 25.8 from 24.7.

The survey of 1,569 people was conducted between Dec. 1 and Dec. 10.

A vehicle dealer told me that last year was a good one and this year is even better. National sales are up 10% and North Otago sales are up 40%.

He credits irrigation with making the difference here.

He said it’s not just farmers who are buying new vehicles. Trades people who are benefiting from the building which has come in the wake of the irrigation are too.


Hager’s Hollow Horror

05/07/2008

John Roghan  says Nicky Hager is carving out a new career in disingenuous political naivete.

Not content with a book based on Don Brash’s emails, since brought to the stage and soon to be a movie too, Hager is running a sequel on the discovery that some of the same “hollow men” are consultants to John Key.

The fact that someone in the National Party must be passing this material to Hager is far more interesting than the use he is making of it, and I have no objection to his using it.

I agree that where the material comes from is the more interesting, and for National, more serious point.

…email, I think, is fair game. A fair reporter, though, could reveal what he learns without feigned horror at the fact that people running for public office hire consultants who try to conceal some of their intentions during an election campaign.

Parties of all stripes are coy on some subjects before an election for good reasons.

The public interest can be greater than the sum of personal interests, sometimes even in conflict with direct personal gains. It is easy to sell benefits to a section of the electorate, harder to explain how the benefits hurt a country in the long run.

Some are minority interests that should be advanced in the national interest. Hager should ponder how much progress Maori would have made in recent decades if every step in their recognition had been an election issue.

Quite.

Public debate usually favours the status quo. Not much could ever be done if every decision was put to the electorate for a prior mandate.

Take the present Government’s biggest economic moves, KiwiSaver and, this week, KiwiRail, which I don’t remember being canvassed, with all their costly implications, at elections beforehand.

Had Labour given an inkling at the last election of the premium they have had to pay to re-nationalise the railway, and the fortune it is going to cost to cover its likely losses, National’s last campaign would have feasted on the information.

If only.

But now that the deed is done, the politics have changed. The purchase is the status quo and National will not dare put re-privatisation before the electorate this year, though that may be what it ultimately does with the trains if not the tracks.

Yep – once something is underway it is difficult to change it, even if it’s because sometimes bad policy is good politics.

Likewise KiwiSaver, a year old this week. At the last election the savings scheme was an essentially voluntary proposal. The following year it was to become compulsory for employers and acquire some costly enticements of dubious economic value.

Not long ago my employers wound up my company super fund. I couldn’t blame them; from April they had to contribute to KiwiSaver if staff favoured it. And who of us were going to turn down Cullen’s $1000 handout and tax credits?

The scheme celebrated its first birthday on Tuesday with 718,000 members – more than double the number predicted in the first year. The only people complaining about it are those annoying economists who see the difference between individual gains and the national welfare.

They fear the scheme will not add to total personal savings, merely displace previous savings schemes.

In the Herald last weekend Maria Slade reported an estimate that as little as 9 per cent of the money in KiwiSaver accounts so far is new saving, a percentage the researcher reckoned would not cover the administration and compliance costs of the scheme.

Is anyone surprised by this?

Westpac economist Dominick Stephens said KiwiSaver had cost the taxpayers $497 million in its first 11 months, an amount that could have added to national savings if it had been left in the Budget’s fund for future public pensions.

Even that fund is questioned by some savings professionals who point out that a superannuation scheme is only as good as the future economy that will have to pay out. From that point of view, the best retirement insurance is the investment made in the economy today.

And not just retirement – health, education and every other service will be more secure in the future if we strengthen the economy now.

Anyone who believes that the best investments are made by those who stand to lose if they get it wrong would argue the economy would be stronger in the long run if the KiwiSaver incentives were turned into personal tax cuts.

And yes again.

Nevertheless, National will have to keep the scheme now that it is replacing private savings on such a scale. The best the party can do is continue to avoid saying whether it will keep the incentives.

It will not be easy, and should not be easy; it is the job of political opponents and the press to pin all policies down. But adroit tacticians can keep the options open and enable a government to come to power with room to move in the national interest. Voters, I think, understand this. They don’t need horrified disclosures that it happens. It is the horror that sounds hollow.

Exactly. National has learnt from the damage done by stupid promises made by Jim Bolger before the 1990 election; and Helen Clark has too which is why she keeps trying to under promise and over deliver.

Parties should be upfront about their philosophy, principles, general  policy, and – sometime before an election – some detailed policy. But they can’t be specific about everything because, once a party is in Government it must have room to adapt to events and circumstances.


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