Rural round-up

30/05/2013

Dairy development helping environment – Gerald Piddock:

A controversial dairying development near Omarama is leading the way with its environmental practices.

It is still early days but the structure, fertility, health and depth of Little Ben dairy farm’s soil has significantly improved over the past three years.

Farmers saw the progress the farm had made at a field day last week.

The 470ha farm operates as a partnership between Richard Gloag and Merv McCabe. . . .

PGG Wrightson managing director to step down in August – Tina Morrison:

PGG Wrightson managing director George Gould will step down from New Zealand’s biggest rural technology and services firm after helping refocus the company.

Mr Gould previously headed Pyne Gould Guinness and was appointed to the top job at the larger company in February 2011 to help stabilise it as it exited non-core activities.

He will leave on August 31, the Christchurch-based company says in a statement today. . .

Merino man shakes up primary industries

In 1995, John Brakenridge had an acute case of ‘new guy’. 

He’d been hired by the board of Canterbury-based wool marketer New Zealand Merino to breathe fresh air into a stale sector.

But the high country heartlanders were wary.

‘Which part of the South Island are you from?’ they asked the bloke who grew up in Auckland. ‘You look a bit young, don’t you?’ they said to the 34-year-old. ‘How long have you been in the wool industry?’ It was his first day.

Although he had a track record in the primary sector, serving as marketing manager for produce company Cedenco Foods in the late 1980s and partnering with the New Zealand Dairy Board in the Middle East, he was unmistakably a wool industry outsider.  . .

So close on second go – Jill Galloway:

Cam Brown says he will always be known as the guy who was second in the grand final of the Young Farmer Contest.

He was one of seven regional winners who won a place in the final. He was the winner of the Manawatu-Taranaki final.

Brown is competitive. He likes to do everything correctly and win.

“I lost by five points. I thought afterwards about places I could have made up those points. But I knew I’d given it my best shot in the contest.” . . .

Westland Milk Products Predicts Lifts Payout Prediction for 2013-14:

Westland Milk Products has announced a pay-out prediction for the 2013-14 season of $6.60 to $7 per kilo of milk solids (kgMS), an increase of 60 to 70 cents on the current season, with an opening advance (payable 20 September) of $4.80 per kgMS for all milk collected from 1 August 2013.

The Hokitika-based dairy cooperative also confirmed the forecast pay-out for this season of $6 to $6.30 per kgMS excluding retentions. The advance rate payable 20 June 2013 has been approved at $5.20 per kgMS.

Chief Executive Rod Quin says the forward view for the dairy market is relatively strong, even with the recent decline from the highs of six weeks ago. The strong outlook is being driven by ongoing firm demand and the expected shortfall of milk supply from key exporting markets. . .

Dairy farmers welcome some good news at last:

After a harsh drought and massive feed costs, dairy farmers needed good news and Fonterra Cooperative Group may have just delivered it.

“The forecast farmgate milk price of $7 per kilogram of milksolids (kg/MS) for 2013/14 is going to get a lot of attention,” says Willy Leferink, Federated Farmers Dairy Chairperson.

“Boy oh boy did we need some morale raising good news. In plain-English, it means that farmers could get about 0.58 cents per litre for milk they will produce between June and May 2014.

“While a $7 kg/MS milkprice forecast sounds amazing, the public deserve to know this is forecast revenue and revenue is not profit. To get to profit, you need to take off the farm’s working expenses, tax obligations and pay back the bank manager; a big expense being right there. . .

Aggressive forecast Farmgate Milk Price, advance welcomed by Farmers:

Fonterra Shareholders’ Council Chairman, Ian Brown, said it was encouraging for Farmers to see Fonterra take an aggressive stance in its Milk Price forecasting for next season.

The Fonterra Board of Directors today announced an opening Farmgate Milk Price forecast of $7.00 per kg/MS for the 2013/14 season, including a $5.00 advance.

Ian Brown: “This is great news for our Farmer Shareholders and reinforces the good position our Co-operative is in.

“Having a strong forecast Milk Price and advance puts Farmers in a healthier position and provides them greater flexibility in running their farms. . .

Great food starts with great soil:

Ballance Agri-Nutrients is showcasing the connection between great soil and premium produce, with quality producers of beef, vegetables, apples and wine featuring at their Fieldays site this year.

Ballance General Manager Sales, Andrew Reid, explains that soil is an integral part of the success of our farmers.

“In fact the whole New Zealand economy starts with those three inches of topsoil which support our rural production sector,” says Mr Reid.

Mr Reid says that premium producers have one thing in common – respect for the soil and the ability to work with it. . . .


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?


Norgate’s last stand?

03/05/2010

The Press (not online) reports that Craig Norgate has given up on Rural Portfolio Investments, the parent company of Rural Portfolio Capital:

Norgate has essentially thrown in the towel on Rural Portfolio Investments . . . saying he cannot raise enough funds for the next dividend on the $60m of preference shares.

It is unlikely the preference shareholders will get the face value of that $60m investment back in the short term and the market has already priced in a much lower return.

The security for the RPC preference shares is 46.76m PGG Wrightson shares (which closed at 53c yesterday) and 10m NZ Farming Systems Uruguay (NZFSU) shares (41c) was well as $742,314 held in a dividend escrow account. . .

RPI and its financing subsidiary Rural Portfolio Capital are the investment vehicles for Norgate and the Otago-based McConnon family, and will very likely be wound down. . .

Norgate contributed to the McConnon family fortune when, as general manager of Kiwi Dairy, he bought Mainland Products from them. He’s now taken a large chunk of that away through his encouragement for them to invest in PGW.

He thought he could capture the rural servicing market by amalgamating Williams and Kettle, Pyne Gould Guiness and Wrightson. But farmers never bought into his plans and the combined market share of those companies fell from more than 70% to less than 50%.  PGW’s share price went from around $2. 80  two years ago to just 53 cents on Friday.

The decline of PGW provided opportunities for competitors Combined Rural Traders and new companies of stock agents set up by former PGW agents, including Hazlett Rural and Rural Livestock.

The only positives for PGW at the moment are the arrivals of Sir John Anderson as chairman of the company and former PGG general manager George Gould as a director.

One of Norgate’s biggest mistake was failing to gain finance for the purchase of 50% of Silver Fern Farms. While the financial meltdown has been blamed for this many farmers cannot believe how he ignored the fundamental basics of business which require securing funding before doing a deal.

His foray into dairying in Uruguay was big on promises but has yet to deliver. Share prices peaked at $2 and were at 41 cents on Friday.

From the outside, the investment in Uruguay looked simple. However, Norgate failed to take full account the challenges of farming in South America with language, cultural and political difficulties and a very different climate from New Zealand.

You only have to look  at the difficulties New Zealand companies have when investing in Australia, where at least the language, culture, banking and legal systems are similar, to realise that what works so well here might not  transfer easily to Uruguay.


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