Tosh no substitute for trust

29/12/2013

Labour did it’s best to make the 2008 election about trust.

They thought they could convince voters they wouldn’t be able to trust John Key.

Their plan didn’t work.

Whatever the party tries to campaign on this year it can’t be about trust because one of David Cunliffe’s big weaknesses is a reputation for talking out both sides of his mouth.

Fran O’Sullivan points to the problems this causes:

. . . Cunliffe also uses an essential duality – which has been accurately pin-pointed as “talking out of both sides of his mouth” – to try to assuage middle-class and politically adept New Zealanders that he doesn’t really mean all the tosh he threw as bait to Labour’s bedrock base to garner voting support during his leadership campaign.

What fascinates and frustrates is that it is difficult to work out which side of Cunliffe’s mouth will triumph if he ends up this time next year as Prime Minister.

Will it be the crusading politician who wants to bring down bloated plutocrats, raise the underclass up and cut the ground out from under particular corporates through legislative intervention?

Or will it be the more considered politician – an experienced former cabinet minister who is prepared to take advice and feedback from affected players instead of ramming decisions down their throats with a damn the consequences mentality? . . .

If Cunliffe can’t give the same, straight message to different audiences, he’s going to have a very big job convincing voters he can be trusted.

The tosh he gave supporters while campaigning to be leader might work for the die-hard party faithful but it’s no substitute for trust.

And that tosh will be a much harder sell for the wider public when so many indicators are showing the policies Cunliffe and his party have fought tooth and nail against are turning the economy around.

If swinging or undecided voters ask themselves who they trust it’s unlikely to be Cunliffe.

If they ask which party is most likely to deliver better economic conditions, the answer isn’t going to be Labour, especially when it would be in coalition with the Green party whose economic credentials are even more questionable.


Bring in the AG

14/12/2013

Fran O’Sullivan is calling for the Auditor General to open a wider inquiry into Len Brown’s abuse of his position.

If he had any skerrick of honour left, Len Brown would by now have tendered his resignation as mayor to the people of Auckland.

It is absolutely clear that Brown has obtained multiple private benefits by virtue of his position as Mayor of Auckland.

It’s now time for Auditor-General Lyn Provost to open up a much wider inquiry to satisfy Aucklanders – and New Zealanders at large – just where Brown’s abuse of his position stopped.

Brown is hopelessly compromised by the Ernst & Young (EY) report, finally released after lengthy “negotiations” between the mayor’s office and Auckland Council chief executive Doug McKay on just what would be made public from the review into the possible use of council resources during the mayor’s two-year affair with Bevan Chuang.  . .

Brown has clearly flouted Auckland Council disclosure guidelines and general standards. This is symptomatic of a politician who believes he is above the rules. The fact that he was a “no show” at yesterday’s press conference indicates Brown has no answers outside the carefully crafted but ridiculous spin that his bevy of well-paid mayoral office press people have been churning out in recent days to try to deflect attention from the damaging findings in the review. . . .

This isn’t just about Auckland.

The rest of the country might love to hate our biggest city but we understand its importance to the rest of the country.

A mayor whose mind – and morals – are elsewhere is not giving the job the concentration and dedication it requires.

This is not a man citizens can look up to. He is not a role model for children. His standards are not those of the leader the city deserves.

His infidelity is a matter for him and his wife. His acceptance of gifts he didn’t declare and failure to reimburse the extensive use of his work phone for private calls and texts, and other matters the Ernst & Young report didn’t cover, are public concerns.

New Zealand’s reputation for lack of corruption relies on proper investigation of any misuse of public resources and the Auditor General is the one who should do that.


Rural round-up

22/08/2013

Age crisis dawns as sunset years sets on workers – Hugh Stringleman:

KPMG has delved into the perplexing reasons why young people don’t take careers in agriculture more seriously in a country which relies upon the primary sector. Hugh Stringleman has read its latest Agribusiness Agenda report.

The capability of the people who work the land has made New Zealand what it is today.

While competitors can replicate equipment and processes, it is not easy to replicate the insight and relationships that people have developed over decades, according to the latest KPMG agribusiness report.

But the ages of existing farmers, orchardists and scientists continue to rise and the entire primary sector faces manpower shortages now and in the future. . .

Balance sheets under stress from lower livestock numbers – Allan Barber:

After the discussions between meat companies, lobbying by MIE, conferences and strategy debates, right now an eerie calm has settled over the meat industry. This is partly due to the mid winter slowdown in processing activity with only bobby calves to get excited about

At this time of year companies are doing their best to minimise any losses in the last quarter. There is no doubt the final results will be a lot better than last year, but they have to be, because the large companies could not sustain another big hit to their balance sheets.

Combined current and non-current debt between Silver Fern Farms, Alliance and ANZCO of $710 million at 30 September 2012 to fund losses and inventories means a substantial improvement this season is absolutely essential. The noises from the processors suggest moderate profits at best, mainly because of a sell down of inventory leading to reduced current debt and better control of procurement, offset by lower margins. . .

Spierings leads charge of change – Fran O’Sullivan:

Fonterra boss Theo Spierings has consolidated his powerbase at the dairy co-operative with chairman John Wilson’s emailed statement to shareholders that the board has confidence in the way the chief executive is handling the tainted whey protein affair.

The brutal truth is that long-time senior executive Gary Romano – who ran the New Zealand operation – had already offered himself up as the sacrificial lamb.

Romano’s resignation came before the various inquiry teams had even started delving into who to blame for the late discovery of “clostridium” in a batch of whey protein which had been made into infant formula and other products.

Since then two other executives have been put on leave – a clear indication that Fonterra already has a good idea where the buck will stop on this fiasco. . .

Auctioneers competition returns:

Following a successful inaugural event, the Heartland Bank Young Auctioneers Competition will return to the Canterbury A&P Show in 2013. 

The competition aims to showcase and develop young livestock auctioneers and improve the standard of auctioneering across the board. 

During the judging, which includes a test of auction rules and a mock auction, each entrant will be required to sell three lots of heifers/bulls. . .

Eastern Southland Dairy Conversion Benefits from Farm Environment Competition:

Entering the Ballance Farm Environment Awards helped a fledgling Southland dairy operation measure its progress as a successful and sustainable farming business.

South Coast Dairy Ltd, an equity partnership between five families, owns 202ha between Curio Bay and the Haldane Estuary in Eastern Southland. The former sheep and beef farm was converted four years ago and now milks 385 cows on a 135ha milking platform.

Mindful of the farm’s location in a sensitive coastal area, the owners have made a big effort to mitigate the environmental impacts of dairying, with extensive riparian fencing and planting work conducted following consultation with the Department of Conservation, Environment Southland, Landcare Trust and Fish and Game. . .

Brancott Vineyard celebrates its 40th anniversary:

As the pioneers of the Marlborough wine region and its signature varietals, Sauvignon Blanc and Pinot Noir, Brancott Estate is excited to celebrate 40 years since the first planting of vines at Brancott Vineyard, home of world-renowned Brancott Estate wines.

On 24 August 1973, in front of a crowd of local media, politicians and business leaders, the Marlborough wine industry was born. At the time, the founder of what is now Brancott Estate, Frank Yukich made the statement that “wines from here will become world-famous” – and indeed they have, receiving many prestigious awards and accolades around the world. . .


Problem of attitude not environment

13/01/2013

Fran O’Sullivan writes on the problem of relatively high youth unemployment when employers can’t fill vacancies with locals:

. . . as with the dairy industry – farmers would rather import low-paid but highly skilled workers from the Philippines who will work long hours, rather than set up an optimum working environment for young Kiwis. . . .

Any dairy farmer could write a book about staff.

There are the wonderful ones who are keen, willing to learn, and use their heads and their hands.

There are others who aren’t as good but aren’t bad and there are always some who are hopeless.

There are good and bad employers too – but the latter don’t keep staff long and don’t deserve to.

Good employers also have trouble getting locals to work which isn’t a reflection on the working environment.

Dairying isn’t easy. It requires getting up early, getting dirty and working in all weather and there’s not a lot employers can do to make that more attractive.

But it pays well and workers with the will to advance can go up the employment ladder to management or sharemilking. That in turn can lead to farm ownership or provide a nest egg for investment in other business opportunities.

There are a lot of foreign workers on dairy farms but they’re not low paid and it’s not because employers prefer foreigners per se.  It’s because they are often better workers.

Dairying isn’t the only industry where this happens.

It’s not the working environment that’s the problem. It’s the attitude of some of those who are out of work and aren’t prepared to take the long term view that doing well in any job is far more likely to lead to a better one than doing nothing.

 

 


Rural round-up

17/10/2012

Meanwhile back at the ranch – Fran O’Sullivan:

Is Fonterra’s Sir Henry van der Heyden staying on past his use-by date as the dairy co-operative’s chairman to protect chairman-elect John Wilson from a boardroom coup?

That question was doing the rounds even before Fonterra confirmed on September 27 that van der Heyden would not step down from the board as expected this December when he hands over the chairmanship to John Wilson at the co-op’s AGM.

Van der Heyden will instead stay on for an unspecified period – expected to be much less than the December 2013 period when his term as an elected board member runs out – to ostensibly “provide continuity around the board table” until after Trading among Farmers (Taf) is up and running. . .

Maintaining lifestyle balance – Sally Rae:

Keri Johnston was about halfway through her final year at St Kevin’s College, in Oamaru, when she decided to pursue an engineering degree.

Ms Johnston had always loved science and mathematics but laughingly recalled how she hated the sight of blood, which ruled out anything in the medical profession.

After hearing a talk from a lecturer from the University of Canterbury School of Engineering, she decided engineering was something she might like to do. . .

Rabobank Australia & NZ country banking head appointed CEO of US Rabo AgriFinance:

Rabobank Australia and New Zealand Group country banking division head Neil Dobbin has been appointed to run Rabobank’s United States agri banking business, Rabo Agri Finance (RAF).

Mr Dobbin – a veteran of 25 years with Rabobank in Australia and New Zealand, the past decade as group executive Country Banking Australia & New Zealand – has taken on the role of chief executive officer for RAF.

Announcing the appointment, Rabobank Group executive board member Berry Marttin said during Mr Dobbin’s stewardship of its Country Banking operations in Australia and New Zealand, Rabobank had grown to become the leading food and agribusiness bank in the region. . .

New voice for local farmers

The new president of Federated Farmers in Wairarapa is aiming to make sure local farmers have their voice heard.

Bideford’s Jamie Falloon was voted in on Tuesday night by the executive committee to replace outgoing president Paul McGill, who is taking up a position at Landcorp in Wellington.

Mr Falloon, 43, lives in Bideford with his wife Georgie and three children Joe, 9, John, 6 and Anabelle, 4. . .

Blue sky thinking from green fingered finalists:

Ideas that cut the cost of heating propagation beds to grow plants and turn frost fans into power generators are just two of the six projects being developed by the finalists for the Agmardt Market Innovation project in the 2012 Young Horticulturist of the Year Competition. Other innovation ideas include collapsible crates for freighting small plants, an instant rollout flower mat, and a design that takes weeding to a new level.

Six finalists from around New Zealand who have won their industry sector competitions are preparing for the intensive two day competition on November 14 and 15 in Auckland.

“The standard this year is amazing; I think the judges will have difficulty selecting the winner,” says Nicola Rochester, Chair of the RNZIH Education Trust, which manages the competition. . .


Ministers can use judgement

12/08/2012

Quote of the day:

 . . .   the court’s robust decision restores much-needed clarity to New Zealand’s foreign investment regime.

The upshot of the Fay-led challenges is that the bar has been raised for foreign buyers of farms or businesses worth more than $100 million. But Cabinet ministers are entitled to rely on their judgment when it comes to assessing the additional value to New Zealand that a foreign bidder brings when acquiring assets.

Critically, the court has shot a massive hole in the notion that a foreign buyer must have direct industry experience if they are to buy local farms or $100 million-plus Kiwi businesses. Fran O’Sullivan

Some legislation allows Ministers no latitude at all, the law is the law in those cases and Ministers have no discretion over its application. But other legislation, among which is that governing overseas investment, allows them to exercise their judgement.

In this case, the sale of the former Crafar Farms to Shanghai Pengxin, they decided that the company could add value to New Zealand, and imposed very strict conditions on the purchase to ensure it would.

The opposition to the sale is almost all based on emotion.

Now the Court has ruled in the purchaser’s favour the company and Landcorp will be able to get on with running the farms and the sooner they do that the sooner they’ll prove the doubters wrong.


We need brainy and brawny jobs

09/07/2012

Fran O’Sullivan has identified a new strain of “New Zealand envy” from the other side of the Tasman Sea:

. . . Like Bill English, Groser had been buoyed after hearing a bunch of Australian business leaders talk openly about their clear case of “New Zealand envy” in Sydney the previous week.

The frank admiration for New Zealand’s economic policies – which was on show at the annual Australia New Zealand Leadership Forum meeting – had not really been displayed by Australian power-brokers since this country was in the grip of Rogernomics and Bill Birch’s labour market reforms.

 The Cabinet has since made a strategic decision to capitalise on the improved Australian business sentiment towards New Zealand by “going hard” for more investment. Companies like Heinz Wattie have already scrapped hundreds of Australian jobs in favour of opening new plants in New Zealand to take advantage of lower wages and restrictive labour laws.

This is good news. But typically, Labour still sees it through a “glass half empty” prism as positioning New Zealand like Mexico; a low wage neighbour where Australians can outsource manufacturing jobs in the way United States corporates have outsourced similar jobs to Mexicans.

I wish Labour would also focus on the fact that it is going to take considerable time and investment to build more high-tech growth companies which will spawn high-paid brainy jobs as well as the brawny ones.

Three or four decades ago made in Japan meant low price and probably low quality. Now  Japanese products, especially electronics and cars, are generally high quality.

That took time and it will take time for our economy to turn round and support more high paid, high tech jobs.  While we’re waiting we should welcome companies keen to do business here, even if one of the attractions is lower costs, including that of labour.

It’s stupid to sneer at lower paid jobs and those that require more brawn than brain. They too can contribute to much-needed economic growth.


Certainty and predictability needed

12/04/2012

Sir Graeme Harrison, chair of the  NZ International Business Forum, wants the Cabinet ministers considering the Crafar farm sale to Shanghai Pengxin to give a clear signal foreign investment is welcome here:

NZIBF chairman Sir Graeme Harrison makes the point that foreign investors are prepared to respect the rules but they need predictability and certainty that when conditions are complied with the investment will be able to proceed.

“That is why the current uncertain situation with regard to the Crafar Farms is so negative for New Zealand’s interests. It risks detracting from New Zealand’s attractiveness as an investment destination at a time when there is strong competition for foreign investment from other countries.”

Sir Graeme’s determined push follows a strong statement by Auckland Regional Chamber of Commerce chief executive Michael Barnett who railed against the way the Shanghai Pengxin bid had been demonised by late-comer bidders in an appearance on Q&A at the weekend.

Fran O’Sullivan has added Sir Graeme to her unofficial roll-call of business people who are finally stepping up and saying this country needs to protect its reputation as a fair regime for foreign investors.

But the big question is why is that only Sir Graeme, Barnett, BusinessNZ’s Phil O’Reilly and George Gould have been prepared to openly speak up for what matters in this area. The paucity of open debate on the pros of foreign investment is astounding and business does need to step up here.

One of the glaring omissions from the list is anyone from Fonterra.

I can’t understand why the company which sells most of its produce overseas and which itself owns farms in other countries, is opposed to foreign ownership here.

As Sir Graeme says, we need foreign investment to make up for our own lack of savings:

“Foreign investment is what plugs the gap in our low domestic savings rates. Without it, ratings agencies could react by increasing New Zealand’s (already high) credit risk rating and interest rates will rise.”

Would the people so strongly opposed to foreign investment be quite so sure of their stand if their mortgages increased without it?


Whole greater than sum of parts

08/03/2012

Why did the receivers of the Crafar farms not offer the properties individually rather than only attempting to sell them all as a job lot?

I’ve asked this question several times and it’s been based on a misconception because the receivers did offer the farms separately or together.

A comment from JC yesterday pointed to a column by Fran O’Sullivan who explained:

“But KordaMentha receiver Brendon Gibson confirms there was no real difference between the way the Crafar farms were marketed here and overseas.

The wording used in the advertising material in New Zealand was quite explicit in what was being offered. “There is the potential to purchase a single property, a selection of properties, or the entire portfolio,” the advertisement stated.

This was patently clear in copies of the NZ advertisements which Bayleys placed.

The firm had been instructed to market the portfolio to the widest potential buyer audience possible and secure the best possible outcome by maximising the value of its clients’ property assets.

The receivers are duty-bound to get the best price.

Given there would be a much larger market for individual farms than the whole lot as a package I’d have thought that selling them separately would have raised more money than selling them all together.

Obviously not in this case where the value of the whole is greater than that of the sum of the parts.

It could be that those interested in single properties thought they’d get a bargain and didn’t offer enough. It could be that decent offers were made for the better properties but not enough was offered for the run-down ones.

There might be other explanations, but whatever the reason, the best offer was from  Natural Dairy but was turned down by the Overseas Investment Office. The next best offer was from Shanghai Pengxin and both were for all the farms as a package.


One does what it oughtn’t and t’other doesn’t what it ought’a?

16/04/2011

Quote of the week:

“Does Labour do things they shouldn’t so people vote for them and National doesn’t do things they should so people won’t not vote for them?”

Sean Plunket or Duncan Garner* on The Nation this morning in response to a comment by Fran O’Sullivan on the cost of Labour’s 2005 election bribes.

*I was listening not watching and it’s not online yet to check who said this while chairing the panel discussion.


FTAs slow but vital progress to prosperity

27/10/2009

The announcement of a free trade agreement with Malaysia, our eighth biggest trading partner, is welcome news.

Prime Minister John Key said:

“Between 2004 and 2008 New Zealand’s goods exports to Malaysia grew by more than 80 per cent – double the rate for New Zealand’s export growth to the world over the same period.”

If we can achieve that without an FTA, the opportunities with one will be even better.

Trade Minister Tim Groser said:

“Malaysia’s large and growing population of more than 28 million people presents considerable opportunity for new and enhanced market access for New Zealand’s exporters, including in education, environmental, management consulting and veterinary services.

Fran O’Sullivan highlights the opportnuities for dairy prodcue too.

But it’s not just about goods and services, it’s also about attitude.

For generations we looked to the other side of the world, to Britain, and sent most of our produce there.

Now we are looking to markets closer to home. This is not just about trade, it signals a change in culture and a growing recognition of the importance of the Asia Pacific region.


Fran O’Sullivan on blogging on YouTube

02/10/2009

Fran O’Sullivan spoke on the accidental empire of political blogging at a breakfast organised by Rural Women NZ earlier this week.

Part of that address is now on YouTube:

Roarprawn posted on the breakfast, so did Big News and Kiwiblog  who also discussed Fran’s suggestion that NZ On Air should become NZ On Media. That in turn led to a post from Bill Ralston.

UPDATE:

Not PC  reckons this is an example of life imitating satire; and  Liberty Scott thinks NZ On Air should be abolished


An accidental empire

14/09/2009

An accidental empire – the rise of political blogging and its effect on conventional media.

That’s the topic of an address by Fran O’Sullivan will be delivering to a Rual Women NZ breakfst in Wellington on Tuesday September 29 from 7.15am to 8.15am.

The meeting is being held in the Horticulture New Zealand Boardroom, Level 2, Huddart Parker Building, Post Office Square, (opposite Queen’s Wharf).

An email from RWNZ told me to tell friends and colleagues from which I gather that anyone is welcome to attend. There is no charge but RSVPs are requested to: noeline.holt@ruralwomen.org.nz 0r tracygalland@xtra.co.nz


Hidden agenda in NZX purchase of CPL?

06/05/2009

I greeted uncrtically the news that NZX was buying Country-Wide, publishers of most of of the papers which get delivered free to rural mail boxes, including my favourite NZ Farmers Weekly.

Others aren’t so innocent.

Cactus Kate finds some sharp knives in the NZX Haystack .

Jenni McManus reports  that Trans-Tasman editor in chief Max Bowden has made a Commerce Commission complaint because he thinks NZX is trying to act as regulator in a market in which it would be a participant.

At issue: whether an organisation calling itself a regulator should be cornering the market in anything, let alone a commercial enterprise, by acting as both a player and the market enforcer.

Adolf at No Minister smells something fishy and asks:

How can it be that the regulator of share trading activities in New Zealand companies an be allowed to itself operate trading companies which are not part of its core activity, namely regulation? What happens when one of its own companies transgresses?

Roarprawn also smells something whiffy and agrees with Fran O’Sullivan who questions why the stock exchange is putting on gumboots.

Expanding into publications during the economic downturn is a bold move.

The Cross memo explains that the NZX is getting into an “advertising-reliant media publication” in this climate. She contends print media are the best way to contact farmers while internet access remains slow and inconsistent for rural New Zealand.

“This protects to a certain extent rural publications from the downturn in advertising in mainstream/daily media publication and, second, farmers’ behaviours as the majority still read physical papers instead of accessing the internet for their news and information.”

The memo predicts it will be more than five years before farmers swap to online news services.

I’m not so sure about that, improvements to rural boradband services are moving quickly. We’ve got wireless broadband but discovered by accident we could get a much better service through the phone line now.

I’ve always used “you don’t do rural broadband” to put off people wanting us to change to telephone providers. But when I used that line with a cold-caller on Monday I was told they did and we could get broadband access via our phone line. I phoned Telecom to check and was told that our exchange had been upgraded and our phone line could now deliver broadband.

If that service is as good as promised more country people will turn to the internet for news rather than waiting for the papers which come with the mail – which for us isn’t until early to mid afternoon.

This point is made by Quote Unquote who also has questions about the NZX purchase of CPL.

. . .  there are some astute comments about magazine publishing in general which Weldon could consider – in particular, Rundle’s key line:

To go into the magazine trade now is like starting a stable just as the first Model T Ford rolls off the line.

We’ve been getting a regular stream of change-of-address emails from farming friends who have discovered they no longer have to rely on dail-up access to the internet.

The service we get in the country still doesn’t deliver the ultra-fast speeds available in cities, but it won’t be far away and when it comes, our readinghahbits will change.

You can’t tuck a PC into your back pocket as you do with a paper when you’re heading up the back paddock . But if you’ve already read the news on the net  over breakfast you won’t need to.

The question of who’s going to pay for the news on internet will wait for another day.


Let’s not go back there

18/02/2009

Phew, thank goodness the government appears to be back tracking  from suggestions yesterday that it would bail out Fisher and Paykel.

In a country where more than 90% of businesses employer fewer than 20 people, a company with 1600 staff is unusual and the impact of those job losses should the company collapse would be significant for the individuals, the wider commnity and the economy.

But the company is not about to collapse and even if it was I’m very wary of any suggestion that the government should invest to save it.

Easing the way should a foreign company wish to take a stake in the business would be okay but there’s nothing iconic about whiteware and even if there was that’s not a reason to invest taxpayers’ money in a company which makes it.

If there are any iconic industries here then they are those based on what we do best because of our climate and topography – growing grass and turning it into protein.

Fran O’Sullivan   writes about a couple of those, PGG Wrightson and Fonterra.

Speculation can easily turn into self-fulfilling prophesy so it’s important to make it clear that neither company is facing a situation which might make them need or ask for taxpayer assistance. However, if they were I’d be just as opposed to any suggestion of any government  investment in them as I am to the idea of a state bail out of F&P.

New Zealand dragged itself away from governement interference in, protection of  and subsidies to businesses in the 1980s with considerable pain for those caught in the fallout and we should resist any attempt to go back there.

There may be a difference between government investment in a company and a subsidy to producers, but I wouldn’t want to be in Tim Groser’s shoes if he was asked to explain that while putting New Zealand’s case for freeing up trade to our competitors.

If we make a sacred cow of a company which manufactures whiteware we’ll be in a much weaker position to argue against countries which build alters of subsidies for their primary producers.

For the record: I own a few Fisher & Paykel shares and our farm supplies Fonterra.


White gold tarnished

08/01/2009

At the start of last year sheep and beef farmers looked enviously at the returns dairy farmers were enjoying and aimed to get prices for meat, wool and other by-products which matched those from milk.

The gap between sheep and beef returns is closing on those from dairying but that owes more to the fall in the price of milk than improved prices from cattle and sheep.

Fonterra has already announced a drop from its opening forecast of $6.60 a kilo of milk solids for the season to $6 and is expected to announce a further fall at the end of the month.

The average price the company got at its internet auction  on Tuesday was $US2017 ($NZ3420) per tonne which was 9.3% less than the average in December.

The only glimmer of hope is a small rise in spot prices which might indicate prices are reaching the bottom of the cycle but that’s small comfort when the global price for milk, which peaked at the end of 2007, has fallen sharply  since September last year. 

dairy-11

dairy-10001

The state of global commodity markets isn’t the only problem facing Fonterra which just 12 months ago was being held up as the example the sheep industry should follow as the benefits from the white gold flowed through rural communities and into the wider economy.

The on-going fallout from its investment in Sanlu, one of the company’s hardest hit by China’s poisoned milk scandal continues. Sanlu was declared bankrupt  by a Chinese court on December 24th and the way the company has handled the issue doesn’t give me any confidence that it has learnt enough to ensure success in any future investment in China.

However, the financial losses from the Sanlu investment have already been taken into account and disappointing as Fonterra’s payout is expected to be it’s unlikely to fall as far as that of Westland Dairy Co-operative. It’s  reduced its forecast payout   for the season from the $5.20 to $5.60 a kilo of milk solids announced in November to $4.10 to $4.50.

Making matters worse is Westland’s decision to backdate the forecast meaning suppliers have to pay back money already received.

The reduced payout will mean suppliers will receive $180 million less than expected.

To bring that down to an individual farm: the owner of a 350-cow herd received $90,000 for his milk from Westland last month and had budgeted on getting $120,000 for January but is now expecting just $30,000.

Lincoln University professor Keith Woodford  said that given Westland’s position that Fonterra is unlikely to to achieve a payout of more than $5.

Westpac economist Doug Steel has a more positve view and thinks Fonterra could still achieve a $6 payout.

However, the company could do well to follow the advice given to politicians to under promise and over deliver because a lower forecast might help to stabilise or even reduce some of the production costs which rose further and faster than last season’s record payout.

The whitegold has tarnished but most commentators are still confident that the longterm outlook for dairying is positive for those who are able to farm there way through the current lower returns.

Established farmers with good equity will be disappointed by the drop in income and may have to tighten their belts but it shouldn’t threaten their businesses and they’ll be helped by the fall in interest rates and the cost of fertiliser and fuel.

Those most at risk are the ones who have just converted or are in the process of converting for next season who bought land and stock at peak prices; and sharemilkers who bought cows in the middle of last year when values were highest.

However, while the payout obviously has a big impact on financial performance it’s not the only factor to affect profitability.

A speaker at a SIDE (South Island Dairy Event) conference a couple of years ago said he’d had a better result for the year when the payout fell to $3.60 than he had the previous season when it was above $5 because he’d kept a tighter rein on costs when the payout was lower.

P.S. – Cactus Kate, Macdoctor  and Inquiring Mind have posts on Fonterra and Sanlu; and Fran O”Sullivan  is not impressed by the way the company has handled the issue.


Inquiry essential

05/11/2008

Fran O’Sullivan  is calling for a full inquiry into the allegations against Winston Peters, Peter Dunne and Ross Muerant.

Irrespective of whether Peters and NZ First are returned to Parliament this Saturday (frankly I think NZ First is toast), or, whether it is Helen Clark or John Key who is prime minister after the post-election talks, a full commission probe should take place. . .

. . . Key and Act leader Rodney Hide have benefited politically from the long campaign to unmask Peters’ secret donations from big business. Clark did nothing so as to keep her Government intact.

There is enough on the table to justify all three leaders calling for a proper inquiry. The cards should then lie where they fall.

She is right. Too many allegations have swirled round too many politicians for too long in the old government. The new one, whatever its make up,  needs to set a much higher standard of behaviour and accountability from the start.


Playing politics to retain power

18/10/2008

Inquiring Mind covers a column by Fran O’Sullivan (which isn’t on line) which accuses Helen Clark and Michael Cullen of playing politics to retain power.

There’s nothing unusual about that, but some things should be above politics and economic stability is one of them.

RESERVE Bank Governor Alan Bollard must openly tell the Government to stop playing politics and guarantee the trading banks’ foreign funding lines, before they ration lending and stall the New Zealand economy.

Labour has put politics before principle on numerous occasions and politicised the public service but the consequences of that have never been as serious as they are now.

So far, this Government has reduced Bollard to a well-paid eunuch as it announces policies for political effect on the election campaign trail, instead of forming a statesmanlike response to the international crisis.

You can read more at Inquiring Mind.

Update: Fran O’Sullivan’s column is now on line here.


Time for a cull

23/05/2008

When feed is getting short, sensible farmers do a bit of culling. In light of comments by Fran O, Sullivan, Colin James, John Armstrong, and Rod Emmerson’s cartoon that Cullen is leaving the paddock bare, where should an incoming Government, in whatever form that might take, start its cull?

 

National has said it will not increase the number of core bureaucrats. I’d go further and get rid of the Ministry of Women’s Affairs and Families Commission altogether.

 

Welfare may be the only way to assist low income families but it’s ridiculous to turn those on the upper tax rate into beneficiaries so Working for Families would be adjusted.

 

 Oh, and any position which has a job description in anything but the plainest of English  would go too.

But of course I’m not trying to get elected nor am I courting coalition partners.


Not very bright

07/05/2008

Fran O’Sullivan understands why Labour wants to play with trains:

The problem is that this is really an election year move by the Labour-led Government to try and make ownership of state assets a campaign issue.

 

And what they should have done instead:

If the Government was truly serious about strengthening the role sustainable transport will play in a carbon-constrained future it would not have stymied plans for regional councils to apply local fuels taxes to fund projects like the $500 million proposal to electrify the Auckland suburban rail network.

As it is it has mopped up an out-of-date railway with taxpayers’ cash – but effectively put a blocker in the way of proposals that would get more people out of cars.

Not a very bright outcome really.

 No, but playing politics rather than running the country isn’t.


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