Rural round-up

Te Kuiti man smashes new world lamb shearing record –  Jessica Dermody :

On Tuesday, Taihape teen Reuben Alabaster broke Irish shearer Ivan Scott’s record of 744 lambs set at Opepe (near Taupō) in 2012. He did so in the dying minutes, setting a new record with a total of 746.

But just two days later, Te Kuiti’s Jack Fagan etched his own name in the record books, shearing 754.

A record that’s been held for a decade, has now been broken twice in one week.

Starting at 7am on Thursday at Puketiti Station near Pio Pio, Fagan made Alabaster’s hold on the record a short one. . .

Govt emissions will lead to production loss and leakage – DCANZ – Peter Burke :

The Dairy Companies Association of NZ (DCANZ) says it’s disappointed at the Government’s response to the He Waka Eke Noa partnership proposal.

Executive director Kimberly Crewther says the Government’s proposal is fundamentally different to what He Waka Eke Noa (HWEN) put forward. She says DCANZ has raised concerns about how the changes made are pushing a system that achieves a reduction by cutting dairy production.

“In our view, [the proposal] holds a very strong risk of emission leakage, being counterproductive to the global emissions reduction outcomes that we are trying to contribute to,” she told Rural News.

Crewther says the agricultural sector had worked hard to come to a consensus, which took into account a broad range of considerations. This included taking advantage of the opportunities that exist in NZ and managing the risk of undue economic impact on rural communities – especially if that involves cuts to production in NZ. . .

The signs look ominous – Sudesh Kissun:

Prices fetched by New Zealand’s primary produce are facing clear downward pressure as economic conditions deteriorate offshore.

BNZ senior economist Doug Steel says the signs are looking more ominous.

However, he believes strong balance sheets, thanks to several years of strong commodity prices, should help farmers navigate a looming recession.

Steel points out that over the past six months global dairy prices have dropped 19%. . .

Had a chance to visit a sheep farm on the North Island + as much as I love the Canterbury plains it was nice to look at some green hills. Postcard pretty.

The scale of it is amazing. 17,000 breeding ewes on this farm. Was awesome. pic.twitter.com/5LQvUvAStG

— Will McLean (@thenameismclean) December 20, 2022

Hunting, shooting, fishing – and Covid – Neal Wallace :

Diversification has taken on a whole new meaning for Richard and Sarah Burdon of Glen Dene Station at Lake Hawea in Central Otago.

An initial investment in a guided hunting and fishing business was designed to assist with farm succession, but when the adjacent Lake Hawea Camping Ground came up for sale in 2009, they saw it as another vehicle for greater control over their affairs.

Income from those off-farm investments disappeared with the arrival of covid in 2020, and they had to look again at what diversification meant to them. It came to describe diversity of thought and the strategy and planning needed to ensure their businesses survived.

“We lost all our income from the camping ground and hunting and it took an enormous amount of working through contracts and realigning our business,” said  Richard. . .

End of an era for the Mt Ida musters – Neal Wallace :

For 125 years, access to summer grazing on Central Otago’s Hawkdun Range has been a relief valve for a group of Maniototo farmers.

That all comes to an end in 2025 when stock are excluded from the land, now part of the Oteake Conservation Park.

The syndicate’s origins lie in a horrendous snowstorm in the 1890s and the ensuing stock losses  that drove the runholders of the Eweburn and Hawkdun stations off their properties. 

“When they mustered the sunny country on the Eweburn, they didn’t have enough sheep to pay the wages, so they walked off,” said syndicate shareholder and secretary Grant Geddes. . . 

Merry Christmas to all and have a safe one pic.twitter.com/KSm0yCe0kI

— KIrk Jeitz (@kirk_jeitz) December 21, 2022

Eminent vet Lord Trees backs gene editing for healthy livestock :

Given my interests as a veterinarian, indeed the only vet in the House of Lords, my contribution to the second reading debate of the Genetic Technology (Precision Breeding) Bill focused on its potential implications for animals, particularly in terms of disease resistance, the environment and animal welfare.

These are overlapping issues for which, in my opinion, there is huge potential for positive effects with the adoption of new breeding technologies such as gene editing.

I share passionately the concerns raised during the debate by a number of peers about the need to safeguard animal welfare and to prevent animal abuse and suffering. Importantly, however, these concerns are not unique to this Bill.

Legislation already exists to cover laboratory, breeding and on-farm welfare issues, which would apply to precision-bred animals, as I will discuss. . . 

 

Rural round-up

Primary sector exports defy challenges – Sudesh Kissun:

Primary sector exporters, take a bow.

Despite major challenges, New Zealand primary sector exports are holding up well. And it’s not just dairy products leaving our ports in droves – beef, apples, kiwifruit, wine and sheepmeat are also being shipped out.

According to BNZ’s latest Rural Wrap, NZ primary sector exports have been impressively resilient to the massive global economic shock over the past 12 months.

BNZ senior economist Doug Steel points out that exporters have been facing considerable challenges – many of which are ongoing.

Critical worker shortage on dairy farmers will take a toll:

Federated Farmers is deeply disappointed the government’s exception announcement today shows it could not find a way to bring 500 desperately needed skilled dairy employees into the country.

Feds believes the pressure some farming families are now under, due to a severe lack of people to work on farms, is already taking a toll on stress levels, wellbeing and health.

“Farmers have been telling us for well over a year there is a real shortage of suitable dairy staff,” Federated Farmers employment and immigration spokesperson Chris Lewis says.

“I am getting daily calls about the labour situation and many farmers don’t know what to do for the coming season. . . 

New Zealand horticulture industry welcomes Government’s decision to bring in more workers from the Pacific:

The New Zealand horticulture industry has welcomed the Government’s latest move to increase the flow of workers from the Pacific, in support of the Recognised Seasonal Employer (RSE) scheme. 

‘Pacific workers are an integral part of the horticulture industry’s seasonal workforce, particularly for harvest and winter pruning.  They make up the shortfall in New Zealanders while at the same time, enabling the horticulture industry to grow and employ more New Zealanders in permanent positions,’ says HortNZ Chief Executive, Mike Chapman. 

‘Indeed, over the past decade, the New Zealand horticulture industry has grown by 64% to $6.49 billion while in 2019, before Covid struck, more than $40 million was returned to Pacific economies through the RSE scheme.  . .

Teatsealing heifers with a bit of goat assistance @VetSouthNZ pic.twitter.com/g23fobSKsF

— Anieka Templer (@AniekaNick) May 9, 2021

Silver Fern Farms creates opportunities for young people to succeed in the red meat industry :

Silver Fern Farms will launch their search for the future stars of the red meat industry in the coming weeks, with applications opening for the Plate to Pasture Youth Scholarships and the Silver Fern Farms Graduate Career Programme.

Since 2017 Silver Fern Farms has invested $130,000 to further the careers of young people through Plate to Pasture Youth Scholarships, and has also placed nine young people in roles around the business in the Graduate Career Programme.

Silver Fern Farms Chief Executive Simon Limmer says the Plate to Pasture Youth Scholarships and the Graduate Career Programme reiterates the commitment Silver Fern Farms has to developing young people and their careers. . .

Alternative proteins industry has huge potential but lacks direction – report – Maja Burry:

New Zealand’s alternative proteins sector has huge potential, but is fragmented and lacks clear leadership, according to a new report.

The report was done by FoodHQ, a group which represents the country’s food innovation organisations, and was based on input from 185 people working in the broader sector. Products considered to be emerging proteins include plant-based foods and beverages, insect foods and lab-grown proteins.

FoodHQ chief executive Abby Thompson said while there was huge potential to meet global demand for emerging proteins, the industry faced significant challenges.

“New Zealand is currently missing a co-ordinated approach that is going to help drive some of addressing infrastructure gaps that is going to really help with the attraction and retention and development of talented scientists, technologists and entrepreneurs who can really drive some of this stuff.” . .

A few loads of pine chip ready for delivery pic.twitter.com/bbodND9RuY

— ᖇOᗪ ᗰᑌᒪᒪIᑎ 🌱🐄🥛🥩 (@RodMullin) May 10, 2021

New technology brings vegetables centre stage:

The Ministry for Primary Industries (MPI) is enabling New Zealand to tap into the growing market for plant-based products, where vegetables feature as a ‘centre of the plate’ item.

A diverse range of new processed vegetable products is now available on the market, thanks to $147,000 investment from MPI’s Sustainable Food and Fibre Futures (SFF Futures) fund – and more innovation is under way.

The two-year project led by Food Nation, which kicked off in mid-2019, aimed to develop a range of plant-based ‘meat alternative’ foods using mushroom seconds and an array of other more novel plants.

One year on, it has made some exciting progress. . . 

Rural round-up

Farmers worried about ‘economic situation’ – David Anderson:

Farmers remain cautious and even wary – despite the sector having done reasonably well during the COVID-19 pandemic – according to the latest rural report from the BNZ.

The bank’s Rural Wrap report, published earlier this month, says this should not really surprise anyone.

“A global pandemic simply demands vigilance from a sector that sells the bulk of its produce into offshore markets.”

Report author and BNZ economist Doug Steel says farmers the ‘economic situation’ has been catapulted up the list of farmer worries – after being well down the list in previous surveys. . . 

M bovis investigations for 28 more farms after milk tests – Maja Burry:

Bulk milk testing for Mycoplasma bovis has this month picked up 28 dairy farms requiring further investigation.

Figures from the Ministry for Primary Industries show there is just one farm actively infected with the cattle disease at the moment, and a further 249 farms have been culled of their stock and declared safe to repopulate.

The Ministry’s chief science advisor, John Roche, said the 28 farms detected in this month’s national milk screening had been placed under restricted movement controls while more accurate testing was carried out.

Dr Roche said less than 3 percent of farms detected through screening last year ended up being positive for M bovis. . .

A couple of weeks out from lambing, set up well at this stage. Best job there is! pic.twitter.com/5nRLx1EBd6

— Paul Ensor (@PaulEnsor1) August 25, 2020

FMG grows in complexity and clients – Hugh Stringleman:

FMG made a net profit of $6.1 million in the 2020 financial year and added 6000 clients to its books, the total now numbering 94,300.

Chair Tony Cleland, who sought re-election as a director this year in a crowded field of candidates, said the growth rate was twice that of other insurers.

“While we are not trying to be the biggest, but the best, growth in numbers does lower the unit cost of delivery per client,” he told the mutual group’s online annual meeting.

FMG’s goal is to bring the operating cost from 31% to 25% of premiums over the next 10 years. . .

Abbie reynolds to head Predator Free 2050 Limited:

Predator Free 2050 Limited has appointed Abbie Reynolds as its new CEO

Abbie Reynolds is the former Executive Director of the Sustainable Business Council and in that role helped establish the Climate Leaders Coalition, motivating more than 100 member organisations to climate action.

She received the Board and Management Award at the 2019 New Zealand Women of Influence Awards.

She has also held senior roles in telecommunications as Head of Corporate Responsibility at Telecom and Head of Sustainability and Foundation at Vodafone New Zealand. . . 

Waiting waiting waiting for my shorthorn babies to arrive. pic.twitter.com/gMs5IrHSCW

— Anieka Templer (@AniekaNick) August 25, 2020

New startup supports local Kiwi artisan producers:

New Zealand online startup, The Kiwi Artisan Co, selects the finest small batch artisan goods for food lovers nationwide, supporting and celebrating local independent producers from Southland to Central Otago, Canterbury to Nelson, and Hawkes Bay to Northland.

The artisans, specifically chosen by The Kiwi Artisan Co, handcraft their goods from locally sourced, high quality ingredients in small batches using sustainable production processes. The thoughtfully curated range of delectable sharing platter boxes are tailored to individual tastes and dietary requirements.

Each online order received at kiwiartisan.co.nz is hand packed and delivered direct to your door, making it easier for foodies to entertain, connect and discover the real taste of New Zealand with friends and family. . . 

Uzbekistan’s cotton farms turn to Aussie irrigated farming know-how – Andrew Marshall:

Far from his family farming operation on the NSW-Queensland border, former National Farmers Federation boss Peter Corish is co-ordinating an Australian team leading a multi-million dollar irrigated cotton and grain cropping revamp in Uzbekistan.

In what was a totally unexpected and unusual request two years ago, Mr Corish was called in to help a massive private farming venture adopt Australian cotton growing technology and techniques in the land-locked communist Central Asian country. 

Over the next 18 months, as drought conditions at home kept his own family’s cropping activity in a lull, the advisory job took him back and forth to the former Soviet state 14 times. . . 

Bringing it to the table – farming women who mean business:

Sarah Louise Fairburn has told her empowering story of her role in making one of the UK’s largest egg producers the success that it is today.

It follows the launch of #AgriWomen24 campaign in June, which aims to celebrate women in agriculture.

Sarah Louise’s journey began when she worked as a business improvement driver for Yorkshire Bank and her paths crossed with Daniel Fairburn – who had been in farming all his life at L J Fairburn & Son Limited.

After getting married and having children together, she began helping around the farm, only to realise that as the business grew, so did the need for her to become more involved. . .

Rural round-up

Farmers ask government to align domestic, international emissions target – Eric Fryberg:

Two major farming groups have urged the Climate Change Commission to align New Zealand’s domestic policy with its international promises on climate change.

Dairy NZ and Beef and Lamb said it did not make sense for the government to do one thing within New Zealand and something else for the rest of the world.

Their concern was based on the relative importance of different greenhouse gases.

Domestically, the government has legislated a different emissions reduction target for long-lived gases like carbon dioxide, compared with a short-lived gas like methane. . .

Fonterra Dairy Woman of the Year finalists reflect depth and diversity in the industry:

Three woman contributing to the dairy industry in very different ways are this year’s finalists in the Fonterra Dairy Woman of the Year award.

Ngai Tahu Farming Technical Farm Manager Ash-Leigh Campbell from Christchurch, Auckland based microbiologist and bio chemist Natasha Maguire and West Coast dairy farmer Heather McKay are all in the running for the prestigious dairy award managed by the Dairy Women’s Network being announced early next month.

Dairy Women’s Network Trustee and a member of the awards judging panel Alison Gibb said all three finalists came from such different directions and perspectives which highlighted the depth and diversity of how women are contributing to the dairy industry in New Zealand. . . 

Ag exports a ‘godsend’ – Pam Tipa:

Primary product prices will fall further this year but remain at reasonable levels before some improvement in 2021, according to BNZ senior economist Doug Steel.

However, the falls – so far this year – have not been as much as might have been expected, he says.

“The defensive qualities of NZ’s food-heavy export mix may well be a Godsend for the economy as a whole during the current turmoil. If nothing else, it is easy to imagine a new-found appreciation for where our food comes from,” Steel told Rural News. . .

Sorted up the #MangaRa ewe hoggets today for mating. Here is a snapshot of some of our short-tail #Ezicare sheep. The next generation will be the 1st with any selective breeding, and with a trait that is 70% heritable, we are looking forward to a bit more progress. pic.twitter.com/LWFsyL4wxd

— William Morrison (@MorrisonFarming) April 28, 2020

Ritchie instrumental in driving positive change for red meat sector – Allan Barber:

Tim Ritchie came into the Meat Industry Association as CEO at the end of 2007, initially intended to be for an 18 month period, and retired earlier this month over 12 years later. His first task was the planned merger of the processor representative organisation with Meat & Wool, the forerunner of Beef + Lamb NZ, which was strongly promoted by Keith Cooper, then CEO of Silver Fern Farms, and Meat & Wool chairman, Mike Petersen.

The merger was doomed to fail after dissension among the processors, some of which failed to see how the two organisations, one a member funded trade association and the other a farmer levy funded body, could possibly work as one. History has clearly shown the logic behind the eventual outcome which has seen MIA and B+LNZ each carving out a clearly defined role to the ultimate benefit of the red meat sector. . . 

Cautious optimism over apple exports – Peter Burke:

NZ Apples and Pears says while it’s early days yet, apple export volumes for this year are only slightly behind last year.

Alan Pollard, chief executive of NZ Apples and Pears, says so far there has only been 25% harvested, but the signs are encouraging and he’s cautiously optimistic.

He’s predicting that it may be a reasonable year, but not a great year. . .

https://twitter.com/RozMackenzie/status/1255295540293763074

An historic month:

Data released today by the Real Estate Institute of New Zealand (REINZ) shows there were 50 less farm sales (-15.1%) for the three months ended March 2020 than for the three months ended March 2019. Overall, there were 281 farm sales in the three months ended March 2020, compared to 329 farm sales for the three months ended February 2020 (-14.6%), and 331 farm sales for the three months ended March 2019. 1,216 farms were sold in the year to March 2020, 15.9% fewer than were sold in the year to March 2019, with 32.6% less Dairy farms, 14.3% less Grazing farms, 26.1% less Finishing farms and 14.1% less Arable farms sold over the same period.

The median price per hectare for all farms sold in the three months to March 2020 was $21,130 compared to $23,383 recorded for three months ended March 2019 (-9.6%). The median price per hectare increased 2.7% compared to February 2020. . . 

Rural round-up

Beef + Lamb New Zealand calls for tailored approach towards emissions:

Beef + Lamb New Zealand (B+LNZ) welcomes the government’s commitment to setting a new carbon target and considering accounting for the differing contributions of specific livestock emissions as consultation on proposed Zero Carbon legislation gets underway.

“With severe weather events like droughts and floods becoming more frequent, sheep and beef farmers feel the impacts of climate change first hand and are aware of the challenges climate change brings”, says B+LNZ CEO Sam McIvor. “We know that everyone has to do their bit to meet this challenge, and as a sector we’ve already reduced greenhouse gas emissions from livestock by 30 per cent since 1990.

“We’ve also set the target for our sector to be carbon neutral by 2050 as part of our new Environment Strategy and we’re progressing a range of actions to help build on the good work that farmers are already doing. . . 

Gas differences recognised in Zero Carbon consultation:

Federated Farmers is heartened that impacts on the economy, and the difference between short and long-lived greenhouse gases, are becoming more prominent topics in our discussions about global warming and climate change.

Some of the choices and challenges in front of New Zealand get an airing in the Ministry for the Environment’s consultation document on the Zero Carbon Bill, the Federation’s Climate Change spokesperson, Andrew Hoggard, says.

“It’s a positive that the ‘Our Climate, Your Say’ document, released today, recognises that methane from livestock is a recycling, not accumulating, greenhouse gas. Methane has a half-life of around 12 years, whereas carbon dioxide stays in the atmosphere for hundreds of years. . . 

Economists concerned by risks of ‘M. bovis’ – Sally Rae:

Economic risks associated with Mycoplasma bovis are rising, economists say, and a beef farm in Ranfurly is one of the latest properties confirmed with the disease.

Last week, it was announced eradication would be attempted, at a cost of $886million, and entailing slaughter of a further 126,000 cattle.

In BNZ’s latest Rural Wrap, senior economist Doug Steel said there was much more to it than the initial impact on production from culling cows. . . 

Devold role continues a passion for wool – Sally Rae:

Craig Smith’s passion for wool never dims.

After about 28 years in the wool industry, Mr Smith remains a staunch advocate for the natural fibre, which he described as “the most amazing product in the world”.

This month, Mr Smith — previously business development manager at PGG Wrightson Wool — began a new job as general manager of Devold Wool Direct NZ Ltd.

Devold is a Norwegian-based high performance wool clothing brand which dates back to 1853, when its founder came up with the idea of knitting wool sweaters for fishermen. It celebrated its 165th anniversary last weekend. . . 

Beef + Lamb New Zealand proposes levies increase to meet future challenges:

Beef + Lamb New Zealand (B+LNZ) today launched consultation on a proposal to increase sheepmeat and beef levies to accelerate investment in a range of key programmes.

B+LNZ is seeking farmers’ views on the plan to increase the sheepmeat levy by 10 cents to 70 cents per head and the beef levy by 80 cents to $5.20 per head.

If adopted, the rise would mean an average sheep and beef farm would pay an additional $260 per annum and an average dairy farm an extra $55 per annum. . . 

Congratulations to former FAR CEO Nick Pyke who received the Arable #Biosecurity Farmer of the Year Award, and also to arable farmer Syd Worsfold, who was honoured as Arable Farmer of the Year at yesterday's @FedFarmers conference in Timaru 👏🏼🏆#nzarable #agchatnz pic.twitter.com/SpFwr4IwtV

— Foundation for Arable Research (NZ) (@FARarable) June 6, 2018

Arable Industry Honours Two of its Finest:

A leading advocate for biosecurity and a 30-year contributor to organisations that support growers were honoured at the Federated Farmers Arable Industry conference in Timaru yesterday.

Former Foundation for Arable Research (FAR) CEO Nick Pyke was presented with the Federated Farmers Arable Biosecurity Farmer of the Year Award and North Canterbury farmer Syd Worsfold was named Federated Farmers Arable Farmer of the Year in recognition of his contribution over the last three decades to the arable industry and stakeholder groups, Federated Farmers, FAR and United Wheatgrowers. . . 

Belted Galloways overlooking Littondale. pic.twitter.com/2XX59aiiid

— Hill Top Farm (@hilltopfarmgirl) June 6, 2018

Helping dairy farmers avoid FEI penalties with supplementary feed:

It’s three months away but New Zealand dairy farmers are already preparing for the impact of Fonterra’s new fat evaluation index (FEI) grading system, which comes into effect on September 1.

Fonterra established the FEI test to measure the fat composition in the cow’s milk it collects, to ensure it is suitable for manufacturing products that meet customer specifications.

The use of palm kernel expeller (PKE) as a supplementary feed has been identified as a key influencer on high FEI levels in dairy milk. A by-product of the palm oil extraction process from the fruit of the palm, PKE has become increasingly popular as a feed option in dairying, due to its relative low cost. However, high use of PKE can impact the fatty acid profile of milk, and has led to manufacturing challenges for Fonterra with certain products. . . 

Where will milk price go?

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:

 

 

 

 

 

 

 

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.

 

The manufactured crisis

Remember the manufactured manufacturing crisis the opposition spent so much of their energy and our money on last year?

The news on it is bad for them but very good for the rest of us:

New Zealand’s manufacturing sector started 2014 on a healthy note, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for January was 56.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). The sector has now been in expansion for 16 consecutive months, with the last six months also averaging 56.2.

BusinessNZ’s Executive Director for Manufacturing Catherine Beard said that despite the usual seasonal effects of Christmas and the holiday season, the sector has begun the way it finished off 2013.

“Positive comments from manufacturers revolved around a growing confidence by consumers, further gains in building construction and continued high levels of new orders, both domestically and offshore. In particular, the metal product sector is currently benefitting from the strong residential construction boom, which will no doubt continue for some months to come.”

BNZ Economist Doug Steel said it would be easy to understand if the PMI had lost a bit of heat in January, given the hefty lift in the NZD/AUD exchange rate. But the PMI has barrelled on, as domestic demand strengthens. . . .

This provided the opportunity in Question Time yesterday:

Hon STEVEN JOYCE: Of the 16 different industries measured by the household labour force survey, employment rose in 11, including manufacturing, which does debunk another myth often heard around this building. There is no doubting that the high New Zealand dollar is a challenge for exporters, but the January Performance of Manufacturing Index, which was released today, shows manufacturing has now been in expansion for 16 consecutive months, which is, weirdly, precisely the exact same time since the Opposition announced the start of its inquiry into a manufacturing crisis. I quote from the Performance of Manufacturing Index today, which says that manufacturing punched above its weight regarding job growth in 2013. It accounted for 13.5 percent of jobs added in the New Zealand economy overall last year, which is more jobs than were added in Australia in the same period. . .

There is a cloud on the horizon though:

Hon STEVEN JOYCE: . . .  The Government has more than 350 initiatives under the Business Growth Agenda that are helping businesses grow, because that is how employment grows. I contrast this with policies that would put a chill on industries, that would cause their hiring intentions to freeze, and companies themselves might not even survive—for example, if you nationalise the electricity industry or double the cost of the emissions trading scheme on households and businesses, or if you impose new taxes on every single business in the country. . . .

The left demonise business without realising its the goose that lays the golden eggs of employment and economic growth.

The recovery is real but it’s not yet robust and a change of government with policies that would undermine business confidence could easily reverse the hard-won progress that’s being made.

 

 

 

Not a manufacturing crisis

New Zealand manufacturing expanded at the fastest pace in eight months in January, but employment in the sector is shrinking.

The BNZ-Business New Zealand Performance of Manufacturing Index climbed 4.8 points to 55.2 last month, the highest since May last year and the highest for the month of January since 2007.

The survey showed the strongest sector within manufacturing was in non-metallic mineral products, which stood at 77.5 and probably reflected demand for concrete, especially for the Christchurch rebuild, said Bank of New Zealand economist Doug Steel.

“Over the coming years we anticipate the positive flow-on effects of a stronger construction sector, and not only in Canterbury, to broaden to other parts of the manufacturing sector,” Steel said.

Production was the strongest of the five seasonally adjusted diffusion indexes within the PMI, with a reading of 57.7 last month, the survey shows. On the PMI scale, a reading of 50 separates contraction from expansion.

Deliveries were at 57.6 and finished stocks on 56.1, the highest since October 2007. New orders rose to an eight-month high of 55.8.

By contrast employment slipped to 48.4, marking the eighth straight month of contraction.

Manufacturing is expanding but jobs in the sector are declining.

That shows that, contrary to claims by  Opposition parties which are wasting money on an inquiry into the manufacturing “crisis” that there is no crisis in manufacturing.

The problem is in employment.

If manufacturing is growing while jobs are declining it suggests growth in productivity which is good but it is often based on improved technology and more mechanisation.

The down-side of that is fewer people are required for the work.

The solution isn’t to subsidise manufacturing it’s to help train people for different jobs.

The rise in the New Zealand PMI contrasts with that in Australia, which sat at just 40.2 in January, for the widest gap between the two nations since the New Zealand index was started in 2002.

This might seem like good news for those focussed on Trans-Tasman rivalry.

But Australia is our biggest trading partner and any indication its economy is faltering is a concern for us.

 

 

Rural round-up

Heaps of grass has helped agriculture grow three times as fast as the overall economy. Doug Steel wonders if this may even understate how well the rural sector is doing, given how the numbers were analysed in 2007/08 – Doug Steel:

Like blood to the body, agriculture is critical to the NZ economy.

The sector makes economic contributions in direct and indirect ways, although measurement of such can be a tricky business.

The latest national accounts show agriculture GDP growing 7.5% through the year to March 2012. This supported the 2.4% expansion in the New Zealand economy over the same period. . .

Massive Chinese market for red meat market – Sally Rae:

The importance – and potential – of China as a market for the red meat industry was reiterated during the recent red meat sector conference in Queenstown.   

 Arron Hoyle, McDonald’s senior director and head of strategy in China and Hong Kong, said the dragon was redesigning  global trade and global prices.   

He spoke of the “unprecedented” urbanisation in China, the emergence of mega cities and the significant opportunities      the fast food chain saw. It was bullish and very excited      about those opportunities. . .

Sector strategy shows encouraging signs – Sally Rae:

Meat Industry Association chairman Bill Falconer believes the red meat sector strategy has been “settling down extremely well” since its launch 14 months ago.   

The strategy, initiated by the MIA and Beef and Lamb New  Zealand, was aimed at improving the sector’s viability and      increasing its earnings from $8 billion to $14 billion by  2025. . .

Aim for first place: chairman:

NZPork chairman Ian Carter has challenged those attending the  industry’s annual conference to recognise themselves as “the best little pig industry in the world”.   

    “Pork is the world leader in animal protein, but only number three in New Zealand.   

    “Our target must be first place,” Mr Carter, a North Otago farmer, said. . .

Clutha dairy earnings climb – Shawn McAvinue:

Sheep and beef farmers were the biggest agricultural earner in the Clutha district but dairy farmers were a close second.

The latest statistics from the Clutha Agricultural Development Board (CADB) says sheep and beef farming earned $313 million and dairy farming $276m for the year ending June 2011.

However, a steady five-year growth spurt in dairying had the Clutha herd increasing by 30 per cent to 98,543 cows. In the same period sheep numbers dropped 14 per cent to about 2.17m. . .

2013 Ballance Farm Environment Awards Opening Soon:

Entries for the 2013 Ballance Farm Environment Awards open on August 1, 2012.

Administered by the New Zealand Farm Environment Trust (NZFE) and operating in nine regions, the annual competition promotes sustainable land management by showcasing the work of people farming in a manner that is environmentally, economically and socially sustainable.

Entry forms for the 2013 competition are available from the NZFE website at http://www.nzfeatrust.org.nz

NZFE chairman Jim Cotman says this website has been upgraded to make it easier for farmers to find information on the Ballance Farm Environment Awards and the Trust’s other activities. . .

High food prices good for NZ

Quote of the week:

At times of rising food prices, the rest of the world must look at NZ  and see strong growth prospects, and the benefits from the world buying our products at higher prices are shared across the economy. The NZ dollar tends to follow broad movements in international commodity prices. Among the benefits of this are lower prices for imported goods, leaving more money to be spent elsewhere. In the upshot, the effect of high international foodprices is a net positive for the economy. “To think otherwise, would be like thinking higher oil prices are  a negative for Saudi Arabia. It would just not make sense.”  Economist Doug Steel in Trans Tasman.

White gold tarnished

At the start of last year sheep and beef farmers looked enviously at the returns dairy farmers were enjoying and aimed to get prices for meat, wool and other by-products which matched those from milk.

The gap between sheep and beef returns is closing on those from dairying but that owes more to the fall in the price of milk than improved prices from cattle and sheep.

Fonterra has already announced a drop from its opening forecast of $6.60 a kilo of milk solids for the season to $6 and is expected to announce a further fall at the end of the month.

The average price the company got at its internet auction  on Tuesday was $US2017 ($NZ3420) per tonne which was 9.3% less than the average in December.

The only glimmer of hope is a small rise in spot prices which might indicate prices are reaching the bottom of the cycle but that’s small comfort when the global price for milk, which peaked at the end of 2007, has fallen sharply  since September last year. 

The state of global commodity markets isn’t the only problem facing Fonterra which just 12 months ago was being held up as the example the sheep industry should follow as the benefits from the white gold flowed through rural communities and into the wider economy.

The on-going fallout from its investment in Sanlu, one of the company’s hardest hit by China’s poisoned milk scandal continues. Sanlu was declared bankrupt  by a Chinese court on December 24th and the way the company has handled the issue doesn’t give me any confidence that it has learnt enough to ensure success in any future investment in China.

However, the financial losses from the Sanlu investment have already been taken into account and disappointing as Fonterra’s payout is expected to be it’s unlikely to fall as far as that of Westland Dairy Co-operative. It’s  reduced its forecast payout   for the season from the $5.20 to $5.60 a kilo of milk solids announced in November to $4.10 to $4.50.

Making matters worse is Westland’s decision to backdate the forecast meaning suppliers have to pay back money already received.

The reduced payout will mean suppliers will receive $180 million less than expected.

To bring that down to an individual farm: the owner of a 350-cow herd received $90,000 for his milk from Westland last month and had budgeted on getting $120,000 for January but is now expecting just $30,000.

Lincoln University professor Keith Woodford  said that given Westland’s position that Fonterra is unlikely to to achieve a payout of more than $5.

Westpac economist Doug Steel has a more positve view and thinks Fonterra could still achieve a $6 payout.

However, the company could do well to follow the advice given to politicians to under promise and over deliver because a lower forecast might help to stabilise or even reduce some of the production costs which rose further and faster than last season’s record payout.

The whitegold has tarnished but most commentators are still confident that the longterm outlook for dairying is positive for those who are able to farm there way through the current lower returns.

Established farmers with good equity will be disappointed by the drop in income and may have to tighten their belts but it shouldn’t threaten their businesses and they’ll be helped by the fall in interest rates and the cost of fertiliser and fuel.

Those most at risk are the ones who have just converted or are in the process of converting for next season who bought land and stock at peak prices; and sharemilkers who bought cows in the middle of last year when values were highest.

However, while the payout obviously has a big impact on financial performance it’s not the only factor to affect profitability.

A speaker at a SIDE (South Island Dairy Event) conference a couple of years ago said he’d had a better result for the year when the payout fell to $3.60 than he had the previous season when it was above $5 because he’d kept a tighter rein on costs when the payout was lower.

P.S. – Cactus Kate, Macdoctor  and Inquiring Mind have posts on Fonterra and Sanlu; and Fran O”Sullivan  is not impressed by the way the company has handled the issue.

Land price lifts 209% in 6 years

The price of farmland has risen 209% in the past six years accroding to Westpac economist Doug Steel.

Prices were expected to peak in 2007-08, as they did in previous cycles, in 1989-90 and 1995-96, followed by a trough in 2001-02.

It was not surprising that land suitable for dairying had led the increase given the rise in dairy prices, but Mr Steel said product prices, as they related to land prices, ignored the influence of productive capacity, future returns and the cost of production.

But the two did correlate, evident by Fonterra forecasting the milk price well ahead of the season and the impact that had underpinning land values.

“Fonterra’s early forecast of $7 a kg milk solids has given confidence to the market that high dairy payouts are going to be around for the next 12 months.”

Elevated land prices also reflected confidence in the dairy sector.

Mr Steel said dairy production had increased considerably in the past decade, and milk solids per hectare had increased by a compound rate of 2.6% a year, reflecting more more cows per hectare and also more milk solids per cow.

But Mr Steel said research showed that the top 10% of dairy farmers in the 2006-07 season were producing 25% more milksolids per hectare than an average operator.

Similarly, sheep production had improved markedly.

Lambing percentages had risen from 105% in the mid 1990s to over 120% now.

Looking ahead, Mr Steel forecast a milk payout for the coming year of $7.10 a kg m/s but revised down to $6 from $6.30 his predicted payout for 2009-10.

. .  . The return of US beef to Asia had also put pressure on prices, but growing demand from Russia was supporting prices.

Mr Steel was optimistic about prospects for the medium term.

He was equally optimistic with lamb prospects, saying prices this season should be “considerably better than the dismal returns of the past few seasons”.

He picked prices to be 50c a kg higher than they were in 2007-08 and $1 a kg better than 2006-07.

Sheep numbers were falling all around the world and meat prices in Europe were 30% higher than they were a year ago, while prices for co-products were also improving.

“While growth in demand in the EU and US may ease with economic growth, reducing supply is likely to keep prices firm.”

Chris Nixon an economist with the New Zealand Institute of Economic Research analysed the price of farmland and its reflection of economic activity for Agmardt. He presented his findings at the AGmardt breakfast during the National Bank Young Farmer contest and you can read it here.