Rural round-up

29/06/2020

Agriculture emerges from lockdown relatively unscathed, but coming global recession will bite, says economist – Bonnie Flaws:

Agricultural incomes are expected to take a hit later this year as the effects of the global recession caused by coronavirus kicks in, says Westpac senior agri-economist Nathan Penny.

The sector was likely to remain profitable, however.

Despite having come through the lockdown and its immediate effects relatively unscathed, due largely to agriculture’s classification as an essential service, the forecast 3 per cent hit to global growth over 2020, meant there would be less demand for the forseeable future.

As a country that exported over 90 per cent of its agricultural production, New Zealand would be heavily exposed, Penny said. . .

McBride optimistic about Fonterra’s future despite global uncertainty – Esther Taunton:

Fonterra will face “bumps in the road” as the global economy rebuilds after the coronavirusoutbreak, but chairman-elect Peter McBride is optimistic about the dairy co-op’s future.

“Businesses learn more from challenges than successes and there will be plenty learnt from this,” the South Waikato dairy farmer said.

And McBride should know.

As the chairman of the Zespri board from 2013-18, he led the kiwifruit marketer through a crippling outbreak of the vine disease Psa, estimated to have cost growers close to $1 billion . .

Few winter grazing issues found – Neal Wallace:

Soutland farmers are being given a pat on the back for their winter grazing management so far this year, which Environment Southland says is an improvement on last year.

An aerial inspection by regional council staff prompted chief executive Rob Phillips to conclude farmers have made positive improvements.

“I’m encouraged by what we’ve seen. Farmers appear to have made a real effort, which is exactly what we need.”

Phillips said it is early in the season so wet weather will change conditions. . . .

Outstanding vintage despite Covid-19 conditions:

While it will be forever remembered as the Covid-19 harvest, an excellent summer throughout most of the country has contributed to an outstanding vintage for New Zealand’s wine regions.

“Although Covid-19 restrictions did have a huge impact on the way the harvest was run, they will not affect the quality of the wine, and we are really looking forward to some exceptional wines coming from this year’s vintage” said Philip Gregan, CEO of New Zealand Winegrowers.

The New Zealand wine industry had hoped for a larger harvest in 2020, after smaller than expected crops over the last three years. With 457,000 tonnes of grapes harvested, this year’s vintage will help the industry to meet the high demand for New Zealand wine.

With New Zealand moving into Alert Level 4 just as Vintage 2020 began, the industry was acutely aware that it was in an incredibly privileged position to be allowed to pick the grapes, says Gregan. . .

Tug-of-war fan desperate to keep sport alive – ‘It’s weightlifting lying down’ – Carol Stiles:

A Waikato farmer is building a museum on his farm to preserve memorabilia from New Zealand’s oldest introduced sport – tug-of-war.

Graham Smith has a dairy farm 50 minutes south of Hamilton.

He is also a passionate advocate for a sport which is dwindling. He’s preserving the memory of tug-of-war in case one day it sparks up again.

He is the president of the New Zealand Tug of War Association and has been involved for more than 40 years. . .

Record on-farm price for EC Angus – Hugh Stringleman:

An Angus bull from Turiroa Stud, Wairoa, has made $104,000 at auction, believed to be a New Zealand on-farm sale record.

Turiroa’s best-ever sales performance also featured a price of $86,000 and an average of $12,560 for a full clearance of 50 bulls.

Andrew Powdrell said there was good buying further into the catalogue and there was a bull for everyone.

The Powdrell family was humbled by the result and thrilled the bulls are going to good homes. . .


Rural round-up

04/06/2018

Porirua boy now a top farmer – Neal Wallace:

An extra year’s experience was the telling factor for Harepaora Ngaheu, this year’s recipient of the Ahuwhenua Young Maori Farmer award. Neal Wallace spoke to the Te Teko dairy farmer.

On June 1 Harepaora Ngaheu began contract milking on a Bay of Plenty dairy farm and, according to his long term plan, should own a dairy farm within 10 years.

It is a spectacular turnaround for someone who five years ago was drifting through life and stumbled on the dairy industry through a training course. . .

The social science of Mycoplasma – Dr Gareth Enticott and Dr Anne Galloway:

Usually when animal disease strikes, it is the advice and expertise of the veterinary sciences that is sought.

However, recent disease outbreaks such as Foot and Mouth in the UK in 2001, have led to the recognition that the social sciences should also play an important role in the management of animal disease. They should also be important to help understand and manage the impacts of mycoplasma in New Zealand.

Whilst there are some important differences between Mycoplasma and the UK’s FMD outbreak, there is already a remarkable similarity between the two events. Taking lessons from social studies of animal disease, the following issues should be of concern for all involved in the management of Mycoplasma:

1. Trust

In 2001, the outbreak of FMD in the UK was accompanied by a complete breakdown in trust between farmers, vets and the Government (Poortinga et al., 2004). Why was this? . . 

Youngsters see the light on working outdoors :

Kiwi youngsters in town and country schools are learning about the prospect of farming careers via AgriKids and TeenAg, devised by NZ Young Farmers, says its chief executive Terry Copeland.

They are funded by the Transforming the Dairy Value Chain (TDVC) Primary Growth Partnership (PGP) scheme led by DairyNZ, Fonterra, MPI and others.

AgriKids and TeenAg, respectively, inform primary and secondary schoolers about farming and its career possibilities.

Apple accolades top great season and more trees already in the ground

Hawke’s Bay’s contribution to the world’s “most competitive” apple industry is set to grow, with more than 100,000 new plantings at just one Hastings orchard alone set to further the region’s future standing.

For the fourth year running, the United States-based World Apple Review has named New Zealand’s apple industry the most competitive on the global stage, against 33 major apple growing countries.

The review, released by Belrose Inc, the world fruit market analysts, stated that the innovations emerging from New Zealand’s apple industry would increasingly impact production and marketing throughout the world and added that high productivity gains helped deliver outstanding performance, ahead of its closest rivals Chile and the United States.. . .

Fonterra pays winter milk premium but transport costs eat into profit – Gerard Hutching:

Fonterra and other processors are paying a premium for milk collected during winter but farmers have been cautioned the payments are not the bonanza they seem.

South Island farmers are especially finding it hard to make a good profit because their milk has to be transported to Christchurch, for which they pay a higher transport surcharge.

In the North Island, Fonterra pays an average of $3.15 per kilogram of milksolids for the months of June and July – totalling $9.90 (based on the base price being $6.75 kg/MS). . .

The Perth Valley Project – what is it all about?

As reported in previous updates, we have recently begun working in collaboration with the Department of Conservation and Predator Free 2050 Limited on a new research programme at a 12,000 hectare site within the Perth River Valley (South Westland).

Earlier this month we worked with West Coast Film to produce a short video about this ambitious and exciting programme of work, which aims to completely remove possums (and potentially rats) from the site and prevent them from re-establishing. . . 

Move over kale – steak is the new superfood – Amanda Radke:

Despite the decline in beef consumption in recent decades, America’s favorite protein is still a punching bag for many of our nation’s health woes. From cancer to diabetes to heart disease and more, everyone loves to point the finger at beef and ignore the fact that this product is a nutritional powerhouse packed with zinc, protein, highly absorbable iron, B vitamins and brain-fueling saturated fats.

Yet, this misguided rhetoric is complete white noise when we begin to look at diets that avoid animal fats and proteins altogether.

In a recent article from The Telegraph, Sarah Knapton studies* the long-term effects of vegetarian diets. Her conclusion — going meatless can lead to genetic mutations that raise the risk of heart disease and cancer.

(*I have no idea of the scientific value of this study)

 


GDT index up 9.4%

04/02/2015

The Global Dairy Price Index  increased by 9.4% in this morning’s auction.

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The price of wholemilk powder, which has the biggest influence on the milk payout, increased 19.2%.

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That might not be enough to increase the payout but it will help prevent another drop in it.

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The sky isn’t falling

25/09/2014

The cut in Fonterra’s payout isn’t good news but it isn’t the disaster that many are proclaiming.

Nor was the timing the political conspiracy that Winston Peters suspects:

Just four days after the General Election the true state of the dairy industry is revealed – returns for milk that the New Zealand economy is reliant on have slumped.

“Questions need to be asked by New Zealand voters on why they were not informed about this serious decline before Election Day,” says New Zealand First Leader, Rt Hon Winston Peters.

“The drop in payout is a $5 billion hit to the New Zealand economy and 2 per cent off nominal GDP.

“It appears the government and Fonterra joined forces to keep the facts hidden from voters? . . .

Fonterra makes announcements on its previous season’s final payout and any revision to the current one at this time every year.

The record final payout for last season was no surprise. Nor was the cut in this season’s forecast.

Anyone with even cursory knowledge of the global milk market was expecting it after successive drops in the GlobalDairyTrade price index and with the knowledge that the milk supply here and around the world was outstripping demand.

Lower income will impact on farmers, those who service and supply them and the wider economy but the news isn’t all bad.

The value of our dollar fell after Fonterra’s announcement which will help all exporters.

And while dairy prices are falling, demand and prices for sheep meat and beef are improving:

Rabobank New Zealand CEO Ben Russell said the softening in overall rural confidence was clearly a reflection of the impact of the bearish global dairy outlook and lower milk prices on dairy farmer sentiment.

“Falling dairy commodity prices are the overwhelming factor at play here. At the time of the survey being taken, the globalDairyTrade auction prices fell six per cent, taking them down 45 per cent from their February peak,” Mr Russell said.

“And with global dairy supplies continuing to increase from all key exporting regions, a significant price recovery is not imminent.

“That said though, farm commodity prices move in cycles and, clearly, dairy commodity prices are entering a lower part of the cycle right now. While this is always a difficult time, the important thing to remember is the medium to long-term picture for the dairy industry is strong.”

Mr Russell said dairy farmers were also cautious with the dairy industry approaching a critical time in the year, with the peak production and selling period for New Zealand milk just weeks away.

The dampened confidence among dairy farmers was reflected in their business performance expectations in the coming 12 months.

Dairy farmers had the most pessimistic outlook of their own farm business performance. However, Mr Russell said, it should be noted this was coming off record highs for business performance expectations among dairy producers over the past 12 months.

The latest survey found almost half of dairy farmers surveyed (47 per cent) expect the performance of their own farm business to worsen in the coming 12 months, up from 30 per cent with that expectation in the previous quarter. Just 20 per cent expect an improvement in performance, compared with 27 per cent previously. A total of 32 per cent expected performance to remain stable.

While there was also a tempering in sentiment among beef and sheep farmers, after reaching three-year record highs in the previous survey, confidence in this sector remained at overall strong levels.

Mr Russell said lamb prices were up on the previous season and beef prices were currently hitting record highs due to tight global supply.

In terms of expectations of their own businesses, the number of beef and sheep farmers expecting improved performance declined from 57 per cent last quarter to 48 per cent this survey. However, the percentage expecting their farm business performance to worsen remained stable, at just seven per cent. A total of 42 per cent anticipated business performance would remain at the same level.

Despite the decline in overall confidence, New Zealand farmers’ investment intentions were overall stable, the Rabobank survey showed.

Sheep and beef farmers increased their investment appetite – with 43 per cent indicating they intend to increase investment in their farm businesses over the next 12 months, up from 37 per cent previously. Only six per cent intended to decrease investment (compared with four per cent in the past quarter).

For dairy however, investment appetite had waned, with 21 per cent intending to invest less in their businesses (up from just seven per cent with that view in the previous survey) and 20 per cent expecting to increase investment (down from 27 per cent). This was the lowest level of dairy farmer investment intentions in more than five years (since August 2009).

Mr Russell said this change in sector investment dynamics may be an early indication the decline in the national sheep flock and the rate of dairy farm conversions were slowing. . .

Federated Farmers says farmers will be down but far from out:

Fonterra Cooperative Group farmer shareholders will welcome confirmation that the 2013/14 season has ended exactly as promised with a total payout of $8.50 per kilogram of milksolids (kg/MS).  That good news is balanced by a sharp revision downwards in the 2014/15 forecast.

“The 2014/15 season which offered so much has turned into a breakeven one for not just Fonterra suppliers but the entire industry,” says Andrew Hoggard, Federated Farmers Dairy chairperson.

“Like Synlait’s revision this week, there is a ‘good news and bad news’ dimension in this.   The good news is that we take the 2013/14 confirmed payout and the lowest revised forecast for 2014/15, we are talking an average total of $7kg/MS across the two seasons.

“A $5.30 kg/MS milkprice is also a lot higher than some commentators had expected if the forecast sticks.  If being a little word with a big meaning.

“Losing 70 cents kg/MS on the milkprice is really going to hurt.  Farmers will be kicking capital works into touch and will be pruning herds to rid themselves of any passengers.

“Speaking to DairyNZ, farm working expenses this season, before depreciation and interest payments, are expected to be around $4 kg/MS this season.  Feed, fertiliser as well as repairs and maintenance are going to be cut back.  We’ll only do what needs to be done.

“What we know from DairyNZ is that two-thirds of dairy farms have working expenses of between $3.25 and $4.75 kg/MS.  Of course when you start paying back the bank manager, the average cash costs on-farm head up to $5.40 kg/MS.

“As you can tell from what the forecast currently is, the current surplus is a wafer thin 15 to 25 cents kg/MS.  Expressed as retail milk, that’s about 1.25 to 2 cents a litre this season.

“It means that upwards of a quarter of our guys will be making a loss this season. 

“We also believe that unlike the Global Financial Crisis, dairy farmers have been listening and have focussed on building financial freeboard.  Sadly for some farmers, they’ll have to dip into that big time.

“Federated Farmers’ advice is to watch costs but to keep your bank, farm consultant, accountant and family fully in the loop.  Take a no surprises approach to get through.

“This season has been a perfect one for global milk with ideal conditions everywhere compounded by civil unrest in the Middle East and dislocation of European milk due to what is happening in Eastern Ukraine.

“We can only hope there is no more bad news but I am optimistic we may be back above $6 kg/MS for 2015/16,” Mr Hoggard concluded.

Agricultural prices are always cyclical.

Dairy farmers creamed it last season, now it’s sheep and beef farmers who have a brighter outlook. Both know that what goes up comes down and what comes down goes up again, sooner or later.


GDT price index stable

17/09/2014

The GlobalDairyTrade price index didn’t change in this morning’s auction which is a relief after five consecutive falls.

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gdt17.9.14


Fonterra fined $300,000

05/04/2014

Fonterra has been fined $300,000 for it failings in last year’s food safety scare.

Fonterra Cooperative Group, the country’s biggest company, was fined $300,000 for breaches of the Animal Products Act during last year’s whey protein concentrate incident.

Judge Peter Hobbs fined Fonterra $60,000 for three separate charges and $120,000 for a fourth charge in the Wellington District Court. The judge took a starting point of $375,000, before mitigating factors including Fonterra’s early guilty plea and steps it took to address the issue, though he lifted the penalty to reflect the company’s size.

“There’s no doubt the flawed reworking process and its fall-out had wide ramifications,” Judge Hobbs said. “I accept, however, the offending resulted from careless failure to follow proper procedure rather than a deliberate or reckless plan – things could have and should have been done better.” . . .

Every company which deals in food faces the risk of a safety problem. All should have better systems in palce to deal with it than Fonterra had.

It let its customers and suppliers down and it is the latter who will ultimately pay:

After accepting four Ministry for Primary Industries (MPI) charges relating to the 2013 whey protein concentrate recall, Federated Farmers believes the $300,000 fine is proportionate.

“To a shareholder, $300,000 is much better than what the cooperative potentially faced,” says Willy Leferink, Federated Farmers Dairy Chairperson.

“Given the size of negative coverage relating to the non-botulism scare and the dent it put into the coop’s reputation, the size of the fine is proportionate.

“Especially given Fonterra did not contest the charges brought by MPI. Even the Crown Prosecutor acknowledges Fonterra has swiftly moved to put its house in order.

“As supplier shareholders and unit holders will ultimately meet the cost of the fine, we are certain Fonterra’s management has got the message loud and clear,” Mr Leferink concluded.

The company has implemented changes which show it has got the message.

This is vitally important because it’s not just Fonterra but the country’s reputation for food safety which would be damaged by another debacle.


Fonterra accepts MPI charges

13/03/2014

The Ministry of Primary Industries has filed charges against Fonterra over last year’s whey protein concentrate incident.

Charging documents have been filed for the following four charges:

  • Processing dairy product not in accordance with its Risk Management Programme
  • Exporting dairy product that failed to meet relevant animal product standards
  • Failing to notify its verifier of significant concerns that dairy product had not been processed in accordance with its Risk Management Programme
  • Failing to notify the Director General as soon as possible that exported dairy product was not fit for intended purpose.

MPI cannot make further comment as the matter is before the courts.

In a newsletter to shareholders, Fonterra chair John Wilson says the company accepts the charges:

  • We have announced that we have accepted all four charges, which are consistent with the findings of our Operational Review, and the Independent Board Inquiry.  A copy of our media release will be on fonterra.com.
  • The business is implementing the recommendations of the Operational Review and Independent Board Inquiry.

I’m pleased the company accepts the charges and that it is already implementing the recommendations resulting from the review and inquiry.

Fonterra let consumers, shareholders, the country and itself down over its handling of this incident.

Accepting the charges shows it accepts that.

Even more important is that it has already implemented very necessary changes to its processes and procedures.


Jury still out

14/11/2013

Fonterra’s internal report on the  botulism scare was full and frank.

The company has said it will implement all 33 recommendations.

It must because as Federated Farmers chief executive Conor English told the international food safety conference,  food safety is New Zealand’s number one issue – and the botulism scare was damaging and a massive risk for the economy.

Mr English compared it to Christchurch’s February 2011 earthquake.

“The stuff that happened with Fonterra and the dairy industry is very like the earthquake … and if they can’t get, frankly, their s*** together so that they are better for it – then I think New Zealand’s in a lot of trouble.

“So I hope, that they do – but the jury’s out for me, to be honest.”

These are strong words.

The earthquake killed lots of people and in the end no lives were at risk from the contaminated why protein.

But a real health threat in any of our dairy products would have as devastating an impact as the earthquakes have.

Fonterra is our biggest exporter and the fallout from the botulism scare shows the damage goes much wider than the company when something goes wrong.

That it appears not to have done any lasting damage has been in spite of the company’s inept handling of the issue when it broke and in the immediate aftermath.

The director of Victoria University’s contemporary China research centre, Xiaoming Huang, said Fonterra’s problem was not as big a deal in China as it might appear from New Zealand.

Professor Huang said New Zealand food still has a very good reputation and believes the public over-reacted.

The Global Food Safety forum’s founder, Rick Gilmore, said time will tell if New Zealand’s response so far is the right one.

“Agricultural and ag exports are so important to the New Zealand economy, that you can’t afford to do otherwise. I think everybody recognises that. So my impression is that New Zealand has held on to its claim to be a food safety model.”

That’s reassuring but no excuse for complacency.


Rural round-up

16/09/2013

Drought unlikely to trigger recession – James Weir:

The summer drought is likely to have the economy knocked backwards in the June quarter, possibly down 0.2 per cent, though there is no risk of a slide into recession, economists say.

While the official figures will be “unflattering” for the economy, after subdued growth of just 0.3 per cent in the March quarter, there should be a strong bounce in the September quarter forecasters say.

Official figures for economic growth are due on Thursday. They are expected to show the full damage from a slump in milk production and a drop in livestock slaughter numbers, after a spike up earlier in the year because of the drought. . .

Windy weather creates lambing headaches – Tim Cronshaw:

Gale-force winds have made life difficult for newborn lambs, and hill country farmers have their fingers crossed that the good luck for lambing on the Canterbury Plains lasts for them.

The lambing beat officially starts today for the hill and high country, and farmers there have watched lambs in the down country come through with a good run.

Survival rates have been high so far, although some mismothering was expected as a result of last Tuesday’s howling nor’westers, preventing lambs from moving and seeking warmth from ewes. . .

No evidence tail docking detrimental:

Preliminary findings of research into tail docking by Alliance Group have found that leaving a lamb’s tail longer or intact has no long-term beneficial or detrimental effect on its growth rate.

The southern-based company has just completed the first year of a three-year study.

Tail docking is common practice among New Zealand farmers. It is thought to help reduce dag formation and the risk of fly strike, a major cost to the sheep industry. However, to date there has been little objective information or research on the benefits, or otherwise, of the practice. . .

Fonterra has big plans for China – Dene Mackenzie:

Fonterra Co-operative Group has played down the implications of the whey contamination scare as it pushes ahead with a plan to double its milk production in China.

Although the world’s largest milk exporter identified some shortcomings in processes during the review, the co-operative says its staff on most occasions acted conscientiously on new information, and generally sought to do the right thing. . .

Need to enshrine horse heritage – Sally Rae:

Department of Conservation policies need to ensure that high country horse heritage is remembered, fostered and supported, horse-trekking enthusiasts say.

The High Country Pleasure Riders group, which was established in 1999 and is the largest horse-trekking club in the South Island, has made submissions to Doc’s draft conservation management strategies in both Canterbury and Otago.

The club has an annual calendar of weekend horse treks throughout the high country, often traversing public conservation land. . .


Rural round-up

10/09/2013

Could have done better – Hugh Stringleman:

Fonterra’s operational review of the botulinum food-safety scare has identified opportunities when the mess might have been avoided.

Group director of strategy Maury Leyland and her in-house team have also come up with several ways of preventing something like this happening again.

Fonterra said its world-class manufacturing facilities, quality systems, and robust testing regimes were all stress-tested by the incident.

“Overall our systems worked well, while some aspects showed room for further improvement,” Leyland said.

Chief executive Theo Spierings said many innovative actions had resulted from the review and Fonterra remained well-placed as the world leader in dairy nutrition but with no room for arrogance. . .

Primary role push for deer markets :

Dan Coup’s heart lies in New Zealand’s primary sector.

Mr Coup in July took over as chief executive of Deer Industry New Zealand, replacing Mark O’Connor, who stood down after 13 years in the position to run his family-owned investment business.

Less than two months into the role and Mr Coup is excited about the opportunities for the industry, while being realistic about the challenges it faces. . .

Young farmers’ CEO experienced – Sally Rae:

Terry Copeland has been appointed chief executive of New Zealand Young Farmers.

Mr Copeland’s background includes management, sales and marketing, supply chain management, tertiary teaching, journalism and being a brand ambassador.

His latest post was with Treasury Wine Estates, the second largest wine company globally. He led the export strategy and the supply chain team for four years. . .

Satisfaction in seeing improvement :

Colinswood Bush is alive with birdsong and has the feel of forest, a tribute to Conservation Award finalist Nigel McPherson’s stewardship. Mr McPherson (84) talks about 20 years leading the volunteers responsible for the restoration of the biodiversity of the native forest remnant on Otago Peninsula.

What is it about the project that got you involved and kept you interested?
Colinswood Bush is on private land at Macandrew Bay and has been protected by a Department of Conservation covenant since 1993. Here was a native bush remnant in the early stages of recovery previously neglected, but still with damage from grazing animals, wind, muehlenbeckia and other weed vines smothering lower growing trees, weeds and weed trees in plenty; but also the results by others to restore the original forest and some remaining good specimen trees such as broadleaf, kowhai, lacebark, a matai and nearby two substantial totara pointing to the possibilities that restoration was a realistic goal. . .

Farmlands Acquires NRM:

Farmlands Co-operative Society Limited has announced they have acquired the brand and business of NRM, an iconic New Zealand agricultural brand in the animal nutrition business. Farmlands, in partnership with commercial pig and poultry feed producer Mainfeeds, bought the New Zealand feed milling assets of Viterra, which became available for sale following the global acquisition of Viterra by Glencore.

The purchase will be completed over the next two months.

Commenting on the acquisition, Farmlands Chairman Lachie Johnstone said, “The purchase of NRM will deliver significant benefits to shareholders as part of the co-operatives animal nutrition strategy. Nutrition and water are increasingly recognised as two of the keys in furthering the development of agricultural production. . .

10 Reasons to be at the NZB Ready to Run Sale:

With catalogue production in full swing for New Zealand Bloodstock’s 2013 Ready to Run Sale of 2YOs here are 10 great reasons to consider making a trip to Karaka in November for this flourishing Sale:
RTR Cat Cover

11 Individual Group 1 winners in the past 6 seasons

15 Group 1 victories in the past 6 seasons

6 Derby winners since 2010

7 Cups wins in NZ since 2009 . . .


No single cause

05/09/2013

When something goes badly wrong, everyone wants to pin the blame on someone or something.

However, often there isn’t a single person or thing at fault, but a series of mistakes and this is what Fonterra has found in the operational review in the wake of the debacle over the precautionary recall of products containing why protein concentrate.

In an email to shareholders, chair John Wilson said:

The Review found that there was not one single cause of the precautionary recall. It was the result of a number of separate and unrelated events occurring in an unforeseen sequence:

  • The decision to reprocess the original WPC80 and not downgrade the product, in combination with the use of an item of non-standard equipment, was the cause of the contamination.
  • A one-off lapse in information sharing across two parts of the business led to delays in testing.
  • This issue should have been escalated to CEO-level earlier.
  • A major upgrade of the computer systems at some of our sites immediately prior to the recall resulted in product tracing taking longer than it should have.
  • Although Fonterra has clearly established domestic and international product recall systems, the size and complexity of the WPC80 recall was a factor, particularly given the product had itself become an ingredient in the products of multiple customers.

Having established what went wrong, the company is determined to improve its practices to prevent a repeat of the problem.

Business Improvements
To help prevent an incident like this happening again, Fonterra will:

  • Ensure our world-class food production standards continue to be maintained at all times, across all sites, in areas such as quality control, testing, and product specifications.
  • Further increase the business’ focus on quality and safety across the end-to-end supply chain.
  • Increase transparency, internally and externally, to improve information flows and the speed of escalation. 
  • Ensure Fonterra strengthens its product recall and supply management systems which allow the tracing of all product that is in its control, and collaborates with customers on how to link different supply chains and quickly trace products.

The business is now making changes based on the lessons learned in this review, including:

  • Establishing the new role of Group Director of Food Safety and Quality reporting directly to the CEO.
  • Strengthening the remit and scope of the Food Integrity Council.
  • Launching an internal Food Safety and Quality Hotline for staff and contractors to escalate any concerns about potential food safety risks.
  • Quality audits have been completed at our sensitive nutritional plants, including Hautapu.
  • Comprehensive staff training on use of an upgraded computer to efficiently trace products across our entire supply chain has been completed.

Other actions to follow involve a review of any upcoming system changes, strengthening our crisis management capability, and reviewing our traceability systems in our global businesses.

The business is also introducing additional authorisation requirements for non-standard processing and testing, and conducting specialised audits of our global manufacturing plants and product quality standards.

We’ll also be looking to implement any findings from the Board’s independent inquiry.

Everything in our power is being done to rebuild absolute confidence in our processes and products, and to strengthen New Zealand’s already strong food safety and quality system – and make Fonterra even stronger for the future.

Now that tests have confirmed there was no botulism risk the company is being criticised for “crying wolf” but it was right to act when there was a risk that babies’ health might be at risk.

Food safety must always come first.

However, while the precautionary recall was necessary, so too was far better communication than the company provided.

Fonterra  did the right thing but it communicated what it was doing and why badly and that is where it let itself, its shareholders, customers and the country down.

Lessons learned from what went wrong must result in improved practices to prevent a repeat and far better communication if there is another problem.


China admits breast is best

10/08/2013

The breast is best message is wide spread in the west and any advertising of infant formula is careful not to suggest that it is superior to morhers’ milk.

But in China advertising of infant formula is aggressive .

However, the ill-wind of the contaminated whey protein concentrate has blown some good for Chinese babies – promotion of the benefits of breast feeding.

China’s rates of breast-feeding are among the world’s lowest. But health workers and the government are trying to revive the practice, and a drumbeat of safety scares over commercially produced milk is giving them new leverage. Visitors to Internet forums for new parents are posting comments about the benefits of breast-feeding and the potential hazards with formula.

“The risks of formula feeding are increasingly clear to the Chinese public,” Dr. Robert Scherpbier, chief of health and nutrition for UNICEF China, said in an email this week. His comment came after China’s government ordered a recall of formula imported from New Zealand because of contamination fears.

“How many infant formula crises do we still need to convince mothers and policy makers that breast is best?” Scherpbier said. . .

Some women choose not to breast feed, some who want to can’t. But some good will come out of the WPC contamination scare if more mothers who could, do.


Rural round-up

15/05/2013

Government approves kiwifruit Psa plan:

A national management plan for dealing with the kiwifruit Psa virus has been formally approved by the Government, Primary Industries Minister Nathan Guy has announced today.

“This plan means that the primary responsibility for managing Psa is now moving to the industry themselves as they are best placed to co-ordinate and lead the response.

“As part of this, the Government has approved a levy rate on exported kiwifruit equating to one cent per tray for green fruit and two cents a tray for gold fruit. This will help cover disease management, monitoring, plant material movement and dealing with unmanaged and abandoned orchards.

“The levy has been voted on by growers and will have a shortfall until yields return to pre-Psa levels. Therefore Cabinet has agreed that $3.5 million remaining from the initial Government funding of $25 million will be passed to Kiwifruit Vine Health (KVH) to implement the plan. . .

Enrolments to close for leading farm business management programme:

Applications are to close at the end of this month for this year’s Rabobank’s Executive Development Program, Australasia’s leading agricultural business management course for leading primary producers.

Now in its fourteenth year, the prestigious Rabobank Executive Development Program gives leading New Zealand and Australian farmers, from a range of agricultural sectors, the opportunity to develop and enhance their business management skills.

Rabobank CEO New Zealand Ben Russell said the Executive Development Program is designed to assist farmers improve primary producers’ ability to manage the challenges of agriculture and plan for the growth of their farming businesses. . .

Farm Environment Ambassadors Study Marketing of New Zealand Produce in Asia:

An industry-backed trip to Asia has given Otago farmers Blair and Jane Smith a deeper understanding of the challenges facing marketers of New Zealand meat and dairy products.

National winners of the 2012 Ballance Farm Environment Awards, the Smiths recently returned from South Korea, China, Taiwan and Singapore, where they visited a number of key markets for New Zealand sheep, beef and dairy products.

The purpose of the 16-day trip was to learn more about offshore markets, exchange views on topics of crucial interest to New Zealand farmers and to showcase New Zealand’s stance on agricultural sustainability. . .

Announcement of Intention to IPO:

Synlait Milk Limited (Synlait Milk) advises that it is considering an initial public offering (IPO) of shares and to list on the NZX Main Board.

Synlait Milk is currently 49% owned by Synlait Limited and 51% owned by Bright Dairy & Food Co., Ltd (Bright Dairy).

Prior to any shares being allotted under ny IPO, Synlait Limited has advised Synlait Milk that it intends to distribute to its shareholders, on a pro-rata basis, the shares it holds in Synlait Milk. . .

PGG Wrightson annual earnings to fall by up to 27% on drought, lower livestock values:

PGG Wrightson, the rural services company which fell out of the NZX 50 Index this year, expects annual earnings to fall by as much as 27 percent as dry conditions on both sides of the Tasman and lower livestock values erode prices.

The Christchurch-based company expects earnings before interest, tax, depreciation and amortisation of between $40 million and $48 million in the 12 months ended June 30, down from $55 million in 2012, it said in a statement. The decline was put down to the dry climate in Australia and New Zealand, lower livestock value and falling earnings from its Agri-feeds unit after disposing of its 4Seasons Feeds joint venture. . .

Irrigation Event Needs More ‘Owner Operator’ Irrigator Support:

The irrigation industry is rapidly moving away from a ‘No 8 wire mentality’ as next week’s Great Irrigation Challenge in Ashburton will demonstrate, says IrrigationNZ – but more ‘owner operator’ irrigators need to rise to the challenge.

On May 23 and 24 at Ashburton Racecourse, IrrigationNZ, with the support of principal sponsor Aqualinc, will host a series of hands-on workshops aimed at up-skilling and professionalising both irrigators and their support industries.

While more than 100 irrigators, irrigation scheme representatives and industry advisors from across New Zealand have signed up, IrrigationNZ wants to see more ‘owner-operator’ irrigators attend. . .

Southland’s Morning Milking Roll Call:

Georgia Donaldson discovered some ‘udderly amazing’ facts when she came face to face with about 500 cows on Fonterra Shareholders Allan and Ann Black’s farm in Invercargill this morning.

Each Jersey cow can produce at average 4100 litres of fresh milk a year – enough for more than 20,000 packs of Fonterra Milk for Schools milk.

Georgia was one of several children from 12 Invercargill schools invited to learn about the source of their daily dose of nutrition, and how it can help them concentrate in the classroom and, in this case, outside of it. . .


GDT TWI drops 7.3%

02/05/2013

The trade weighted price of milk in this morning’s GlobalDairyTrade auction dropped 7.3%.

GDT Trade Weighted Index Changes

The price is still well above the long term average.

 

gdt 2.5.13

The price of anhydrous milk fat dropped 5.2%; butter was down 6.7%; butter milk powder was down 3.3%; cheddar was down 3.4%; rennet casein was down 3.1%; skim milk powder fell 9.5%; and whole milk powder dropped 10.2%.

 


Rural round-up

01/05/2013

Feel good factor that comes from living with bees – Sally Rae:

Murray and Heidi Rixon get a real buzz from sharing their love of bees.

The couple have launched a business, offering a beehive rental and management service to clients with domestic gardens, lifestyle blocks or rural land.

It was a business they described as having a ”massive feel-good factor” as they provided a hands-on teaching environment and actively encouraged clients to get involved with their new residents.

Brought up in Mosgiel, Mr Rixon has returned to his roots after years away following an interesting career path; horticulture to aviculture and now apiculture.

Horticulture was his first profession and he worked at the Dunedin Botanic Garden for 10 years before moving to the United Kingdom in 1991. . .

Pesticides not to blame for bee deaths:

Europe’s decision to ban neonicotinoids is another example of politicians making decisions meant for regulators. Pesticides have been blamed for a decline in bee health despite a lack of scientific proof.

“Clear scientific evidence has taken a back-seat to a politically-based decision on regulation, which could mean the reduction of effective crop protection products in Europe,” said Graeme Peters, chief executive of Agcarm.

There is absolutely no evidence that neonicotinoids are harming New Zealand’s bee population. First introduced in 1992, neonicotinoids are thoroughly assessed before being approved for use by the Environmental Protection Authority.

Blaming pesticides is barking up the wrong tree. A multitude of factors are responsible for persistent bee mortality, including pests and parasites, microbial disease, inadequate diet, bee management practices and climate change. . .

Fonterra to cut 300 jobs, slashing costs to invest in growth strategy:

Fonterra Cooperative Group, which imposed a hiring freeze in February, may eliminate up to 300 jobs as it seeks annual cost savings of $65 million a year, adding to $60 million of cost cutting already targeted for 2013.

The review of support services affects workers at Fonterra’s corporate offices in New Zealand. It didn’t quantify the potential restructuring costs. The May Day announcement marks the biggest layoff at the dairy giant since it cut workers in 2006 with the closure of manufacturing plants.

“While we are investing in growth, we have to make sure our people are working on the right things and that we are spending our precious capital on the right priorities,” chief executive Theo Spierings said in a statement. Jobs would be eliminated by centralising services, reducing duplication and stripping out layers of management, he said. . .

No fish for you – Offsetting Behaviour:

If you’re a fisherman on Manitoba’s lakes, you can only sell your fish to the government’s monopsonist Freshwater Fish Marketing Corporation. I’ve heard different stories about its establishment: some stories had it that the FFMC was set up to protect small fishermen against big corporations who’d otherwise exploit them; others had it that the system was meant to encourage efficiency through centralised processing. Or maybe it was both of them.

It really isn’t working out very well for fishers based far from the processing plant. And it isn’t working out for fishers who have put in the yards to identify markets for fish that the FFMC has deemed to be of very low value. Fishers cannot sell some species of fish to the FFMC at any kind of profit, but they’re also forbidden from selling those fish to other willing buyers. And so the fish are left for the birds to eat. . . .

Farmers Beef Up Leadership Skills At Environmental Forum:

The first Beef + Lamb New Zealand Environmental Leadership Forum has been hailed as an outstanding success.

Twenty five sheep and beef farming leaders attended the B+LNZ -funded event, held in Wellington from April 16 to April 18.

The forum was facilitated by the New Zealand Farm Environment (NZFE) Trust, which has run a similar annual event for dairy farmers and also delivers the Ballance Farm Environment Awards.

Participants included past-winners of the Ballance Farm Environment Awards and B+LNZ Farmer Council members.

Simon Saunders, deputy chair of the NZFE Trust, says the forum was designed to equip farmers with the skills needed to become effective ambassadors for the sheep and beef industry.

“These farmers have already achieved a huge amount in terms of environmental leadership. So a key aim of the forum was to refresh their skills and give them the tools to work successfully with a range of community stakeholders to address environmental issues.” . . .

DCANZ Welcomes Establishment of Joint Government/Dairy Industry Working Group On Food Testing:

The Dairy Companies Association of New Zealand (DCANZ) today met with the Ministry of Primary Industries and agreed to develop appropriate engagement protocols across dairy companies and MPI where a food integrity issue comes to light.

DCANZ Chairman, Malcolm Bailey, said that the meeting was a positive step forward in strengthening closer ties between dairy companies and government to meet market information needs on food testing.“New Zealand has one of the most robust food safety response systems in the world. The detection of DCDs was not a food safety issue but demonstrated strong interest from markets for information on food testing,” said Bailey.

“Today MPI and DCANZ agreed to formalise coordination and communication protocols related to all future food testing incidents, to help meet market needs both in New Zealand and overseas.” . . .

 

Photo: Happy Earth Day everyone! Thanks to www.FarmOn.com for the picture!

 


Milk price up 1.1% in GDT auction

18/01/2013

The trade weighted price index increased 1.1% in yesterday morning’s GlobalDairyTrade auction.

GDT Trade Weighted Index Changes

jan 18

 

 

 

The price of anhydrous milk fat increased 2.4%; butter milk dropped 6.5%; cheddar was up .9%; milk protein concentrate was down 2%; rennet casein increased .8%; skim milk powder was down .3% and whole milk powder was up 2.8%.


Dairy price up 7.8%

16/08/2012

This morning’s GlobalDairyTrade auction showed a welcome reversal of this year’s trend  for dairy prices with a 7.8% increase in the trade-weighted index.

The price paid for anhydrous milk fat increased 14%; buttermilk powder was up 10.2%; cheddar was up 8.8%; milk protein concentrate increased by 15.4%; rennet casein was up 4.7% skim milk powder increased 7.3% and whole milk powder increased by 7%.

This increase takes the price back to around the long term average.

One reason for the increase could be the drought in the USA. That usually depresses the price of beef because the market is flooded by farmers culling stock, and increases dairy prices because of a decrease in supply.


Phantom vs Fonterra

07/08/2012

A phantom bidder which claims to have offered a better deal for New Zealand Dairies’ South Canterbury milk powder plant than Fonterra is urging the Commerce Commission to investigate the sale process.

In a confidential submission on Fonterra’s application for clearance to buy NZ Dairies, the rival called on the Commerce Commission to “investigate the fairness of the sale process” which it says put “significant pressure” on suppliers to accept the Fonterra proposal. The unnamed bidder claimed to have trumped Fonterra’s undisclosed winning bid.

“The receivers may have elected for other reasons not to pursue the offer, but the perception that the Fonterra offer was the best is not correct, and we request that this be corrected,” the submission said.

“The Fonterra offer was clearly not the best offer on the table, but the receiver chose not to pursue other options and yet Fonterra claim not to have pursued the acquisition. This process should be investigated,” it said.  . .

The unnamed rival was told its bid was unsuccessful as it needed Overseas Investment Office approval, the submission said.

The submission referred to an international equity investor whose chief executive and main shareholding are New Zealanders who are “extremely keen and interested to invest in NZ.”

The bidding company was “formed to invest in and operate dairy farming and dairy processing assets.”

The investors have primarily been in energy and recently showed an interest in pastoral farming and dairy production, the submission said.

The bidder “has for the past three years been researching the NZ dairy industry and is very interested to invest,” it said.

Fonterra’s offer was welcomed by most of NZ Dairies’ suppliers as a lifeline, not least because its offer included payment for milk supplied last season for which farmers hadn’t received payment.

Fonterra is running the plant on behalf of the receivers now. Even those suppliers who weren’t entirely enthusiastic about joining the co-operative will almost certainly prefer the devil they know than a phantom which would have to wend its way through the Overseas Investment Office approval process with no guarantee of success.


Fonterra putting milk back in schools

16/12/2011

School milk was not one of the happy memories of my childhood.

A half pint was too much for me to drink at a time and it was usually warm. Besides, like most of my contemporaries we had plenty of milk at home.

Ample milk and adequate diets are no longer the norm for too many children and Fonterra CEO Theo Spierings has announced a plan to put it back in schools.

Mr Spierings says New Zealand has the potential to be the dairy nutrition capital of the world, and this should start at home with Kiwis drinking milk.

“When I took over this role I made a promise to take a fresh look at how we could make milk more accessible in New Zealand,” says Mr Spierings.

Milk is an important building block for good nutrition. We want Kiwi kids to grow up drinking milk because it is good for them.

We are looking to introduce a Fonterra Milk for Schools programme. We want all New Zealand primary school children to have access to dairy nutrition every school day. For some New Zealanders this initiative will bring back memories of the  Government programme which operated in New Zealand primary schools between 1937 and 1967. We’ll ensure this time that the milk is cold and tastes great.

The company is staring with a regional pilot for primary schools in Northland, covering 110 schools and 14,000 children, starting during the first term next year.

 It will be a voluntary programme for schools to opt into so we can get a fix on likely demand from schools for such a programme.   “We don’t want kids having to drink warm milk in summer like the old days, so we will look at installing refrigerators in schools, and also explore options for recycling the milk packaging,” Mr Spierings says.

Results from the Northland pilot will be monitored during the first three terms of the 2012 school year with the intention of progressing with a nationwide programme for the start of the new school year in 2013. Mr Spierings said Fonterra would welcome support from other partners for a nationwide programme, including the Government.

As a supplier and  shareholder in Fonterra I can see social, health, marketing and PR benefits from this scheme but it comes at a cost.

The company announced an increase in the forecast payout this week and even without that expected returns this year were reasonable. But what happens when the price of milk, and therefore returns to farmers, go down? Once the provision of  “free” milk is established it will be difficult to take it away again.

I’m definitely not keen on the government getting involved in the provision of school milk, especially if it’s not being aimed at only those in genuine need. Its money would be better spent on initiatives which address the causes of ill-nourished children.

The company has been criticised for the high price of milk on the domestic market and is continuing to review it.

Our motivation is to have more New Zealanders drinking more milk because it is important for basic nutrition. To achieve this, we have to make it available and affordable.

In recent years we have seen a major lift in international dairy prices which effectively doubled in 18 months. This has pushed up the cost of milk prices locally and we have seen consumption decline, with New Zealanders drinking less milk.

Traditionally milk consumption in New Zealand has been increasing around 1-2 per cent per year but it is currently declining by a similar rate.

“We are exploring a range of options to turn around the consumption decline by making milk more consistently affordable and will report back in the first quarter of next year,” Mr Spierings says.

Fonterra will also trial milk sales in its RD1 rural supply stores.

Anchor is our flagship brand and it makes sense to have it available in the 64 RD1 rural stores around New Zealand which we now own 100 per cent. “Initially we will be focusing on smaller towns that don’t have supermarkets nearby. From here we can measure the demand and decide whether to roll this out further,” Mr Spierings says.

Customers of RD1 stores are predominantly farmers. But if the stores sell milk well below supermarket prices they will broaden their customer base and the competition will probably force supermarkets to reduce their mark-ups.


Low $ compensates for drop in milk price

05/10/2011

The New Zealand dollar reached a six-month low overnight which will more than compensate for the 1.6% drop in the trade weighted index in Fonterra’s globalDairyTrade auction.

Changes in Price Indices
Anhydrous Milk Fat (AMF)

-3.5%

Butter Milk Powder (BMP)

3.2%

Cheddar .

-4.9%

Milk Protein Concentrate (MPC70)

0.5%

Rennet Casein (RenCas)

-7.2%

Skim Milk Powder (SMP)

-0.3%

Whole Milk Powder (WMP)

-0.7%

All Products (Trade-Weighted)

-1.6%

Prices are still above the long term average but this is the eight consecutive drop in trade weighted price on the GDT auction platform.

It is also the first time Dairy America products have been in the auction, not that there is a link between those two factors.

 


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