Rural round-up

March 27, 2012

Fertiliser Use Increases As Farmers Reinvest In The Land:

Total fertiliser use on New Zealand farms increased for the first time in three years in the 2010/11 fertiliser year, reaching just over 3 million tonnes.

This is a significant increase in fertiliser use compared to the previous year, which was 2.3 million tonnes, but is below the peak use of 3.3 million tonnes recorded in 2004/05 and close to total fertiliser use in 2007/08 of 3.1 million tonnes.

The fertiliser use data are reported in the March edition of Fertiliser Matters, published by Fert Research. . .

New Zealand…A Place Where Talent Wants To Live & Proudly Farm –  Pasture to Profit:

“New Zealand…A Place Where Talent Wants To Live” this was the NZ strategic vision that Sir Paul Callaghan(New Zealander of the year 2011 & ex Massey University Scientist) spoke so passionately about before his death last week. http://www.youtube.com/watch?v=OhCAyIllnXY&feature=related  Sir Paul Callaghan was a world class scientist, leader & a passionate advocate for a better more prosperous New Zealand. . .

Are You Using Farm Business Management “Apps” on Your Farm? – Pasture to Profit:

The Centre of Excellence in Farm Business Management is a joint virtual centre of the Farm Management Departments at both Massey & Lincoln Universities in New Zealand. The Centre is conducting a number of research projects in Farm Business Management. One of those projects is investigating what Apps (Applications) are available for IPhones/IPads & Android mobile phones.  . .

If You Don’t Measure You Can’t Control…Basic Pasture Management! – Pasture to Profit:

What’s going on? Have New Zealand dairy farmers taken their eye off the ball…..or even worse “lost the plot”? What has happened to their famous pasture grazing skills?

 Throughout the low cost pasture dairying world NZ farmers have a reputation of being expert grazing managers & very efficient users of low cost pasture. Is this still true? From my observations I’d say it’s no longer the case that NZ farmers are the best in the world.  . .

We All Cast Our Shadow on The Environment..NZ Landcare Trust Conference – Pature to Profit:

  “We are born into the shadow of our parents & eventually we create our own shadow”. Powerful story telling from George Matthews (a NZ Landcare Trustee) opened the NZ Landcare Trust Conference in Hamilton NZ.

Although his Maori proverb has to do with life itself….we all do cast our shadow on the environment in which we live & farm. Our Earth’s environment is in trouble. It was Albert Einstein who said that …” Insanity: was doing the same thing over and over again and expecting different results.”      . . .

The changing face of the global dairy industry – Dr Jon Hauser:

Australia – A switch from cooperatives to private processors

The Australian dairy industry has undergone vast changes over the last ten years. The biggest shift is in the composition of ownership of the industry; Bonlac, Bega, Tatura, Warnambool Cheese, Dairy Farmers, Challenge Dairy … almost all the major milk processors except Murray Goulburn have gone from being cooperatives to private processors.

In just over a decade 65 per cent of Australian milk, from all states, has been lost to the farmer co-operative sector. This is a monumental change in the culture and direction of the industry. . .

Meat and dairy prices off their peak for now  but outlook positive – Allan Barber:

The recent fall in Fonterra’s GlobalDairyTrade on line auction for the fifth time in six months means global dairy prices have fallen by 9% since last May and by 24% over the season when adjusted for the value of theNew Zealanddollar. The dollar has only just come off historical highs against both the UKpound and the euro, so the combined effect on our dairy, beef and lamb exports has been disappointing to say the least.

But the outlook in the medium term is still good, provided our exports are not derailed by one or more of the dire forecasts of Greek debt default, general lack of buoyancy inUKand Europe, and the lower growth forecast in China. . .

AFFCO able to operate despite lock-out – Allan Barber:

Interested observers of the argument between AFFCO and its unionised meat workers may be confused by a state of affairs which results in a portion of the workforce being locked out, another percentage going on strike in support of their colleagues, and the rest of the workforce being able to keep production going. Read the rest of this entry »


Fert prices drop

December 4, 2009

Ballance and Ravensdown have both dropped the price of fertiliser to $310 and $311 a tonne repsectively.

Both companies say it reflects a fall in the price of raw materials internationally and the prices are about half what they were at this time last year.


Coal to fertiliser plant for Southland?

September 25, 2009

Eastern Southland’s lignite coal could be turned in to fertiliser if joint investigations by farmer-owned co-operative Ravensdown and Solid Energy are successful.

Solid Energy, and agricultural fertiliser supplier, Ravensdown, are jointly investigating the viability of building a US$1 billion plus coal-to-fertiliser plant in Eastern Southland, harnessing the region’s world-scale lignite resource and making New Zealand self sufficient in, and potentially an exporter of, urea fertiliser.

The study will consider the economics and possible location of a plant producing up to 1.2 million tonnes a year of urea – a nitrogen fertiliser used to enhance grass growth – from up to 2 million tonnes a year of lignite mined from Solid Energy’s extensive lignite resources. At last year’s urea prices – up to US$800/tonne – this plant would have generated the equivalent of about NZ$1.5 billion per annum in export equivalent revenue – through a combination of import replacement and direct exports.

The venture could created up to 500 new jobs. The study should be completed early next year when the companies will decide if they proceed to the next stage. If they decide to go ahead construction could start by 2012 and the plant might be operating by late 2014.

Solid Energy’s Chief Executive Officer, Dr Don Elder, says: “. . . Agriculture is our most important economic sector . . .. Urea is a key input to increased farm productivity, but is mostly imported at present, which exposes our farmers to world supply volatility, and prices that can fluctuate widely. Producing urea from our vast lignite resources is a prime example of how New Zealand can capitalise on our position as one of the richest countries in the world in natural resources per capita.”

The lignite to uerea study is running in parallel with work to investigate producing diesel.

“Developing a urea plant in advance of constructing a lignite-to-diesel plant would allow New Zealand to have advanced gasification industry competency and capabilities in place at an earlier stage, to substantially facilitate further and larger developments. Alternatively the two developments could take place in parallel and form the basis of a “syngas park”, supplying clean syngas to multiple downstream applications including diesel and urea.”

Federated Farmers  president Don Nicolson said the responsible exploitation of our mineral wealth would play an important part in increasing productivity.

“The numbers involved in this feasibility study are mind-boggling.  Even if annually it converts two-million tonnes of lignite into fertiliser, there are enough proven lignite reserves to keep the plant ticking over for some 650 years.

“The study opens up the prospect of 500 new jobs and the construction of a state of the art facility in an investment worth some $1.4 billion.

“Given New Zealand imports some half million tonnes of gas or coal based urea each year, the new plant will likely be built to the latest environmental standards.  This has obvious benefits from a global climate change perspective.

“The really exciting thing is the potential of turning New Zealand from an importer into an exporter, generating the equivalent of $1.5 billion in export equivalent income each year. 

“That amount represents one and a half times the size of the wine industry or three times the current value of the wool clip.

“It’s also an example where companies can leverage off agriculture, New Zealand’s most important industry, into completely new areas.  In this case taking a low value mineral which occurs in vast quantities and turning that mineral into a high value export.

Turning a low value resource into fertiliser, replacing imports, creating jobs in rural Southland, doing it all to meet the highest environmental requirements . . .  If investigations show the project is feasable it will be very good news indeed.


Blessed are those who give

May 9, 2009

Three acts of generosity in the last couple of days:

Julian and Josie Robertson from the USA have donated 15 major art works to the Auckland Art Gallery.

The appreciation shown by people when the Robertsons allowed 12 works from their art collection to be shown in an exhibition in Auckland and Wellington, motivated them to make this donation.

From the arts to sport – Eion Edgar donated $1 million to the New Zealand Committee when he retired as president this week.

Mr Edgar and his wife, Jan, have made several substantial philanthropic donations, notably to the New Zealand Olympic Committee, the Edgar Centre in Dunedin, the Edgar National Centre for Diabetes Research and Dunedin’s new stadium, which will be known as Forsyth Barr Stadium at University Plaza.

And from sport to farming –  Ravensdown is offering  shareholders in drought affected areas interest free, deferred payment terms on fertiliser purchases plust free technical advice.

When drought hits, fertiliser often comes out of budgets which means when it rains again pastures don’t get grow as well as they should.

This offer will enable farmers to keep up their fertiliser programmes without increasing their overdraughts.


Otago phosphate could save $1b

September 12, 2008

Rising world phosphate prices could make a South Otago supply  economically viable and save farmers $1 billion a year in imported phosphate rock.

Ravensdown Fertiliser Co-operative chief executive Rodney Green said yesterday, that the Clarendon deposit had become viable as the world price of phosphate rock soared from $75 a tonne in 2007 to $740 a tonne now, as countries shored up supplies of the mineral to increase their food production.

Phosphate is a crucial component in many fertilisers, and New Zealand uses about one million tonnes a year.

Mr Green said the resource could yield 34 million tonnes, enough to make Ravensdown self-sufficient in superphosphate for 22 years.

“This opportunity could be a boon to farmers and could result in the New Zealand economy becoming self-sufficient in phosphate rock, saving $960 million on current prices in foreign exchange a year,” he said.

A three-month investigation will be undertaken to confirm the viability of the deposit which was discovered in 1902 and mined until 1924, then again during World War II when Japan occupied Nauru.

The resource covered 450ha on eight Clarendon farms, and initial work was focused on determining its quality and quantity.

“There is a pretty strong imperative to get this going as soon as we can,” he said.

Mr Green said the world had plenty of phosphate, but China and Togo had imposed export taxes to ensure there was sufficient for their food production needs, while the other main sources in Morocco and Russia were isolated and transport costly.

In contrast, the Clarendon deposit was 3km from State Highway 1 and the main trunk rail line and 40km from the company’s Ravensbourne fertiliser works, slashing shipping costs to a fraction of the current $180 ($US120) a tonne.

Because of the age of the titles, the various mineral rights were privately owned by the landowners and Blackhead Quarries.

All were supportive of the investigation, Mr Green said.

One of the landowners, Tony McDonnell, who lives in Phosphate Rd, said agriculture and the country needed a local fertiliser resource to ensure the sector continued to underpin the economy.

He used 300 tonnes to 400 tonnes of superphosphate a year on his farms, but soaring international prices had made it a costly input.

“If it proves to be big, this would be a large operation and would bring a lot of money into the Otago economy,” he said.

Phosphate fertiliser has increased $300 a tonne since March and it’s one of the biggest items in most farm budgets. If the South Otago deposits are viable it will create jobs in the area. It will also have a wider benefit by and reducing our reliance on imported phosphate which will become even more expensive as our dollar falls in value.


Power pushes up producers’ prices

August 19, 2008

The price of power was the main contributer to the increase in the Producers’ Price Index  in the three months to June, Statistics New Zealand said today.

Ouptput prices went up 3.5% and input prices rose by 5.6%.

The rise in the outputs index is the largest quarterly rise since the June 1985 quarter, while the rise in the inputs index is the largest since the March 1980 quarter. Both indexes were mainly driven by higher prices for electricity generation and supply.

One business’s output becomes another’s input, so for example milk and grain are outputs for farmers but inputs for cheese makers and bakers.The electricity generation and supply outputs index rose 30.9 percent in the latest quarter, the largest rise since the series began. Higher output prices for electricity generation were recorded, with lower lake levels pushing up spot prices. In the year to the June 2008 quarter, the electricity generation and supply index rose 41.7 percent, which is also the largest annual rise since the series began.

 

Electricity producers cover those inolved in generation, transmission, distribution and retail and their inputs include fuel, business services, rent and power itself. I’m not sure how much the healthy dividends the Government gets from the power companies it owns contributes to the price rises.

Within the inputs index, electricity generation and supply rose 50.8 percent in the latest quarter and 85.4 percent in the year to the June 2008 quarter. Both movements are the largest since the series began in the June 1994 quarter. Lower lake levels were the cause of higher costs for electricity generation this quarter.

Ouch. We pump water for irrigation which makes power one of our bigger costs.

Another contributer to the PPI indexes is the wholesale trade which covers fuel and fertiliser and they are also big budget items for farmers.

Wholesale trade also made a contribution to both the PPI output and input indexes. The wholesale trade outputs index rose 6.0 percent in the June 2008 quarter, while the inputs index rose 6.4 percent. In both cases the increase was driven by higher prices in the mineral, metal and chemical wholesaling sector.In the year to the June 2008 quarter, the PPI outputs index rose 8.5 percent and the inputs index rose 11.8 percent.

 

If these input costs, most of which have a large imported component, went up when our dollar was relatively high they will almost certainly be higher in the next quarter because the dollar has been lower.

The increase in inputs has been greater than that for outputs which means we’re absorbing some of the costs. But even so each trip to the supermarket is a reminder that some of the increases get passed on to consumers.

I couldn’t find any 1kg blocks of cheese at the supermarket today, and the 700g block of edam I did find cost $11.99. I wonder if this is because there would be consumer resistance if they tried to sell bigger blocks at that per kilo price?


Lower dollar good news and bad news

August 12, 2008

The good news about the falling dollar, down to an 11 month low of US69.84c this morning, is that we get more for our exports.

However, the lower value of our currency also increases the price of imports which is particularly bad news for farmers when two of our biggest budget items – fertiliser and fuel – are already highly priced.

One reason for the dollar’s fall is the Reserve Bank’s decision to relax its guard against inflation by lowering the official cash rate.

Several commentators said this would be good for exporters, but I’m not sure how much better off we are if the gains on the swings of increased returns for our produce is countered on the roundabout of increased prices for inputs.

Nor do I think that a weak currency is a good recipe for a strong economy.

And I am definitely not relaxed about a little bit more inflation. The memory of the economic disaster which resulted when all the little bits more became a lot and led to inflation rates of more than 20% in the 1980s, and the painful process of bringing it down again, are still too fresh.

I’m with Don Brash who, when he was governor of the Reserve Bank, told a public meeting that a little bit of inflation was like being a little bit pregnant, it doesn’t stop at a little bit.

The B- I got for stage one Economics, as it was then known, doesn’t qualify me to debate this issue. But The Visible Hand in Economics and Show Me The Money  and Brian Fallow  are qualified and they all warn about the dangers of going soft on inflation too.

The falling dollar is a good news-bad news story for exporters and if it contributes to higher inflation the bad will more than outweigh the good.


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