Rural round-up

June 4, 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%

February 4, 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

September 25, 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

September 17, 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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Fonterra fined $300,000

April 5, 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

March 13, 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

November 14, 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.


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