Europe 1,000 – 2005


When I first went to Europe I was amazed how the people, their langauge and culture could be so different when they were separated only by a line often dictated by politics and history rather than geography.

It is even more surprising when you look at this time-lapse video showing the shifting borders, alliances, unions, territories and occupied lan.

Silver lining to drop in vehicle sales?


New car sales  were 28% lower in February than they had been the previous month and 38.5% lower than in February last year.

Sales for most makes of cars in the USA  dropped 40% or more last month. The exceptions were Kia, Hyundai and Subaru which had modest growth in sales that’s attributed to:

 A combination of new models, attractive incentives and sales people who are better with the pitch than the next guy are probably all contributing to how well these brands are weathering the U.S. recession.

In Europe  Volvo truck sales  dropped from  41,970 trucks in the third quarter of 2007 to only 115 in the same period last year.

Is there a silver lining to this?

Frenemy asks what affect declining sales will have on fuel consumption? A decrease in the size of the vehicle fleet or its rate of growth probably means a decline in, or slower growth of, demand for fuel too – unless the increase in the distance travelled by each vehicle increases markedly.

There might also be more work for mechanics keeping older vehicles on the road because people are holding on to them for longer.

However, that will be cold comfort for the people whose jobs making and selling new trucks and cars are under threat.

Is it all about dairying?


Is there a connection between Dutch dairy interests and the leaked tapes from the National Party conference?

The Hive  has joined some dots and reached that conclusion.

Whether or not she’s right about the links there is no doubt that European farmers will have a lot to gain when New Zealand dairying is severely constrained by the Emissions Trading Scheme.

Not only would that be bad for the New Zealand economy, the irony is it would be worse for the global environment because our pastoral dairy system is much greener than the European feed-lot one.

Informed Vote Essential for PGW SFF Deal


Gerry Eckhoff  has some concerns about the proposal for PGG Wrightsons to take a 50% stake in Silver Fern Farms.

The wider industry is bedevilled by self-interest, protectionist or silo mentalities which have cost the sheep industry dearly.

A statement by Owen Poole, chairman of Alliance Group, that Alliance has the best brands in Europe, is a case in point. Silver Fern Farms (formerly PPCS) also tell farmers that its brands are the best. Both are wrong.

The best brand is “New Zealand Lamb”, yet the two large co-operatives continue to believe in their own rhetoric and that, divided, we farmers stand a better chance of survival in the international market place.

I don’t think Alliance is a good brand name for meat. Silver Fern Farms is an improvement on PPCS but Eckhoff is right, New Zealand Lamb is the recognised brand.

The offer by PGG Wrightson to buy 50% of Silver Fern Farms (SFF) is, in reality, the only lifeboat afloat as the sheep industry sinks, so it is little wonder many farmers want to grasp the lifeline offered.

The $220 million offer may well be a very fair one but the question as to why the SSF board, after deciding to seek outside capital, did not call for wider expressions of interest for a 50% stake in the company remains unanswered by the board.

Farmers have had their shares in the company capped because it’s argued too big a shareholding is contrary to the co-operative ethos. But that doesn’t seem to be a consideration with PGW taking a 50% share. A lot of farmers would not be in a position to increase their investment, but there may be some who would not only be able but willing to do so.

Silver Fern Farms has a turnover of $2 billion so the offer by PGG Wrightson of $220 million effectively allows the purchase of a controlling interest in New Zealand’s biggest meat company, for 12c in the turnover dollar.

That seems like a fire-sale price to many sheep farmers, but it also speaks volumes as to the ability of Craig Norgate and Tim Myles of PGG Wrightson.

Farmers will await with interest an analysis/advice from the one non-farmer or independent director of SFF.

The SFF chairman, Eion Garden, says the proposal should not be seen as a financial bailout. That view will be greeted with some incredulity by observers.

If Mr Garden is correct, then he needs to explain why he does not simply invite Mr Norgate and Mr Myles on to the board of SFF for their undoubted expertise, but without the cash.

The Board says the capital injection will be used for improved technology and marketing, but that doesn’t explain why it needs to come from PGW.

Much of the rationale for the merger presented to farmers is the need for year-round supply and the technical assistance PGG Wrightson can bring to ensure this happens.

All that needs to happen to ensure supply during the August-September-October period (the off-season for supply volumes) is for meat processors to ask farmers, in, say, February, to submit a tender price to supply whatever number of stock the processor needs during these months.

The processor then obviously accepts the lowest tender prices until the required numbers are reached. Whether a merger is necessary to achieve that easily obtained outcome is a moot question.

A change in strategy doesn’t necessarily require a change in structure.

It is concerning that the emphasis of the merger appears not to be so much about capturing a greater share of the overseas value chain but locking in the domestic supply chain.

At a time when the world is increasingly short of meat protein and with the prices set to rise substantially, the board of SFF offers to sell 50% of the business to a very willing buyer.

That clearly indicates that there is not too much wrong with the industry – just the people currently running it.

TI wouldn’t say that about all the people running the industry.

If sheep farmers choose to exercise their right to vote on this issue, as they must, they have a duty to future generations to inform themselves as well as possible on all the issues and not just rely on the opinion of vested interests.

That’s good advice for any vote, but you can’t require people to have a comprehension test before they put their tick on the voting paper.

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