Rural round-up

May 20, 2015

Better returns trump loyalty – Hugh Stringleman:

Fonterra must put more effort into understanding why it is losing market share and therefore its shareholder capital is being diluted, major supplier Trevor Hamilton says.

Family-owned TH Enterprises (THE), which has 10 big dairy farms in the North and South Islands, has “driven a bus through Trading Among Farmers (TAF)”.

Founder and chief executive Hamilton said THE directors, including two independents, had exposed the weaknesses of TAF by making perfectly reasonable and sound business decisions over the past 30 months to cash in shares, to buy more farms and divert half of the milk supply to other processors. . .

TAF delivers what it promised – Hugh Stringleman:

Trading Among Farmers (TAF) has delivered what farmer-shareholders wanted in the way of more flexibility as well as capital security for Fonterra, equity analysts have said.

The 2012 restructure created a new generation of hybrid co-operative in which farmers were able to sell the economic rights of supply shares into the Fonterra Shareholders’ Fund (FSF) but retain co-operative control and voting rights.

The fund had grown to $713 million at the interim balance date January 31 with the economic rights of just under 122m shares. . .

 Sheep numbers down but productivity up – Jamie Mackay:

News last week our national sheep flock had dropped below 30 million for the first time since 1943 probably surprised no one but, regardless, it’s a damning and telling statistic for a once all-conquering industry.

When I was a kid growing up on a Southland sheep farm, two things stuck in my head from my final year of primary schooling in 1972. . .

 Apple harvest appears positive – Alan Williams:

Scales Corporation subsidiary Mr Apple is busy packing this season’s apple crop and isn’t expecting a dramatic impact on yields from hail in Hawke’s Bay earlier this year.

The harvest was due to finish about now but packing operations would continue through to the end of June, Scales managing director Andy Borland said.

The incidence of hail damage would be revealed during the packing process. Borland estimated a “bit of an impact” but many of the orchards avoided the hail altogether, a benefit of the group strategy to spread the orchard across the fruit-growing region. . . .

New Zealand Young Farmers educating Tasman teens at Stock Skills Day:

New Zealand Young Farmers is providing an educational day for Canterbury teens wanting to learn more about stock judging and handling on Sunday 24 May at the Canterbury Agricultural Park.

Members of New Zealand Young Farmers High School Clubs, commonly known as TeenAg Clubs, in the Tasman region have been invited to take part in a hands-on, interactive one day program which aims to introduce students to a different aspect of the agriculture industry.

Students will participate in groups of twelve and move through modules as they would through a typical day of competition at an A & P Show; from prepping and handling through to judging and prize giving. Prizes will be awarded to the most engaged students. There will also be a clipping and shearing demonstration. . .

RailBike adventures begin pedalling into the Forgotten World:

The visitor industry in the central north Island is set to surge once again with the introduction of the country’s first tandem RailBike experience.
Operating along what is arguably known as New Zealand’s most scenic decommissioned railway; Forgotten World Adventures has added the RailBike product to its already impressive list of seasonal rail based adventures using converted golf carts, also known as RailCarts.

Waikato Farmer and Forgotten World Adventures founder and Managing Director Ian Balme believes the introduction of the RailBike is a timely step for a business that has seen exponential growth since it was launched in 2012.

“This season we’ve provided over 6,000 clients with an outstanding experience through the historic Forgotten World and I am thrilled that we’re now in a position to build on our existing range of tours by introducing what will undoubtedly become a must-do kiwi adventure for groups of up to ten people” says Mr Balme. . .

10 reasons we don’t need organic food:

1. Organic crops do not increase yield.

GMOs have increased yields by 22% with even greater success in developing nations.

2. Organic crops increase pesticide use.

GMOs have decreased pesticide use by 37% with even greater success in developing nations.

Organic herbicides only kill the plant tissue that it touches, requiring more to be sprayed, and more repeated spraying. Glyphosate, on the other hand, attacks a specific enzyme that is only found in plants. Farmers using glyphosate don’t need to cover all of the weed to kill it, and they don’t need to spray as often. . .

New Horizons for regional South Island:

A new fund has been announced this morning to help regional South Island tourism operators capture the tsunami of opportunities from the growing China market.

The ‘New Horizons Fund’ is a regional economic development programme initiated by Christchurch Airport, as part of the “South” initiative, which sees all 15 South Island regional tourism organisations working collaboratively in tourist markets.

The programme kicks off with a budget of $100,000 and aims to support a minimum of two South Island tourism operators into the China market each year. . .


GDT down again

May 20, 2015

The GlobalDairyTrade price index dropped 2.2% in this morning’s auction.

That’s the fifth consecutive drop.

gdt20.5.15

GDT.20515

gdt20515


Rural round-up

May 15, 2015

Is life down on the farm about to change forever? – James Stewart:

Farmers deal with change all the time. We become obsessed with sun, rain and everything in between which is what happens when your whole livelihood depends on the natural elements. This is part of the volatile world we deal with. All you need to do is throw in commodities and exchange rates and it can make for an extremely challenging environment. This is an accepted fact of life for a farmer.

To add to the abyss of unknown, farmers are anxious about what the health and safety reform will bring and the new challenges that lay on the horizon. We all want to come home from work alive. Unfortunately this will not always happen as you just can’t eliminate all of the risk out of farming.

My own personal experience of a fatality on my own farm still haunts me to this day. Going through a police and OSH investigation was nothing compared to the emotion of meeting the parents the following day to try and explain what may have happened. I take every practical step to prevent accidents happening, but the world we live in is not perfect and accidents happen. . .

One in four dairy farmers in negative cashflow this season, Wheeler says – Paul McBeth:

(BusinessDesk) – Another year of sagging dairy prices would be a concern for New Zealand’s economy and especially for the 25 percent of farmers currently carrying debts above 65 percent of the value of their assets and currently trading in negative equity, says Reserve Bank governor Graeme Wheeler.

Expanding at a parliamentary hearing on this morning’s release of the central bank’s six monthly financial stability report, which imposed new macro-prudential restrictions on lending on Auckland housing, Wheeler said “another year of low prices, that would be a worry for the economy, no question, and also that would be a worry for farmers in terms of their debt capacity.” . . .

Step up, Foterra told – Sally Rae:

Fonterra’s strategy needs to start delivering or its market share will shrink further, Federated Farmers Otago dairy chairman Stephen Crawford says.

The results of small Waikato-based dairy co-operative Tatua and West Coast-based Westland Milk Products’ might well ”far exceed” Fonterra, so it might eventually need to front up and stop blaming volatility, which was experienced by all players in the market, Mr Crawford said in his report to Federated Farmers Otago’s annual meeting in Dunedin yesterday. . . 

 

Horowhenua vegetable growers hit by wet weather again – Gerard Hutching:

Vegetable growers in Kapiti and Horowhenua have been hit by wet weather for the second year in a row.

Woodhaven Garden grower John Clarke, based in Levin, said it was shaping up to be as difficult a season as last year, when autumn had been the wettest he had seen in 31 years of growing.

“It’s starting to trend the same way. It has certainly impacted on what we’ve been able to plant. One day recently we had a hit of 125 millimetres [of rain] and the day before 50mm,” Clarke said.

Metservice figures show 157mm has fallen in the Levin region over the past month. It forecasts rain to continue for the next 10 days, with little prospect  of sunshine. . .

Taranaki rural crime issues reach the top – Sue O’Dowd:

Taranaki farmers who highlighted rural crime have been invited to be part of a national committee looking at a rural policing strategy. 

An inaugural meeting in Wellington on Wednesday among representatives of police, Federated Farmers, Ministry for Primary Industries, Neighbourhood Support, Community Patrols and Rural Women NZ aimed to formulate a consistent approach to rural crime prevention throughout the country. 

Co-ordinator of community policing Alasdair Macmillan, of Wellington, has been working for months on increasing the awareness of what he calls “rural crash and crime”. 

“I came across this group in Taranaki,” he said. “These guys are up and running. What have they got? Do we need some tips from them?” . . .

Fonterra expansion take mozzarella to the world:

Work is complete on a new mozzarella plant at Fonterra’s Clandeboye site, doubling production of the world-famous cheese and creating enough mozzarella to top more than 300 million pizzas a year.

Work is complete on a new mozzarella plant at Fonterra’s Clandeboye site, doubling production of the world-famous cheese and creating enough mozzarella to top more than 300 million pizzas a year.

The mozzarella – one of the Co-operative’s most sought after cheeses – is destined for global pizza and pasta restaurant chains across China, Asia and the Middle East. . .

Rural Equities accepts Webster takeover offer for stake in Tandou – Jonathan Underhill:

(BusinessDesk) – Rural Equities, the farming group majority-owned by the Cushing family, will sell its 6.4 percent stake in ASX-listed Tandou into a takeover offer from Australian agricultural and water company Webster.

Webster’s shares have jumped 26 percent on the ASX this year and the stock is rated a ‘strong buy’ based on a Reuters survey of analysts.

Webster is Australia’s biggest vertically integrated producers of walnuts, accounting for more than 90 percent of the nation’s export crop. It has been on an acquisition spree, buying water entitlements and more than 45,000 hectares of land known as the Kooba aggregation for A$116 million in December and making an A$124 million offer for Bengerang, a large-scale NSW cotton farmer with its own portfolio of water entitlements. . .

Mainman insecticide application approved:

An Environmental Protection Authority (EPA) decision-making committee has approved with controls an application from ISK New Zealand Limited to manufacture or import the insecticide Mainman, which contains the new pesticide active ingredient flonacamid.

Mainman is intended to be used for the control of aphids and psyllids on potatoes and possibly other specific pests associated with horticultural crops. The application is for Mainman to be used by commercial growers and contractors on vegetable crops. . .

 


Rural round-up

May 12, 2015

Initiative promotes agricultural careers – Sally Rae:

When it comes to his career, Leon Olsson’s only regret is that he did not get into the agricultural sector earlier.

Mr Olsson (26), who manages a dry stock farm at Ranfurly which is part of a large scale dairy operation, told pupils at John McGlashan College, in Dunedin, this recently.

It was part of Soil Makes Sense, an initiative supported by Lincoln University and DairyNZ aimed at promoting the opportunities available in the primary industries.

A panel of speakers outlined their own career paths and involvement in the sector. . .

New agribusiness course – Sally Rae:

The opportunities for young people to forge a professional career in the agribusiness sector are ”so diverse”, John McGlashan College principal Neil Garry says.

The Dunedin school was one of seven New Zealand secondary schools invited to become ”lead schools” for the Centre of Excellence for Agricultural Science and Business, the brainchild of St Paul’s Collegiate School in Hamilton.

The joint venture between St Paul’s and agricultural industry partners aimed to deliver and roll out an agribusiness programme to secondary schools throughout New Zealand. . .

Backing for speed limit cut:

The head of road policing is backing lowering the speed limit on many rural roads to 70 or 80 kilometres an hour in the wake of a horrendous weekend of deaths.

Ten people were killed in five separate crashes in a weekend police said was a shocking toll not seen for at least 30 years.

Assistant Commissioner for Road Policing Dave Cliff told Morning Report many roads around the country were simply not designed for the usual 100 km/h speed limit. . .

Farmers back Fonterra – Neal Wallace:

Last week Farmers Weekly gathered the thoughts of southern dairy farmers as they contemplated a winter facing low payouts while coping with the drought hangover. This week Neal Wallace and Hugh Stringleman spoke to some of their North Island counterparts to see what they are thinking. It seems they staunchly back Fonterra but that doesn’t mean they don’t have some advice on how it could improve.

When will it end?

Te Awamutu dairy farmer Brad Eyre remains convinced Fonterra is the right vehicle for the industry. It has just hit a rough patch. . .

Budget 2015: New Afforestation Grant Scheme:

The Government has today confirmed a multi-million dollar reboot of the popular Afforestation Grant Scheme (AGS), Associate Primary Industries Minister Jo Goodhew says.

The new version of the scheme will see $22.5 million invested over the next six years to encourage the planting of an expected 15,000 hectares of new forest.

“The new scheme will take up where its highly successful predecessor left off,” Mrs Goodhew says. “Farmers and landowners can again use the AGS to make better use of marginal land and increase farming diversification.”

Under the previous scheme, from 2008 to 2013, more than 12,000 hectares of new forest was planted, much of it on erosion prone land. This improved water quality and reduced the impact of severe flooding. . .

Gypsy Day – Effluent Management Doesn’t Stop at the Farm Gate:

Waikato Regional Council is reminding dairy farmers of the importance of good stock effluent management during the upcoming Gypsy Day on 1 June.

That’s the day when thousands of cows will be transported from one farm to another, meaning potential for effluent to spill on to roads creating hazardous driving conditions.

To help reduce the amount of stock effluent produced in transit, the council stresses the importance of preparing animals prior to transport, including not giving them green feed for 4 – 6 hours before their journey. . .


Rural round-up

May 9, 2015

Low-Cost Pasture-Based Dairying Still Our Best Bet, Say Farm Environment Leaders:

New Zealand dairy farmers shouldn’t lose sight of their competitive advantage, say farm environment ambassadors Mark and Devon Slee, who recently returned from a study tour of the Northern Hemisphere.

In late March the Canterbury dairy farmers and National Winners of the 2014 Ballance Farm Environment Awards embarked on a 25-day trip to the United Kingdom, Netherlands and Ireland, visiting a wide range of dairy farms

Mark says a key aim of the tour, which was facilitated by the New Zealand Farm Environment Trust and supported by a range of industry groups, was to study intensive dairy farming systems in Europe and to find out how farmers were using technology to improve sustainability. . .

Pacing global changes a big ask for Fonterra – Fran O’Sullivan:

Tim Groser’s warning that the dairy sector would effectively have to guts it out during a period of low milk payouts was timely.

It’s perhaps easier said than done maybe from the perspective of a Trade Minister.

But dairy farmers are a resilient lot. They’ve been through cyclical times before.

Yet, last week’s Fonterra announcement that the co-operative has downwardly revised its 2014/2015 payout forecast back to $4.50/kg milk solids (from $4.70) was still a hard knock for those that had factored the higher track into their own financial planning.

Federated Farmers pointed out just how difficult it was for some dairy farmers with their comment that the average Canterbury dairy farmer was now facing a loss of 91c for every kilogram of milk solids that they produced. . .

ANZ Bank was most aggressive in rural rate swaps sales to farmers, ComCom says – Paul McBeth:

(BusinessDesk) – ANZ Bank New Zealand, the country’s biggest lender, was the most aggressive in pitching interest rate swaps to farmers, over which it subsequently agreed to pay $19 million in compensation, the Commerce Commission says.

General counsel competition Mary Anne Borrowdale told Parliament’s primary production select committee that of the three banks to settle with the regulator, ANZ had the most customers involved and was investigated over both the way it was able to move its margin and the break fees it charged farmers for an early release. While ANZ announced its settlement with the regulator before ASB Bank and Westpac Banking Corp, it only just made its offer to farmers yesterday. The three banks’ collective settlements totalled $24.2 million. . .

Landmark animal welfare legislation welcomed by veterinarians:

The New Zealand veterinary profession welcomes today’s landmark passage of the Animal Welfare Amendment Bill which brings greater clarity, transparency and enforceability of the country’s animal welfare laws, further strengthening New Zealand’s excellent reputation for animal welfare.

The New Zealand Veterinary Association (NZVA), which played a key role in helping to shape the Bill, says some of the key changes include the legal recognition of animal sentience, which is sensation or feeling in animals, for the first time in New Zealand law.

NZVA President Dr Steve Merchant says: “Veterinarians are at the vanguard of animal welfare advocacy and public support is behind us in the call for greater clarity on issues concerning animal welfare and increased sanctions for animal cruelty. . .

 

 High prices and volumes for avocado growers:

Avocado exporter Avoco says its growers are celebrating the end of a season where they not only got a bumper crop – but decent prices for their fruit too.

Avoco said strong end-of-season demand from Australia lifted returns for growers – to $15 per tray for large avocados and $14 per tray for smaller fruit.

Avoco director John Carroll said the company exported a record volume of fruit – 4.5 million trays, out of a total 7 million trays – and still managed to get good returns for its 700 plus growers. . .

Anchor Gives More New Zealanders an Organic Milk Choice:

Anchor is making organic milk more accessible to New Zealanders with the nationwide launch of Anchor Organic.

Fonterra Brands New Zealand Managing Director Tim Deane said that with other organic milk brands only available in certain regions or very expensive, Anchor is on a mission to make organic milk more widely available at a fair price.

“We want to put organic milk in reach of more New Zealanders. We’ve done just that through our nationwide distribution and providing Anchor Organic at an everyday price that works out at only about 20 cents extra per glass compared to our standard Anchor milk,” said Mr Deane. . .

Wool Prices Bounce:

New Zealand Wool Services International Limited’s General Manager, Mr John Dawson reports that a weaker New Zealand dollar, limited wool volumes pressuring exporters and renewed client interest, combined to lift local prices across the board.

Of the 6,350 bales on offer, 99 percent sold.

The weighted indicator for the main trading currencies was down 1.79 percent compared to the last sale on 30th April.

Mr Dawson advises that Fine Crossbred Full Fleece and longer shears were 7 to 10 percent dearer, stimulated by resurgent Chinese interest with shorter types 3 to 6 percent firmer. . .


Dairy price fall affects everyone

May 7, 2015

The fall-out from falling dairy prices isn’t confined to farmers:

. . .there are 7 billion reasons it will affect all of us. Seven billion dollars is the amount that is set to be wiped from the New Zealand economy this year.

Fonterra is forecasting a total payout to farmers this season of $4.70 to $4.80 per kilogram of milk solids ($4.50 forecast payout plus a likely dividend of 20 to 30 cents per share). That compares to last year’s record payout of $8.50 ($8.40 payout plus a cash dividend of 10 cents per share).

The average break-even point for farmers this year is $5.40, after you factor in both the cost of running the farm and the debt interest payments.

It is the reason farmers are cutting costs. That will be felt in towns and cities across New Zealand, from shops in rural towns to cities where manufacturers make equipment used on farms (like irrigation systems).

That will flow through to the taxes that the Government collects, making it even harder to put together this month’s Budget. . .

Although most New Zealanders live in towns and cities, what happens on farms and to the goods they produce still has a very big influence on the wider economy.

When produce prices fall, farmers tighten their belts which affects what they’re willing, and able to buy. That affects everyone who services and supplies them which flows into the wider economy and the tax take.


Fonterra drops forecast payout

April 30, 2015

Newsletter from Fonterra chair John Wilson:

Today we’ve unfortunately had to announce that the forecast Farmgate Milk Price for the 2014/15 season is being reduced from $4.70 per kgMS to $4.50 per kgMS.

When combined with the previously announced estimated dividend range of 20-30 cents per share, this amounts to a forecast Cash Payout of $4.70 – $4.80 for the current season.

The 20 cent drop in the forecast means we have had to reduce the Advance Rate payments, particularly over winter which will have a significant impact on farm budgets.

The updated Advance Rate schedule will be available on Fonterra Farm Source later this morning.
There is still a lot of volatility in international dairy commodity prices caused by over-supply in the market.

We have confidence in the long-term fundamentals of international dairy demand but, right now, the market is out of balance. GDT prices for products that set our forecast Farmgate Milk Price have fallen 23 per cent since February.

Given the uncertainty, there continues to be further risk.

We also announced today that our latest estimate of New Zealand milk production for the current season is 1,607 million kgMS. This is based on recent growth conditions on-farm but will depend on conditions for the rest of the season.

Westland dropped its forecast yesterday too.

It’s disappointing but not unexpected.


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