Rural round-up

April 3, 2019

Westland Co-operative Dairy demise is self-inflicted – Keith Woodford:

The approaching demise of Westland Co-operative Dairy (trading as Westland Milk Products) has come as a surprise to many people.  It should not have done so.  At the very least, either a partial sale or major joint venture has been inevitable for some years. Survival as a co-operative is now impossible.

Most of the people I talk to think the sale to Chinese company Yili is a very bad idea. West Coasters do not like it. Even Minister of Agriculture Damien O’Connor is of that opinion. And if a sale really is necessary, then the common perspective seems to be that it should be a local company.

In response, I say ‘dream on’. . . 

Taratahi owes creditors $31 million – Neal Wallace:

Employees will get what they are owed but nearly 1200 unsecured creditors will have to wait to see if they will be paid any of the $15.8 million they are owed following December’s collapse of the Taratahi Agricultural Training Centre.

An interim report by liquidators Grant Thornton says the sale of livestock will cover preferential creditors, employees, who are owed $2m, and Inland Revenue, owed $655,000, but there is no indication on the fate of other creditors.

Taratahi’s 518ha Mangarata farm is being readied for sale, over which Westpac has a secured mortgage, along stock, plant and shares. . . 

Crop work went like clockwork – Alan Williams:

Cropping demonstrations across cultivation, drilling, harvesting, balage and silage proceeded without a hitch at the South Island Agricultural Field Days at Kirwee in Canterbury.

Twelve or so hectares can sound like a lot of land area but with several different crops being grown on adjacent strips and some machinery being 10 metres wide there’s not a lot of margin for error.

It helps that each crop and activity is worked at separate times but there’s still a lot of planning and a lot of people to organise. . . 

Forestry sales at record high – reports – Eric Frykberg:

New evidence is emerging of a booming forestry sector.

It follows last month’s report from the Ministry for Primary Industries (MPI) showing 2018 forestry sales at a record high.

Since then, the Seattle based think tank Wood Resource Quarterly has highlighted New Zealand’s role in growing imports of logs by China.

Wood Resource Quarterly said the Chinese took a total of 40 million cubic metres of lumber through their ports last year.

That was over a third more than just three years earlier. . .

Cushing family’s H&G to buy 2.2% Wrightson stake from Agria – Paul McBeth:

(BusinessDesk) – The Cushing family’s H&G vehicle has agreed to buy a 2.2 percent stake in rural services firm PGG Wrightson from Agria Corp. for $8.3 million.

H&G has agreed to pay 49 cents a share for 17 million Wrightson shares, matching Friday’s closing price. Agria owns 351.6 million shares, or 46.6 percent of the rural services firm, having divested a 7.2 percent holding in December when Ngāi Tahu Capital withdrew from a seven-year pooling arrangement with Agria and Chinese agribusiness New Hope International. . . 

Record number of beekeepers have their say in latest check:

Almost a half of the country’s registered beekeepers have taken part in an annual survey to understand bee health, losses and beekeeping practice.

More than 3,600 beekeepers completed the 2018 Colony Loss Survey, which was carried out on behalf of Biosecurity New Zealand by Manaaki Whenua – Landcare Research.

“The numbers of beekeepers participating in the self-reporting survey represents 47 per cent of New Zealand’s registered beekeepers and 42 per cent of registered colonies,” says Biosecurity New Zealand’s biosecurity surveillance and incursion (aquatic and environment health) manager, Dr Michael Taylor. . . 

Miscanthus – a carbon negative crop:

Most annually harvested crops require a lot of activity to get them established, grown and harvested. They need cultivation of the soil, weed control, planting, fertiliser, harvesting, sometimes waste disposal, packing and loading on a truck. Most of them need all that every year. In many cases, there is further cultivation, planting and cutting of a cover crop during the off season as well. Again, every year!

Miscanthus on the other hand needs cultivation, planting and weed control – once in at least 15 years – perhaps 25 years – plus harvesting and loading on a truck every year from year 2 onwards. There is also no waste to be disposed of with Miscanthus. There is no need to cultivate the soil again, no need for ongoing weed control, no need to replant, no need for fertiliser in most cases.  . . 


Rural round-up

October 30, 2013

Beef + Lamb New Zealand Puts Case to Washington:

Beef + Lamb New Zealand (B+LNZ) and representatives from other Five Nations Beef Alliance partners have called on Washington’s Capitol Hill to promote a unified view of how trade in agricultural products – and especially beef – should be treated under the Trans-Pacific Partnership (TPP) agreement.

The TPP, which is currently being negotiated and of which New Zealand is a participant, aims to open up trade in goods and services. Progress towards an outcome was most recently reviewed in Bali, where Prime Minister John Key chaired the meeting of the 12 TPP negotiating countries.

The Five Nations Beef Alliance is made up of the national organisations that represent beef cattle producers in Australia, Canada, Mexico, New Zealand and the United States. Collectively, the five countries account for one third of global beef production and approximately half of global beef exports. . .

New Zealand food and beverage producers need to be bulletproof:

New Zealand food and beverage producers need to ensure their operations are “bulletproof” if they want to compete in an increasingly aggressive global marketplace, an industry expert says.

Grant Thornton New Zealand Partner and National Leader, Food and Beverage, Simon Hunter, is describing the firm’s latest International Food and Beverage sector report, ‘Hunger for growth: Food and Beverage looks to the future’, as a wake-up call for the local industry.

The report, based on interviews with 248 senior executives in seven countries (including New Zealand), says 90% expect revenues to increase in the next 12 months but only half expect to employ more people. . .

Gigatown competition will change the future for one town:

Federated Farmers is excited by Chorus’s year-long competition to bring the fastest broadband speed to one New Zealand town.

“This competition is a great opportunity for rural towns,” says Conor English, Federated Farmers Chief Executive.

“If a rural town wins it will become the first town in the southern hemisphere to receive one-gigabit per second broadband speeds – up to 100 times faster than most cities around the globe.

“New Zealand’s farmers are desperate for new ways to get onto the internet and this competition has the potential, for one fortunate town, to spark innovation and mobilise and transform their local economy and society. . . .

(This is why we’re supporting #gigatownoam and the #gigatown campaign).

Fonterra board to set up separate risk committee after food scare review – Paul McBeth:

(BusinessDesk) – The board of Fonterra Cooperative Group will establish a separate committee to oversee risks facing the dairy group in the wake of the false alarm food scare that prompted a precautionary recall in August.

The company’s board will carve out the risk elements from its audit, finance and risk committee into its own separate committee, which chairman John Wilson said will cover “food safety, food quality and other risks Fonterra in today’s environment faces.”

The measure was one of a raft of recommendations from the board-ordered inquiry, led by Jack Hodder QC, after recall of three batches of whey protein concentrate, which were thought to have been contaminated.

Fonterra’s handling of the fall-out was “inadequate” for the kind and size of the crisis and the company’s lack of responsiveness to external stakeholders was seen as a “fortress” mentality, the report said. . . .

Shareholders’ Council welcomes report, inquiry recommendations:

The Fonterra Shareholders’ Council, which safeguards the interests of the dairy Co-operative’s 10,500 Shareholders, said it welcomed the completion of the Fonterra Board commissioned independent report of the WPC80 issue.

Council Chairman, Ian Brown: “The Council has received the report and we commend the Oversight Committee and the Independent Inquiry Team on the comprehensive nature of the report.

“We also commend the Board on their openness and support their decision to make the report public. . .

New health & safety regulations will increase potential penalties for employers:

The potential for higher penalties for non-compliance as a result of upcoming changes to Health and Safety regulations means employers in the high-risk agricultural sector need to be more aware than ever of their obligations, says Melissa Vining, AGRI Consultant for human resources specialists Progressive Consulting – the HR division of Crowe Horwath.

The government will establish new Crown Agent WorkSafe New Zealand by December 2013, when it also plans to introduce to parliament a new Health and Safety at Work Act, which is expected to come into force by December 2014. . . .

Xero releases farming blueprint:

Xero has released its Farming Integration Guide, a blueprint that helps rural solution providers connect to Xero and deliver integrated farm management and accounting solutions. 

Xero CEO Rod Drury says this is a great example of technology bringing an industry together. “This guide is the key step towards full integration between farmers, rural accountants, rural suppliers, banks and software providers. The innovation we’re experiencing in the tech sector is being applied directly now to the rural economy, the backbone of the NZ economy.” . . .


Need to be in black to be green

May 30, 2012

The Grant Thornton International Business Report (IBR) shows that many New Zealand businesses would like to  adopt cleantech principles but the economics just do not add up.

Eugene Sparrow, partner, Privately Held Business for Grant Thornton New Zealand, said:

“It’s a tough environment for many companies and until these businesses can see a cost saving they will be reluctant to adopt cleantech options. Many look upon green philosophies and cleantech principles as discretionary and something they will only adopt if there are clear economic advantages.

“Unfortunately our size is also against us. We are a country of small businesses without the scale to benefit from the adoption of some cleantech options. There is no doubt that these businesses are all mindful of being green and clean, but if it is going to cost, then it will have to wait,” he said.

Businesses have to be in the black to be green and they’re not going to invest in new technology if it doesn’t make economic sense.

I think there is another factor involved – a lack of good research which enables businesses to differentiate between products and practices which do make a positive difference and greenwash.

That said, there are some simple ways in which being greener can be good for the bottom line too. Fonterra has been working with dairy farmers to reduce energy consumption which has both environmental and financial benefits.

P.S.

Apropos of greenwash, Green is good at the Fundy Post is a good read.


Farming driving business optimism

January 4, 2012

Grant Thornton’s quarterly business survey shows a cautious  increase in optimism for the year ahead and it’s being driven by farming:

“In New Zealand our rural sector has a far more widespread effect because there is barely a city, town or province which does not have some farming component. The benefit is that when the rural sector is doing well it feeds right throughout New Zealand. There’s a far greater distribution of benefits than from the extractive industry in Australia, which is far more geographically defined.”

The 2010/11 year was the best in a generation for farmers. This season isn’t expected to be quite as good as that but even conservative budgets are indicating a reasonable year.

Last year many used better returns to reduce debt, this year there is more going into development which will flow through the wider economy.


People still trust Hubbard

August 28, 2010

Disbelief was the first reaction to the news that Allan Hubbard was being investigated by the Serious Fraud Office and that he and his wife Jean were under statutory management.

This wasn’t a flash Harry, living the high life. This was a man who learned the lessons of his Depression-era childhood; who is spite of his wealth, lived a very modest life; the man who’d done so much for individuals, business, charity and the community,

When banks wouldn’t back would-be farmers, Hubbard often would. He looked at the business case, but he also looked at the people and their personal drawings. Those who were prepared to work hard and spend little on themselves, almost always got his support.

Assistance was often given as a personal loan with low or no interest and he was rarely, if ever, let down.

He took a personal interest in his clients and adjusted his fees to their circumstances. It wasn’t unusual for someone having a bad year to find their accountant’s bill was a lot less than expected.

His investment vehicles, Hubbard Management Funds and Aorangi Securities, have always given investors very good returns.

But the second report from Grant Thornton,  the statutory managers,  has very bad news for investors, many of whom rely on the interest payments.

. . . it is highly unlikely that we will be in a position to return any significant amounts of capital to investors this side of Christmas.

On a slightly brighter note, it is our priority to try and be in a position to make a small repayment to investors in October. There is an alarming gap between the income that Aorangi is presently receiving from its loans and investments and the amount it needs to pay out to its investors. Any payment at this time will be treated as a repayment of capital and will be dependent on the amount of funds paid to Aorangi by borrowers and from the investments in farms. Interest payments remain suspended.

Grant Thornton says a large part of the problem is that Aorangi accepted deposits from investors on call and put them into long term investments or loans including minority shares and mortgages in about 25 dairy farms.

The dairy payout is holding up but farm sales are slow. Those who received loans are unlikely to be in a position to repay them quickly and forcing sales would be disastrous.

 The protracted sale process for the Crafar farms shows the difficulties of putting several farms on the market at once. Forcing more sales would depress prices and threaten equity in the properties concerned which would impact on the value of all farmland.

The ripples from the statutory management and SFO investigation have spread through the southern South Island and further, showing just how big an influence Hubbard and his various operations have.

When other finance companies have failed it’s not been hard to find people ready to criticise the principals. There has been no public condemnation of Hubbard, and I haven’t heard any privately. People still trust him and the feeling of disbelief continues.


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