Rural round-up


Irrigation water flows at Sheffield as new scheme starts – Heather Chalmers:

Sheffield arable farmer Damon Summerfield expects to double his production following the arrival of water from the massive Central Plains Water irrigation scheme, writes Heather Chalmers.

If Central Canterbury arable farmer Damon Summerfield is acting like an expectant farmer it’s no surprise. This “baby” has been 10 years in the making.

He’s even talking about a christening which is apt when the “baby” is irrigation water as part of the Central Plains Water community scheme. . .

Farmer vigilance helps keep sheep measles at low ebb:

New Zealand recorded its lowest lamb prevalence level of sheep measles in ten years, says the project manager for Ovis Management Ltd, Dan Lynch.

He says 0.59% of lambs processed in the season ending October were detected with sheep measles versus 0.64% last season.

Lynch believes this low prevalence reflects continuing onfarm control being exerted by farmers across NZ. “This is a great outcome.” . . .

Beef + Lamb New Zealand Chairman James Parsons not seeking re-election:

James Parsons, Chairman of Beef + Lamb New Zealand (B+LNZ), announced today he will not be seeking re-election in the organisation’s director elections in March.

Mr Parsons, who farms a 478-hectare hill country farm in Tangowahine, Northland, has served as the Northern North Island Director on the B+LNZ Board for nine years, including four as Chairman.

“Although I am still very energised as the organisation’s Chairman, another three-year term would mean 12 years on the board and seven years as Chairman,” says Mr Parsons. . .

Beef + Lamb New Zealand invites director nominations and remits/resolutions for Annual Meeting:

Beef + Lamb New Zealand (B+LNZ) today announced nominations have opened for two B+LNZ director roles and one position on its Directors’ Independent Remuneration Committee (DIRC).

Under the requirements of the B+LNZ constitution, two electoral district directors and one existing DIRC member retire by rotation at the annual meeting.

This year, directors Phil Smith (Northern South Island), and James Parsons (Northern North Island), and DIRC member Derrick Millton will be those retiring by rotation. They are permitted to seek re-election. Mr Parsons announced this week he will not be seeking re-election as a director. . .

Rabo NZ chief Daryl Johnson resigns after less than two years in the job – Sophie Boot:

(BusinessDesk) – Rabobank New Zealand chief executive Daryl Johnson has resigned, less than two years after taking over the reins of the rural lending specialist.

Johnson’s resignation will take effect on Dec. 22, and Rabobank NZ has commenced a process to appoint a new chief executive officer, chair Henry van der Heyden said in a statement to the NZX. Johnson joined the bank in July last year, having previously led National Australia Bank’s Asia business. . . .

Water scientist hits back at claims around Waimea dam plan – Cherie Sivgnon:

The Waimea River, near Nelson, will be dry most summers if more water is pumped from the aquifers under the plains without augmentation, according to Landcare Research water scientist Andrew Fenemor.

If minimum flows in the river were to be maintained and seawater intrusion avoided, there needed to be limits on water taken from the aquifers, he said.

Fenemor is a former Tasman District Council environmental manager and a member of the newly formed Community Water Solutions Advisory Group, set up to advise the council and its proposed joint-venture partner in the $82.5 million dam project, Waimea Irrigators Ltd. . . 

Canterbury A&P Show: ‘Amazing’ weather and crowds for day one – Oliver Lewis:

Bryce Black has been described as the “chief stirrer” and “ring entertainer” during his long tenure at the Canterbury A&P Show.

The 87-year-old has almost never missed a show and has presided over the movement of horses into the ring for the past 70 years.

On Wednesday, the opening day of the 155th event, the Tai Tapu local was in his caravan right on the edge of the Main Arena. . . .

There’s more farmland in the world than was previously thought – Megan Durisin:

There’s more agricultural land in the world than previously thought, and India rather than the U.S. or China is now believed to have the biggest acreage of any country, according to new study aimed at improving food and water security.

Global cropland totals 1.87 billion hectares (4.62 billion acres), 15 percent to 20 percent higher than earlier estimates, according to a map released Tuesday by the U.S. Geological Survey. The increase is due to the assessment of areas previously mapped inaccurately, or left unmapped, the USGS said in a statement. . .


Rural round-up


Rabbit rise may bring 1080 response – Gerald Piddock:

Environment Canterbury’s annual count shows that rabbit numbers are on the rise in the Mackenzie Basin and Omarama.

The regional council monitors rabbit trends every year and the latest draft analysis showed a noticeable increase of rabbits in the Mackenzie Basin, eastern Mackenzie around Haldon Rd and in Omarama.

ECan’s biosecurity team leader, Brent Glentworth, expected there would be some large 1080 operations this summer, particularly on the eastern side of the Mackenzie, as land owners battle to keep rabbit numbers down. . .

UK biofuels influence NZ wheats:

European, notably UK, breeding programmes, growers at PGW’s agronomy group field day last week heard.

 Europe is normally a regular exporter of wheat, but three massive biofuel plants have created an extra 2mt of demand for wheat, preferably high starch soft milling types that maximise ethanol yield, Limagrain’s UK director of sales and New Zealand coordinator, Alastair Moore (pictured), explained.

“We’re seeing quite a drive to the soft wheat end and a lot of the new varieties recommended [in the UK] were in that category.” . .

Insecticide removal would hit crops hard – Gerald Piddock:

Seed and cereal farmers face a major risk to their productivity and profitability from the removal of organophosphate insecticides from the market.

Current control practices used by farmers, particularly during crop establishment rely heavily on organophosphates which are currently the subject of a review and re-regulation by the Environmental Protection Authority (EPA).

Organophosphate insecticides are used by farmers to control grass grub, one of the country’s most destructive plant pests. . .

Van der Heyden works till end:

OUTGOING FONTERRA chairman Henry van der Heyden will be using the next five months as a director to help execute the co-op’s strategy refresh.

Van der Heyden is defending his decision to stay on the board after relinquishing the chairmanship to John Wilson. He says the decision has been taken in the interest of the co-op. Some shareholders have questioned the decision.
Van der Heyden says he has always done what is right for Fonterra. . .

Kirkwood takes vote for council – Gerald Piddock:

Oamaru dairy farmer Greg Kirkwood is the new Fonterra Shareholders councillor for ward 32 in Southern Canterbury.

Mr Kirkwood was elected to the council ahead of Geraldine dairy farmer Ad Hendriks.

He takes over from Desiree Reid, who retired from the position by rotation.

Mr Kirkwood said he put his name forward for the Shareholders Council because he wanted to get involved more in the co-operative.

Raw milk health risks under review:

Since the 1950s, New Zealand’s commercial milk supply has been pasteurised – treated with heat to kill bacteria – and most of us have swallowed the official position, that untreated milk is potentially dangerous to drink.

But there’s a growing trend of consumers wanting their food in a natural state, and that includes milk. They say raw milk is not only safe, it’s better for you, and a major study is underway to see if they’re right.

Most of us buy our milk pasteurised and from a dairy or supermarket fridge. But for mums like Angela Jones that’s changing. She’s one of thousands of townies making a regular trek to a trusted farmer to buy raw milk at the farm gate. . .

Farmers in Fonterra for long haul


Friends of Fonterra have shown strong interest in buying investment units in the company.

In an email to shareholders Sir Henry van der Heyden says that more than 2,500 people have applied to buy Units under the Friends of Fonterra offer.

o Nearly 900 farmer shareholders
o Nearly 200 sharemilkers
o About 70 retired farmers
o More than 1,300 staff
• Further 260 Australian dairy farmer suppliers also applied for Units

Only about 260 farmers offered to sell Economic Rights of around 5.5 million shares into the fund which means the board will top up the fund to $500m.

This shows that farmers have faith in the company, are with it for the long run and have confidence that they’ve more to gain by holding on to their shares than the short-term profit from selling them.


Good and bad news in clean-stream snapshot


A newsletter to shareholders from Fonterra chair Sir Henry van der Heyden says there’s good and bad news in the dairying and clean streams accord snapshot: 

  • Good news is we’re making headway.
    • Full compliance with effluent rules up 5% to 65%
    • 99% of farms have nutrient budgets
    • 85% of stock excluded from waterways
    • Less than 2% of farms need crossings bridged or culverted
  • Bad news is there’s been a 1% increase in significant effluent non-compliance from15% to 16%.

Fonterra said  the slight increase in significant non-compliance with regional council dairy effluent rules was unacceptable, but believed its Every Farm Every Year inspections regime was a concerted effort to turn this result around.

Today’s Dairying and Clean Streams Accord snapshot for the 2009/10 season shows significant national non-compliance rose by 1% to 16%, despite considerable improvements in Northland, Auckland, Hawkes Bay, Wellington, Canterbury and Otago.

Fonterra Group Director Supplier and External Relations, Kelvin Wickham said Every Farm Every Year was a concerted effort to address non-compliance by identifying farms at risk and ensuring remedial plans were put in place.

“The programme got underway nationally in August so it was never going to change last season’s results. But what is encouraging is that the compliance message is getting through and farmers are taking it seriously. That’s also evident in the snapshot results for full compliance which rose 5% to 65% last season.”

He said Fonterra’s Sustainable Dairying Advisors have completed 1188 consultations with farmers keen to ensure their on-farm effluent infrastructure is able to cope with the year-round demands put on it. Farms are referred to the advisors if the Every Farm Every Year inspection identifies properties at risk of non-compliance, but Mr Wickham said some farmers had also proactively sought advice ahead of their farm’s assessment.

“Our initiative is beginning to have a positive impact with farmers willing to accept advice and to spend the money needed to improve their effluent systems. By the end of this season we expect to have 1,000 remedial plans in place. Since August, 252 farms have already completed their plans and a further 582 are underway. There are no quick fixes but farmers are working hard to get it right and in many cases a significant investment is needed to ensure systems are compliant 365 days a year.”

Mr Wickham said good progress was being made on other Accord targets and Fonterra was this year highlighting the work of five farmers who were contributing to this progress.

Work done by these farmers who have put the Dairying  Accord into action can be seen here.  Their work includes improved fertiliser management, fencing waterways and tree planting.

“Across the country there is a lot of good work going on unnoticed and while we know there’s more work to be done, it’s also appropriate to acknowledge the real efforts being made.”

The snapshot showed 85% of farms nationally now have stock excluded from waterways and in Northland, Canterbury, Otago and Southland 90% have been excluded. Less than 2% of farms required bridges or culverts for waterways. Nutrient budgets had been adopted by 99% of farms but the challenge now was to work towards full management plans where nutrient inputs and outputs are measured and managed.

“The results show a lot of good effort has gone in from farmers, regional councils and organisations like DairyNZ and Every Farm Every Year is stepping up the effort in the key area of compliance.”

Farms working through remedial plans include those which could pass a compliance spot check, but farmers still accepted the work had to be done.

“Every Farm Every Year assesses whether an on-farm system is fit for purpose 365 days a year. This is about risk assessment and mitigation, not compliance monitoring. It’s not enough for a farm to comply 90% of the time. Year round compliance is what we are looking for and that’s where we are heading.”

Mr Wickham said risk factors being identified on farms mirrored those identified in the Dairying and Cleans Streams Accord snapshot.

“We know effluent storage capacity, irrigation systems and feed pads or standoffs are all potential trouble spots. Without adequate storage farmers can’t defer irrigation in wet conditions and Every Farm Every Year helps them recognise that. They are also recognising the value of effluent as a source of nutrients and can see the money spent on upgrading systems has a relatively quick payback through better grass growth and productivity.”

He said new tools like the Massey University effluent pond storage calculator were invaluable for ensuring individual farms had storage matched to soil types, herd size, production days, yard and feedpad areas and irrigation capacity. DairyNZ had also successfully established a new industry code of practice to ensure the design and installation of effluent systems meets set standards. Positive working relationships between regional councils, Fonterra and DairyNZ also meant farmers were getting good information and practical programmes such as open days.

“There is a lot of commitment out there and both Fonterra and our farmers are taking sustainability very seriously. There’s a way to go, but the effort is going in and we are starting to see some promising results.”

Agriculture Minsiter Minister David Carter said farmers are slowly taking heed of the need to lift their game to prevent pollution.

Mr Carter says that while progress could be faster, the message is gradually getting through to those farmers who have struggled with effluent compliance, and are now looking to their industry bodies and regional councils for support

“For example, in Canterbury, the ‘Check it, fix it, get it right’ initiative has been working to provide information and advice to farmers on adopting good effluent management practices.

“In the 2009/10 dairy season, 59 percent of Canterbury dairy farms were fully compliant with their dairy-shed effluent discharge conditions, up from 43 percent in the previous season. Significant non-compliance fell to 8 percent from 19 percent in the previous season.

“This initiative is now being rolled out throughout the North Island, and Southland.

The 2009/10 Snapshot shows progress has been made on four of the five targets set by the Accord.

Mr Carter also notes that Fonterra’s Every Farm Every Year checks of effluent management expects to have about 1000 farms on remedial plans by the end of the current dairy season.

“It’s encouraging that many of those farmers did not wait to be checked, but got in touch with the co-operative to ask for the plan.

“While it can’t be directly attributed to those initiatives, Environment Waikato has reported that significant non-compliance has more than halved in the season-to-date, with just 11 percent of farmers in serious breach of regional planning rules.”

“There is now a good deal of education, training and technological innovation underway in the dairy sector, all aimed at maintaining productivity while reducing environmental impact,” says Mr Carter.

Farmers in our area are taking the Accord very seriously. Most are motivated by the determination to keep the water they drink and swim in clean.

For the few for whom that carrot isn’t sufficient there’s the stick of severe and costly consequences of falling foul of regional council requirements. There’s also the knowlege that Fonterra has lost patience with the minority who are deliberately or carelessly polluting waterways and tarring all dairy farmers with their dirty brush.

The full snapshot is here.

Christchurch earthquake appeal goes global


Prime Minister John Key has launched a global appeal for the Christchurch earthquake recovery effort.

“It’s vital we reach as many people throughout the world as possible who want to help. This isn’t just New Zealand’s tragedy – the February 22 earthquake affected countless people internationally.

 “Like all Cantabrians and fellow New Zealanders, I have been humbled by the offers of help and assistance pouring in from individuals, organisations and governments around the world. This new Appeal gives people another means of donating to the people of Christchurch and the recovery effort.

 Mr Key said the Appeal was designed to complement those already established, such as the funds organised by the Red Cross and the Salvation Army.

 “It’s my intention that the Government will work alongside these organisations to make sure the funds are used in the best possible way.”

Mr Key said New Zealand government departments at home and around the world would be throwing their weight behind the Appeal. 

“This Appeal will have global reach, with our network of diplomatic posts able to reach millions of people world-wide.

“I am also pleased to announce that the proceeds raised for the earthquake recovery from Saturday’s special Lotto draw will go directly to the Appeal,” said Mr Key.

 Mr Key praised several organisations which had donated their time and expertise in order to get the Appeal up and running.

“Westpac has worked tirelessly with Clemenger BBDO, Direct Payment Solutions and AIM Proximity to turn the Appeal into a reality in a very short space of time. Facebook has also helped its users engage in the initiative, which gives the Appeal a truly international flavour.”

Mr Key also thanked Colenso BBDO and Run the Red, both of which worked with Westpac on the Appeal website and text message donation service respectively.

 “I’d also like to thank New Zealand’s other retail banks, which are working with Westpac on the Appeal.”

 Mr Key said he was encouraging New Zealanders to give generously to Christchurch.

 “Every little bit helps – every donation, no matter how small, will be welcomed.”

 Donations can be made at

 Telecom, Vodafone and 2 Degrees mobile customers can text chch to 933 to make an automatic $3 donation.

 Donations can also be made via internet banking, or at any branch of New Zealand’s retail banks, by depositing into account number 03-0251-0039807-00.

More information on the gloabl appeal can be found on Facebook.

Fonterra has arranged for shareholders to donate from their milk cheques and will match those donations and any from its staff dollar for dollar up to $1 million, on top of the $1 million donated last week.

A newsletter from chairman Henry van der Heyden on Friday said shareholders and staff had already donated $260,ooo which with the company’s matching donation meant more than half a million dollars had been given.

High dollar stops increase in Fonterra payout


Fonterra has confirmed the forecast payout for this season at $6.60 per kilo of milksolids and said the high dollar prevented an increase.

Farmers who are fully shared up will get an extra 25 to 35 cents per share.

This means an average farmer who is 100 per cent shared up to milksolids production is forecast to receive a total of $6.85-$6.95 per kgMS in cash payments for 2010/11, with the balance of Distributable Profit being retained by the Co-operative.

Fonterra Chairman Sir Henry van der Heyden said dairy market prices were holding up better than initially expected, leading the Board to contemplate an increase in the forecast Milk Price. However, the recent strength of the New Zealand dollar against the US dollar meant it was not prudent to increase the forecast at this time.

Increasing the advance payout from $4.30 to $4.60 a kilo will help cashflows over the next few months but the company warns the outlook is volatile.

Sir Henry commented, “When we issued the season’s opening forecast of $6.60 in late May, we indicated that then market prices could have suggested a much higher Milk Price – but that given volatile market conditions at that time we expected to see some softening in prices and we therefore forecast at a lower level. While market prices retreated sharply over the next few months before stabilising more recently, they have held up better than initially expected. However, we’ve also seen the New Zealand dollar strengthen significantly against the US dollar, eroding the value of dairy export returns for our farmers.

“We should remain cautious as there’s still uncertainty and volatility in global markets and we remain vulnerable to adverse movements in dairy prices or exchange rates which could hit the Milk Price. There is always potential for both downside and upside in the forecast, so I would encourage all farmers to continue to take a conservative approach in their farm budgeting.”

Those of us who’ve learned the lessons of the last few seasons are taking a very conservative approach to budgeting. It’s only a couple of seasons since the forecast payout dropped and we don’t want a repeat of the problems that caused.

Fonterra milk peak sets new record


Fonterra’s 26 sites processed 7608 million litres of milk last Wednesday, October 27, setting a new record for peak production.

Gary Romano, Managing Director – Fonterra Trade and Operations, says the new record is three million litres up on last year’s record peak.

“It’s a real credit to our teams and our plants that we processed all the milk so smoothly.

“It was a slow start to the season with wet weather in the Waikato and Taranaki and snow in the South Island. However, this recent spell of fine weather has seen a sharp increase in production on-farm. . .

“Since Fonterra was formed, we’ve increased our processing abilities by investing in new technology and plants such as ED4 – the most efficient powder plant in the world – to ensure we can keep ahead of milk production increases in an efficient and sustainable way.

“We’ve handled this growth while maintaining a strong focus on the quality of our products and the health and safety of our people and we’re setting internal quality benchmarks in a number of areas as we continue to focus on improving our performance.

Mr Romano said season-to-date, overall milk production was now slightly ahead of last year but, with the season only a third of the way through, it was too early to talk about actual production figures for the year.

Prices were stable in this morning’s globalDairy Trade auction with no change in the trade weighted index.

The price of whole milk powder was even at $3495 a tonne; skim milk powder dropped 1.1% to $3,021; anhydrous milk fat was up 4.5% to $5,394 and butter milk powder was down 1.8% to $3,011.

In a newsletter to shareholders Fonterra chair Henry van der Heyden said CWT (Co-operatives Working Together) in the USA have stopped culling cows in favour of export subsidies.

Cheese prices are likely to come under pressure as a result of subsidised product from there but butter is still in tight supply in the USA and Europe.

Production in Australia has been hit by wet weather in September.

Snow’s no good for lambs


Spring had been merciful to lambs until now.

But Southland and Otago farmers are expecting big losses in the wake of the weekend’s snowfalls.

Federated Farms board member David Rose said:

“Winter in winter is OK but winter in spring is a bit of a disaster.”

They were in the middle of lambing and had quite a few losses because of the weather, Mr Rose said.

“You feel a bit helpless, really … it’s hard to do anything.”

There were only so many sheep they could put inside, which was difficult at the rate they had been lambing, Mr Rose said. “You do what you can … It’s inevitable you’re going to have losses.”

Feds Otago president Mike Lord said those worst affected could lose 200-300 lambs.

Newborn lambs had virtually no chance against the elements on Saturday because of the wind chill, he said.

Luckily, many late-lambing farmers were due to start today and the losses would have been much worse had the blast hit in a few days’ time, he said.

News reports like this often lead to questions of why farmers lamb at this time of year. It’s all to do with feed supply – having enough grass at the right time to flush ewes before tupping in autumn and to feed them and their lambs in spring and early summer.

Besides, storms strike at any time of the year.

Snow isn’t good for the potential fruit harvest either.

Alexandra’s Blossom Festival is scheduled for next weekend and orchardists have been fighting frosts.

A newsletter to shareholders from Fonterra chair Henry van der Hayden said up to eight inches of snow at Edendale prevented tankers getting out to farms. Several farmers had to dump milk into effluent ponds.

There shouldn’t be any environmental damage as a result of that providing it’s sprayed on to paddocks in the right way at the right time and the co-operative will pay out on estimates of milk lost.

Fonterra donates $1m to Canterbury


Fonterra has announced a $1 million donation towards recovery efforts in Christchurch and the wider Canterbury area which was struck by an earthquake yesterday. 

The donation will go to the Mayoral Relief Fund.

Chairman Sir Henry van der Heyden said:

“We are very concerned for people in the region, especially those coping with significant damage to their homes.  We know the donation will be put to good and immediate use as people try to cope with the very difficult conditions. We encourage other companies to do the same.

“There is a massive job to be done.  We are grateful that our local farmers and our sites have come through relatively unscathed as this means we can put our resources into the community where help is needed most.”

Fonterra would also continue to provide practical help through local staff and equipment.

Fonterra CEO Andrew Ferrier said four Fonterra tankers had been stationed at local emergency centres and were delivering water to the community.

In addition, Fonterra was working with the civil defence team to provide food and milk for the public via emergency centres.

Fonterra service centres and Area Managers were contacting all local dairy farmers.  An estimated 20 percent of farms in the area were still without power.

“We are helping to source generators for these farmers or arranging for them to milk at neighbours’ properties,” said Mr Ferrier.  “Fonterra is continuing to collect all milk from local farmers.”

On Q&A this morning Prime Minister John Key talked about the likely costs involved:

. . . a lot of homeowners will over time find damage that they’re not expecting at the moment. There’ll be problems that can’t present themselves visibly underground and there’s a major rebuild job here in Christchurch. . .

But when you go to that financial issue, an what we’re hearing from EQC is they expect claims from at least 100,000 homes, potentially more. They’re saying a bill of a billion dollars, maybe more. This is the single biggest claim on EQC since the scheme was established. So it is a major impact on both that scheme, but ultimately there’s all the other costs, those that are uninsured, costs on the central government, costs on local government, costs on businesses.

He said the total cost may amount to a couple of billion dollars.

He also mentioned the silver lining. There will be employment opportunities in Christchurch and the hinterland as people clean up and rebuild.

UPDATE: Kiwiblog reports another silver lining – Jim Anderton told CTV on Friday it would take an earthquake for him to lose the mayoral election.

Milk payout holding up


Fonterra shareholders received a welcome email from the co-operative’s chair Henry van der Heyden yesterday – the forecast milk payout is staying at $6.90 – $7.10.

That is based on the expectation dairy prices will strengthen as the season progresses.

The payout will be confirmed after the board’s meeting on September 23.

Sir Henry also complimented the response by farmers, the company’s service centre and tanker drivers to last weekend’s floods in the Bay of Plenty.

The flooding put 75 farms and 500,000 litres of milk at risk but Fonterra was able to pick up all the milk.

Milk auction price down again


Prices for skim and whole milk powder and anhydrous milk fat all dropped at last night’s globalDairyTrade auction.

The gDT-TWI index was down 8.3%, skim milk powder dropped 8.9%, whole milk powder was down 7.7% and the price for  AMF fell 7.6%.

An email to shareholders from Fonterra chair Sir Henry Van der Heyden noted the relatively high value of the New Zealand dollar but said the current season’s forecast payout still remained in the $6.90 to $7.10 range.

World milk prices have been volatile, but there’s nothing new in that. Dr Jon Hauser at X-Cheque has graphed milk prices in Australia, France, the UK & USA since 1995 and it looks like coloured spaghetti. (New Zealand prices aren’t included but he says they’re similar to Australian ones).

For me the most interesting data is that of the USA. A regular cycle of volatility has persisted for 15 years.  The peaks are about 3 years apart with a fall to a roughly similar level in between.  There is no doubt that the supply / demand balance in the US is the principle driver of this cycle. In a perverse way the market behaviour is comforting. It is to some extent predictable and it would be more of a worry if there were prolonged periods at the low points.

Australia and New Zealand look like they are trending towards the US cycle. In the short term that will be a positive as it will mean a lift in the long term average price. In the longer term farmers will need to be very careful to avoid getting over excited about the periods of peak pricing. Their businesses need to be designed to withstand the troughs in price. The major risk in this regard is overpriced land and excessive debt.

Our bank is holding a series of meetings for clients at which they give a similar message.

There may be a glimmer of hope for New Zealand dairy farmers though, the price of grain in the UK is very high (close to £140/t). That will increase input prices for dairy farmers there which ought to make it easier for us to compete with them.

Not where they’re from but what they do here which matters


Whether our ancestors, paddled, sailed, or flew here, they brought with them a variety of skills and cultures which have helped make us and our country what it is.

Now that our birth rate is hovering at or below natural replacement level, immigration is at least as important as it was in the past.

You’d think that means we’d welcome people bringing their expertise and money, but that’s not necessarily the case, especially when it comes to those wanting to buy farm land.

The Herald reports:

. . .  at least 24 countries have been given approval to invest in the agricultural sector, covering 154,855ha and a wide range of sectors from sheep farming to viticulture.

 I suspect they mean that people from at least 24 countries, which is different from the countries themselves, and that’s not necessarily bad.

Westpac chief economist Brendan O’Donovan says foreign investment generally has been an integral part of New Zealand’s growth.

“Because we’ve always had a capital shortage and we’ve been very dependent on foreign funding and foreign firms,” O’Donovan explains. . .


New Zealanders buy into foreign companies and land, he says. “If you expect to be able to buy land in other countries then you’ve got to be prepared to sell it here.”

Adolf at No Minister, agrees and points out that New Zealanders may well have bought a greater area of land in other countries than foreigners have bought here  over the last five years.

Although not all countries allow non-nationals to buy land which is one of the issues Federated Farmers is considering. While mindful of the importance of overseas investment, Feds president Don Nicolson says:

“. . .  I think it’s very important that we have reciprocal rights for purchasing in the countries that may be willing to invest in our land and assets here.

“We can only lease [land in China] so at best people are saying surely these people should only be able to lease land in New Zealand.”

New Zealanders buy land in North and South America, Australia, South Africa and central Europe, he says.

“I think if you talk this through with people clearly they need to understand that we need capital flows into this country … and when you start going through how it plays out people do back up.”

Federated Farmers is reviewing its position on foreign ownership.

“Our position of old has been that, well they can’t take the land with them, provided they acknowledge New Zealand law and institutions and provided they pay taxes in New Zealand then what is the issue?” Nicolson says.

“We want to have capital flow into this country – the last thing we need is anything that would spook capital flight.”

However, Fonterra chair Sir  Henry van der Heyden is less enthusiastic. He  said  low-cost pastoral agriculture is New Zealand’s point of difference and warned we must be careful not to give away our competitive advantage.

“Or we will pay the price,” van der Heyden says.

Van der Heyden wants to start a public debate over who should own prime pastoral land and questions why, given our temperate climate and soil and water resources, land is not seen as a strategic asset.

“Why shouldn’t it be under [New Zealand] control and ownership?”

He didn’t explain how this view sits with the co-operative’s farming ventures in China and Chile, although, at least in China,  Fonterra leases land because foreigners aren’t permitted to own it.

It’s unfortunate that the discussion on overseas ownership now is being driven by fears the 16 Crafar farms may be bought by a Chinese company. Policy on matters as important as this should be formed on general principle not particular prejudice and, as O’Donovan says:

“The key thing in all of this is to set clear rules because what we’re talking about is property rights, you can’t go changing the rules midstream,” he says.

“If there’s any no-go areas for foreign investors then it should be put on a register so it’s clear … and everyone knows what the rules are.”

It’s not just potential purchasers who need certainty, would-be vendors do too.

Land sales are more emotive than other assets because people have a perception the family silver is being sold, he says.

“There’s a limited difference between a foreigner owning a company here versus the land underneath that company.

“The question is always what do you do with the money [from] the asset that’s been sold,” O’Donovan says.

“If you think that you can invest it either somewhere else in New Zealand or overseas and generate a greater return on it, then where’s the issue.”

This is something which is  often overlooked. For every buyer there must be a seller. If money is brought in to New Zealand to purchase land the vendor is then able to invest the proceeds in more land or other ventures and the foreigners investing here bring more than money.

An Italian bought a farm in the Hakataramea Valley, realised it was similar to where he grew up in northern Italy which produced good wines. He planted  grapes and last year opened the Waitaki Valley’s first winery.

We have friends who came from overseas, invested money they brought with them in farms, settled on them with their families and are making a positive contribution to their new communities and New Zealand agriculture.

These examples may well be able to be countered by anecdotes of other people who took more than they contributed but bad farming isn’t peculiar to foreigners.

Regardless of who owns the land, it’s now who they are or where they come from, but what they are permitted to do with it which is most important.

Fonterra opening forecast up and may go higher


Fonterra’s opening payout forecast, before retentions,  for the 20 10/11 season is $6.90 – $7.10. That’s a 50 cent increase on this season’s payout.

That includes a milk price of $6.60/kg of milk solids and a distributable profit of 30 – 50 cents a share.

Fonterra chair Sir Henry van der Heyden said if prices and currency stay where they are now for the whole season it’s possible that the payout could be more than $8, however, he warns there’s a lot of volatility in the market.

Experience shows us it would be wise until the money is in the bank before getting too excited about that and budgets should be based on similar prices to those we’ve got this season.

The company is on track to achieve the forecast of $6.50 – $6.60 before retentions.

Fonterra’s Shareholder Council  chair Blue Read issued a media release welcoming the news: 

“With many farmers still feeling the impact of the recent drought this strong forecast cashflow will be most helpful,” said Mr Read. . .

“The positive forecast for next season will be welcomed by Fonterra suppliers but as always, farmers will be remaining vigilant in their farm business management,” said Mr Read.

It will also be welcomed by banks and the people who work for and service dairy farmers.

More milk, less lamb


Dairy cattle numbers continued to increase and  the lamb population fell in the year to June 2009 Statistics New Zealand’s Agriculture Production Survey.

The South Island dairy herd grew by 13 % to 2.1 million. Canterbury had the most cows with a 10% increase to reach a herd size of 918,000. In Southland, numbers grew 19 percent to reach 589,000.

National dairy herd numbers reached a record high of 5.9 million at 30 June 2009, up 282,000 since 2008. The size of the North Island herd remained stable at 3.8 million.

Factors contributing to the South Island growth include continued dairy conversions, a smaller number of dairy cows and heifers going to the beef herd, more older cows remaining in milking herds, and the sourcing of dairy heifers from the North Island.

“In 2009, South Island dairy cattle numbers were almost seven times larger than 20 years ago when there were 312,000 dairy cattle,” said agricultural statistics manager Gary Dunnet. “North Island numbers increased from 3.0 million to 3.8 million over the same period.”

While dairy herds increased in number and size, the sheep population fell to 32.4 million, deer numbers were down to 1.1 million, and beef numbers remained stable at 4.1 million.

An email to shareholders from Fonterra chairman Sir Henry van der Heyden today reported the European Union butter marked prices have jumped to more than EU3200 per tonne. Prices are now near the peak levels of 2007/08 and demand is remaining steady.

That news may tempt more people to convert to dairying. However, lamb prices are holding up too which will give some encouragement to farmers who by choice or necessity are sticking with sheep.

We’re doing out bit to reverse falling sheep numbers – we put 15,000 ewes to the ram this autumn and will be lambing again in spring for the first time in more than 12 years.

Milk payout up again


Fonterra has announced an increase in the forecast  milk price and distributable profit which should take the payout up to $6.30 – $6.40.

In a newsletter to shareholders board chair Henry Van der Heyden says:

  • The Board met today and has announced an increase in the forecast Milk Price for 2009/10 to $6.10 per kgMS. This is up 40 cents from $5.70.

  • We are holding our forecast Distributable Profit range at 40-50 cents per share.

  • The forecast Dividend to farmers remains unchanged – we’re still targeting 20-30 cents per share. This means 10-30 cents per share of the Distributable Profit will likely be retained.

  • The board will discuss the opening forecast for next season at its May meeting and is advising farmers to budget on a similar price to this season’s.

    This is the second best payout Fonterra has made and will be particularly welcomed by farmers who’ve had to dry off early because of the drought.

    The company will make progressive increases in payments over the next six months which will help cash flow.

    It might also help persuade farmers to buy more dry shares.

    A media release from the company says:

    Fonterra CEO, Andrew Ferrier, said that, since the last Milk Price forecast, dairy prices had remained relatively high and more stable than expected for several months, and had recently increased further.   

      “The global supply/demand balance for dairy products has shifted to a slight supply deficit.  Demand from Middle East/North Africa and Asian markets continues to grow.  On the supply side, global milk production has continued to slow, with production contracting in several key markets.  For instance, supply has been affected by a tough winter in Europe, while North America and Australia production is also down.   In New Zealand, the effects of drought mean Fonterra’s production is now projected to be similar to last season, compared to the modest increase that we forecast at the beginning of the season,” Mr Ferrier said.

     Although the net effect was good news for the Milk Price in the short term, Mr Ferrier cautioned that the market continues to show significant volatility. 

    Jamie Mckay spoke to Andrew about the payout increase on the Farming Show today.

    More cream on the milk payout?


    A review of the season’s milk price and distributable profit will be on the agenda of next week’s meeting of the Fonterra board.

    In a newsletter to shareholders chair, Sir Henry Van der Heyden says he’ll let us know right away of any changes.

    Is that a hint the forecast payout may go up? The dairy grapevine (or should that be milk line?) suggests another 20 cents could be possible.

    That would provide a welcome boost for individual farmers and the wider economy.

    The drought has forced more than a quarter of Fonterra suppliers to dry off early. Even a little more added to the current forecast payout will be some compensation for more than a month’s less production.

    Milk price up 23% – updated


    The average price for whole milk powder  increased 21% and the price across whole milk, skim milk and Anhydrous Milk Fat rose by about 23% in this morning’s globalDairy trade auction.

    In an email to shareholders, Fonterra chair Henry Van der Heyden attributed the price increase to  tightening supply because of  drier conditions and the season coming towards a close in New Zealand and Australia.

    Fonterra has taken an option on some land in Central Canterbury as the site of a possible new processing operation.

    Fonterra trade and operations manager Gary Romano said Fonterra was looking to secure enough land to expand the site, from an initial processing plant with the capacity to process 2.2 million litres of milk a day to a site capable of processing 10 million litres a day “at some point”.

    “Canterbury is the fastest-growing dairying region in New Zealand. It is now producing about 15 per cent of the country’s milk for export and growing at a rate of more than 5 per cent annually,” he said.

    The 50 new permanent jobs the development will create will be a significant boost for the economy of Darfiled, a very small rural town. 

    The proposal is also a vote of confidence in the future of dairying.

    UPDATE: The right hand end of the cut and paste copy of the graph above which shows the encouraging increase in price over time has been cut off.

    This might be better:

    You can see the original here.

    UPDATE 2: posts on the increase, notes it’s only 10% below the peak and could mean a better payout next season.

    Fonterra’s factories damaged in quake


    Fonterra has established no-one at any of its sites in Chile was injured by the earthquake but hasn’t managed to contact all of the company’s staff who were at home when it struck.

    In a newsletter to suppliers, company chair Sir Henry Van der Heyden said that there’s been varying levels of damage to its plants.

    The one nearest to Concepción is quite severely damaged but the others should be back in action in a few days.

    The company is working with farmers to help manage milk supplies until normal processing resumes.

    Milk price corrects in auction


    The average  price for whole milk powder (WMP) went down 7% to US$3,309 per tonne in Fonterra’s first globalDairy Trade auction for the year.

    That wasn’t unexpected after sharp increases in the past few months. It’s still above the long term average and the decrease will be regarded as a correction rather than anything to worry about.

    Fonterra chair Sir Henry Van der Heyden said in a newsletter to shareholders that the movements are in line with the market coming more into balance.

    While the price for  WMP was  down  the average price for Anhydrous Milk Fat (AMF) was up 4% to US$4,539 per tonne.

    WMP up 3.6% AMF down 8.6%


    The average price of Whole Milk Powder increased by 3.6% to $US 3560 per tonne at Fonterra’s globablDairy Trade auction this morning.

    The average price for Anhydrous Milk Fat, which was sold on the globablDairy Trade auction for the first time last month, dropped 8.6% to $US4350 per tonne.

    Fonterra chair Henry Van der Heyden noted in an email to shareholders that last month’s AMF price was a record high.

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