NZ loses its way

November 22, 2017

For several years, New Zealand has received international attention and praise for its economic success.

Just a few weeks with a new government this commentary from Jared Dillian at Forbes is less than enthusiastic about its policies:

On September 23, the people of New Zealand elected 37-year-old Jacinda Ardern as prime minister, the youngest prime minister in New Zealand’s history. Ardern has brought youthful energy to New Zealand politics, but her scary rhetoric during the campaign (like calling capitalism a “blatant failure”) has some people wondering if she will take the country back to the bad old days of the 70s and early 80s.

New Zealand is a supply-side economic miracle. Not long ago, it was one of the most unfree economies that was not actually Communist in name. Most industry was nationalized, from telecommunications and transportation, to banks and hotels. There were strict capital controls and prohibitions on owning foreign assets. And of course punitively high tax rates, inflation, and extraordinary levels of government debt. . .

Those policies from the early 80s back are the ones which failed us.

The 1980s saw an enormous rollback in the size and scope of government, and the beginning of a supply-side revolution. Of course, economic liberalization was happening around the world at that time, but it was most dramatic in tiny New Zealand.

New Zealand enjoyed unprecedented economic growth, and leapfrogged to near the top of the economic freedom rankings, where it usually sits only behind Hong Kong and Singapore. It became one of the richest countries in the world. Part of New Zealand’s success was due to good central banking; the Reserve Bank of New Zealand was the first central bank in the world to institute a formal policy of inflation targeting, which other central banks have copied over the years, to everyone’s benefit. . . 

Inflation is theft. It steals the real value of money and it’s the poorest who are hit hardest by it.

It seems likely that New Zealand will experience a recession during Ardern’s term. Nobody is predicting a return to the bad old days of the 70s, but New Zealand will probably lose its status as one of the most open, free economies in the world. It takes decades to weaken an economy, just like it takes decades to strengthen it. But investors will probably want to avoid New Zealand for the time being.

This government has taken down the welcome sign to immigrants and inwards investment.

Richard Harman at Politik reports the Government is to put the approval of overseas purchases of farmland on hold as it gets advice from officials on how to carry out its coalition agreement with NZ First to strengthen the Overseas Investment Act.

The hold is likely to affect tens of millions of dollars of property sales and possibly hundreds of millions of dollars worth of business transactions.

POLITIK understands that the sale of one large South Island property and the potential sale of an iconic Wanaka station along with two large North Island dairy properties are likely to be caught up in the move.

It was not clear from the comments from Prime Minister Jacinda Ardern yesterday whether the hold will also apply to overseas business investments – but if that is the case, there are proposed takeovers in both the oil and gas and private hospital sectors that could be affected. . . 

The sale of Icebreaker  to VF Corporation which needs OIO approval as will the sale of carpet maker Godfrey Hirst to global flooring manufacturer Mohawk Industries.

Uncertainty over the economy, the inflationary affect of a lower dollar and higher borrowing, and whether immigrants will be available to fill staff vacancies is denting business confidence.

Less confidence means businesses are less willing to take risks, including hiring more staff.

It’s very early days but if overseas investors are being warned off and local businesses are losing confidence, it’s a sign that New Zealand is losing its way.

 

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Rural round-up

November 12, 2017

Westland Looks to Take Its Wastewater Out of the Hokitika River:

Westland Milk Products said today it is well down the path toward potentially taking its treated wastewater discharge out of the Hokitika River.

CEO Toni Brendish says that in September last year Westland re-opened its investigations into an ocean outfall for its treated wastewater discharge, which would take it out of the Hokitika River two years prior to the existing in-river discharge consent expiring in 2021. A final decision on whether to go with the option will be made early in 2018. The investigations are at the stage that the company is about to go back to the West Coast Regional Council for a minor variation to its existing permit. . . 

Challenging future facing livestock farming – Nigel Malthus:

The disruptive forces facing New Zealand agriculture could mean a tough future for livestock farming, says the new president of the New Zealand Institute of Primary Industry Management (NZIPIM).

Farm consultant Craig Osborne, from Oxford, North Canterbury, has been named to replace Guy Blundell, heading the institute for the next two-year term.

Osborne says that where NZ farming is heading is the “million-dollar question” and a tough one to answer because of all the competing forces gaining momentum globally. . .

WTO declines Indonesia appeal on ruling over trade barriers that hurt NZ beef trade –  Jonathan Underhill

(BusinessDesk) – The World Trade Organization has turned down Indonesia’s appeal against a ruling that trade barriers imposed since 2011, which hurt New Zealand’s beef exports, were inconsistent with global trade rules.

New Zealand had invoked WTO dispute settlement consultations with Indonesia in 2013 and 2014 over 18 trade barriers it said had resulted in an 80 percent drop in the nation’s exports to Indonesia of beef and horticultural products such as apples and onions. Prior to the restrictions, Indonesia was New Zealand’s second-largest market for beef, worth $180 million a year, and the accumulated trade impact was an estimated $500 million to $1 billion, according to the complaint. . . 

Icebreaker inks $100M 10-year supply contract for NZ merino wool – Tina Morrison:

(BusinessDesk) – Merino outdoor clothing company Icebreaker has signed the longest ever supply contract with growers of New Zealand merino wool, worth $100 million over 10 years.

The Auckland-based company, which announced this week that it is being bought by US-based VF Corporation, has inked agreements with New Zealand woolgrowers in collaboration with wool marketer The New Zealand Merino Company to ensure it has long-term supply of the fibre. Pricing will be at a premium to market prices to recognise long-term grower loyalty and to enable Icebreaker to use farm imagery and storytelling in its global marketing campaigns, Icebreaker said in a statement. . . 

Fencing best practice showcased – Sally Brooker:

Fencing industry folk from a large part of the South Island converged on a North Otago landmark on October 25.

The Fencing Contractors Association New Zealand ran a demonstration day at Parkside Quarries, the place where Oamaru stone is hewn from the hills.

More than 50 people attended – a mix of fencing contractors and practitioners, suppliers, and industry partners.

Motueka-based fencer and tutor John Noakes said the event showcased fencing best practice – both traditional and modern techniques. . . 

NZ  company Fifth Breath launches woollen yoga mat – Brittany Pickett:

It all started with the idea that traditional yoga mats didn’t align with yogi principles and now Fifth Breath has launched the first yoga mat made from wool.

Co-founders of the New Zealand company Dana McKenzie and Irina Arya have spent the last year working to develop the mat’s design and key technology elements, with the aim to retain the functionality expected by yoga followers.

Both of them are engineers by training and met during studying for a masters in business administration at the IMD Business School in Lausanne, Switzerland in 2008. Since then, they have both enjoyed corporate careers and growing families, yet a passion for wool and yoga prompted them to build Fifth Breath Ltd, a company with an ethos about offering naturally safe yoga mats. . . 


Will Icebreaker VF deal get OIO tick?

November 4, 2017

Icebreaker, one of the company’s that made merino fashionable, is selling to a USA company  but the deal needs OIO approval:

US-based VF Corporation needs Overseas investment office approval to buy Kiwi merino clothing maker Icebreaker, meaning the deal is worth at least $100 million. The terms of the deal were not disclosed.

Merino producers have been getting a lot of pressure to sign up to 10-year contracts with Icebreaker. The proposed sale explains that and a good number of committed producers would have made the deal more attractive to the buyer.

VF Corporation has a market capitalization of around US$28 billion and its portfolio includes The North Face, Timberland, SmartWool, Vans, Wrangler and Lee. In its third-quarter result, the company forecast its 2017 revenue would be approximately US$12.1 billion.

Icebreaker had annual sales of $220 million, of which 86 percent were in offshore markets. Its own outlets and e-commerce sales make up 32 percent of sales, according to the company’s latest statement.

While the terms of the deal were not disclosed, Icebreaker confirmed the need for OIO approval due to the size of the transaction, implying a minimum value of at least $100 million. In a separate statement, VF said “the purchase price is not material to VF.” It also clarified that it expects the transaction to close in April 2018. . . 

I would think the deal would be worth considerably more than $100 million. Regardless of how much more, closure by next April is probably very optimistic.

Friends who have had dealings with the OIO, as sellers and buyers, said it was a very time-consuming process.

Unless it gets a straight decline from the outset, it won’t be any faster under the new government.

According to Icebreaker, the deal creates an expanded opportunity for the New Zealand merino industry. “This is a once in a lifetime opportunity for our global Icebreaker team and for our New Zealand wool suppliers to introduce a whole new universe of consumers to the benefits of sustainably farmed, ethically sourced, New Zealand Merino wool,” said Icebreaker founder Jeremy Moon.

John Brakenridge, CEO of the NZ Merino Company, noted VF have also had a long-term commitment to the New Zealand Merino industry through their investment in SmartWool and NZ Merino has worked with SmartWool in areas such as sustainability and social responsibility.

“Today we are seeing record demand and prices for New Zealand merino wool …the synergy of these two brands working as sisters from the same stable to build increased awareness of the Merino apparel category represents an exciting new development for the New Zealand merino wool industry,” he said. . . 

People tend to be less opposed to selling land to foreigners than selling companies.

But no matter who owns it the land and the business carried out on it stay here.

When a company is sold, there is no guarantee anything will stay in New Zealand.

Icebreaker is a New Zealand company and its clothing is designed here using locally grown merino wool but manufacturing has been done overseas for several years.

If the sale does go ahead, people who want New Zealand made merino will still have the choice of buying from companies like Glowing Sky and Mons Royale.

 


Rural round-up

October 6, 2015

Farm skills for youth _ Sally Rae:

The prospect of getting out of bed at 5am to gain work experience on a dairy farm does not bother Caleb Unahi.

The 19-year-old is enjoying keeping busy as part of the Farmhand training programme, which aims to expose Dunedin’s disengaged youth to rural opportunities.

Before starting the 13-week course, Caleb was doing ”nothing much really”, he said.

A family friend encouraged him to apply for the course, which was first held last year.

”I enjoy it. It’s a good opportunity for me to get up off my …”

he said, while learning about fencing at Invermay recently. . . 

Merino industry stalwarts honoured –  Lynda van Kempen:

A couple described as vital cogs in the fine wool industry had their efforts recognised at the weekend.

Peter and Elsie Lyon, of Alexandra, received life membership to the New Zealand Merino Shearing Society. The award – a surprise to the couple – was made during the national merino shearing championships in Alexandra on Saturday night.

The couple run Peter Lyon Shearing, which had a turnover of more than $10 million last year. . . 

The story behind merino wool – Camilla Rutherford:

I am very lucky to live on a high country Merino sheep station here in Tarras, New Zealand. This farm belongs to my husbands family and they have farmed here for over 100 years, which is a long time in NZ! Every year in the first week of September a big muster happens and the sheep are brought down off the hill and into the woolshed to get their yearly hair cut in time for the hot Central Otago summer. This wool is very carefully removed by highly skilled shearers, who have the very tricky task of removing the precious fibres without harming the wrinkly sheep.

Walking into the woolshed can be a little intimidating, with drum and bass blasting over the sound of the clippers, and a multitude of men and women working tirelessly, each with their own roll making the operation of shearing a sheep like a well oiled machine. This precious wool is sent to Merino New Zealand which is spun and made into Icebreaker clothing, which we all know and love. Merino wool is an incredible fibre; sustainable, warm when wet, cooling when you are too hot and keeps the stink off you. What better fibre to wear against your skin? My wardrobe is nearly 100% merino, from underwear, thermals, summer singlets, technical ski wear and awesome hoodies! . .  [whether or not you want to read more, it’s worth clicking the link for the photos]

Ballance Farm Environment Awards application period extended for Canterbury farmers:

Canterbury farmers have been given another three weeks to enter this year’s Ballance Farm Environment Awards.

The entry deadline has been extended to Friday October 30 to allow farmers more time to get their entries in before judging commences in November.

The Canterbury Ballance Farm Environment Awards Judging Coordinator Sandra Taylor acknowledged that drought and a low dairy pay-out have made for a tough start to spring and for many farmers entering the Awards has been low on the priority list.

“Recent rain and warmer temperatures will hopefully take the pressure off and give farmers a chance to think about getting their entries in.”

She points out the judging process gives farmers the opportunity to benchmark their businesses and get feedback from a team of experienced and knowledgeable judges. . . 

Life-changing win for Young Auctioneer:

With entries now open for the 2015 Heartland Bank Young Auctioneer of the Year Competition, the 2014 winner is urging other young auctioneers to enter the “life-changing competition.”

Cam Bray of PGG Wrightson won the 2014 Competition after entering all three years of the competition. The win enabled him to travel to the 2015 Sydney Royal Show to attend the Australian Livestock & Property Agents Association (ALPA) Young Auctioneers National Final.

Mr Bray said that the trip to Australia resulted in some life-changing experiences.

“The trip to Australia was great – not only for the fact that I was representing New Zealand but to be able to rub shoulders with Australia’s best was an invaluable experience.” . . .

A big win for Rural Contractors NZ:

Agricultural contractors around New Zealand will soon be able to bring in overseas workers much easier than in the past – following a deal struck between its national body and Immigration NZ.

Rural Contractors NZ (RCNZ) president Steve Levet says his organisation has been working with Immigration New Zealand for a long time in an effort to resolve the problems around contractors bringing in overseas workers for the harvest season.

“After many meetings and a lot of hard work by RCNZ – together with Immigration NZ – we believe have come up with a solution that will solve many of the problems that rural contractors currently experience every year and make it much easier to bring in overseas workers,” Mr Levet says. . .

Forest grower poll open:

Voting is now open for the person who will represent owners of smaller forests on the Forest Growers Levy Trust board.

The two candidates are Guy Farman, managing director of Farman Turkington Forestry and Steve Wilton, managing director of Forest Enterprises. Both have strong forestry credentials and are based in the Wairarapa.

Anyone who owns a ‘qualifying forest’ of between 4 and 1000 hectares, planted before 1 October 2003, may vote in the election that opened on Monday 5 October and closes on Friday 16 October. . . .

DataCol Group extends their reach into the rural market with acquisition of pioneering water measurement company Watermetrics:

Data collection and data integrator specialist business DataCol Group, today announced it had fully acquired Canterbury-based Watermetrics, a provider of integrated water flow monitoring, recording and analysis services.

“Watermetrics were pioneers in providing water measurement technology and services to the rural sector, have built a strong brand and significant customer base predominantly in the Canterbury region off the back of that,” says DataCol CEO Bruce Franks.

“Using data collection and measurement technology has become a critical tool for farmers in terms of enhancing productivity, reducing cost and complying with national regulations like water consents. . . 

Queenstown’s Ziptrek Ecotours wins environmental tourism award:

A successful business driven by the ethos of ‘inspiration through adventure’ is how judges described Queenstown’s Ziptrek Ecotours in announcing it as the winner of the Environmental Tourism Award at this year’s Tourism Industry Awards.

After almost six years in business – and a consistent winner of many sustainable practice awards over the years – Ziptrek received the award on Friday night, helping set a benchmark of excellence within the New Zealand tourism industry.

Judges were hugely impressed with the business, describing it as a “wonderful example” of a highly successful tourism business embracing and promoting sustainability in everything it does. . . 

Coronet Peak caps off ‘stellar’ season with visitor experience award:

Capping off a stellar season, Queenstown’s Coronet Peak fought off stiff competition to win the Visitor Experience Award at the New Zealand Tourism Industry Awards this weekend.

The ski area celebrated its final ‘hurrah’ on the snow this weekend with a Rugby World Cup-themed day in support of the AB’s on Saturday. On Sunday, all best efforts to host a Beach Party were somewhat thwarted by wet and wild weather, but a few brave souls managed the Pond Skim to cap off an amazing season.

The final weekend of 2015 winter started well, with Coronet Peak ski area manager Ross Copland accepting the honour in Auckland on Friday night. . . 


Rural round-up

July 10, 2013

Fonterra price scheme proves popular – Jamie Gray:

Fonterra’s guaranteed milk price (GMP) pilot scheme for the current season has proven so popular that it has required scaling, the co-operative dairy giant said.

Fonterra said 328 farms have applied to supply 37 million kg of milk solids for the scheme but that it had maintained the size of the pilot at the targeted 15 million kgMS, about one per cent of its total milk supply.

As a result all applicants were scaled to 40 per cent of their requested kgMS, with a minimum threshold of 10 per cent of a farm’s production. . .

Synlait Milk sets share price at $2.20 a piece:

Synlait Milk will sell shares at $2.20 apiece before joining the NZX later this month, valuing the dairy processor at $322 million and making it the 43rd biggest company on the exchange.

The Rakaia-based company plans to raise $75 million of new capital, and existing shareholders will sell $38.7 million, or 17.6 million shares, in a secondary offer, listing on July 23, Synlait Milk said in a statement.

Cornerstone shareholder Bright Dairy and Food won’t participate in the offer, reducing its holding to about 39 percent from the 51 percent it acquired in 2010 after Synlait abandoned an earlier plan to go public because of tepid investor appetite after the global financial crisis. . .

Huge opportunity with Icebreaker – Sally Rae:

Nicola Simpson is a firm believer in taking opportunities as they come.

She was on holiday with her family at Pounawea when she checked her emails and found a message ”out of the blue” asking if she would be interested in joining merino clothing company Icebreaker.

It meant moving from Wanaka to Auckland, a city where the family had lived before, but it was a ”huge opportunity”, she said. . .

LGNZ Welcomes New Dairy Accord:

Local Government New Zealand has welcomed the new Sustainable Dairying: Water Accord released at Parliament today.

The Accord, which involves two tiers of “accountable” and “supporting” partnerships between a number of dairy industry bodies and agri-businesses, also lists 15 regional and unitary councils as “Friends of the Accord.” . . .


Rural round-up

July 4, 2013

To be or not to be questions for red meat: Speech by Jeanette Maxwell, Federated Farmers Meat & Fibre chairperson, to the 2013 Meat & Fibre Annual General Meeting, Ashburton

In writing my address to you today, where we will be discussing the biggest change red meat has faced for a generation, the first four lines from Shakespeare’s Hamlet come to mind. Especially since there seems to be something rotten in the state of our red-meat industry.

“To be, or not to be, that is the question:
Whether ’tis Nobler in the mind to suffer
The Slings and Arrows of outrageous Fortune,
Or to take Arms against a Sea of troubles…”

Right there I seem to have exhausted my knowledge of Shakespeare!

Suffice to say Hamlet was a tragedy, which is not what we want for New Zealand’s red meat sector. Yet those lines pretty much sum up the position we are in. Do we leave things to chance, or do we do something about it? . . .

New pastoral lease rent system bedding in:

Land Information Minister Maurice Williamson says 17 South Island High Country Crown pastoral leases are from this week on a new rent system.

There are 221 pastoral leases and each one has its rent reviewed every 11 years.

“The 17 leases were the first reviewed under new legislation (Crown Pastoral Land Amendment Act 2012) which bases rents on the earning capacity of the land and not on the value of the land exclusive of improvements. . .

Icebreaker Appoints Rob Fyfe as New Executive Chairman:

Rob Fyfe has stepped up his involvement in Icebreaker to become the Executive Chairman in September of this year.

Icebreaker founder and Chief Executive Officer Jeremy Moon says he is thrilled to have Rob Fyfe more involved in the business.

“The chairman’s role is critical and works very closely with the CEO to steer the ship and set the priorities and objectives of the business for the future. I can think of no one better than Rob to be able to do this, given his wealth of experience. . .

Winter storms sends farm feed prices soaring:

Winter storms which which dumped heavy snow through much of the South Island and left some areas under water have sent supplementary feed prices soaring.

Southern farmers have been warned that feed shortages could become an issue if they get hit with more wild winter weather.

Otago Federated Farmers president Stephen Korteweg says farmers in the south did not go into winter with big surpluses of hay or straw. . .

New research trial shows blueberries’ potential:

New research trial shows blueberries’ potential for reducing hyperglycemia, weight gain and cholesterol levels.

“The blueberry’s ability to intervene in conditions such as Type 2 diabetes and obesity is of critical importance,” says trial leader.

The results of a recently published research study highlight blueberries’ potential to play a significant role in helping to manage weight and prevent the onset of Type 2 diabetes. . .


Rural round-up

June 24, 2013

Stock rescue mission – Rosie Manins:

A massive rescue operation is under way in Otago’s high country, where thousands of sheep and cattle are stranded in thick snow cover.

Volunteers are needed to help farmers access and feed stock on about 40 stations above 500m throughout the region.

Otago’s high country farms are among the worst-hit in the South Island.

Up to one metre of snow has isolated sheep and cattle and prevented farmers from surveying the damage, so it is too soon to know the extent of stock losses. . .

NZ Merino excited by Japanese contract – Sally Rae:

The signing of $2.5 million worth of New Zealand Merino contracts by Japanese brand Nikke has been heralded as a significant deal.

The New Zealand Merino Company (NZM) and its fine wool growers have a 17-year relationship with the Japanese manufacturer of wool textiles.

NZM described the deal, signed in Osaka, as marking an ”exciting new era” in the partnership. Contracts were concluded for 132 tonnes of 14.3, 15.3, 16.3, 17.3, 19.5 and 21.5 micron, at prices ”significantly superior” to today’s market. . .

Innovation took merino to world – Tim Cronshaw:

Some of the best advice Icebreaker co-founder Brian Brakenridge gives to people with new business ideas is not to be afraid of being a non-conformist.

He and his wife, Fiona, were running merinos at Pohuenui Island in the Marlborough Sounds when they founded the merino outdoor garment business before the entry of “marketing guru” Jeremy Moon.

Brakenridge admits he sometimes feels uncomfortable being called the founder of the business, as Moon took it to its great heights. . .

Rural contractors take big hit from drought – Carmen Hall:

Western Bay of Plenty rural contractors lost as much as 50 per cent of their business because of the drought.

Hardest hit were hay, silage and cropping companies, which say most of their work was wiped out because of poor grass-growing conditions.

Bradstreet Contractors owner Peter Bradstreet says his workload is down 45 to 50 per cent and it is possibly the worst drought since the business began 35 years ago. “It has been particularly bad because the grass just didn’t grow.

“We’d get a little bit of rain but it would stop just when growing conditions looked good again … it was the longevity of the dry spell that did the damage.” . . .

 

Farmers add meat to debate on behaviour -David Burt:

Federated Farmers’ meat and fibre executive asked its members in April to participate in an online survey about farmer behaviour.

The aim was to gather information that would help the executive understand the drivers underpinning stock selling and related behaviours, which are thought to be one of the issues holding back the sector. The response from members was gratifying, with nearly 900 members participating.

A full analysis of the results is under way and will be presented to members at the Meat & Fibre Conference in Ashburton on July 3 and 4. . .

Double the support for Dairy Women’s Network:

Long-standing Dairy Women’s Network member Cathie Cotter has been appointed to a new role as convener co-ordinator for the South Island.

The network was boosting its support of dairying women throughout the country through two new roles which would help its regional groups increase memberships, increase local training opportunities and identify and support emerging leaders, executive chairwoman Michelle Wilson said. . .

 


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