Rural round-up

March 16, 2016

Whitestone blue wins silver in world champs – Sally Rae,

Whitestone Cheese has got the blues – but in a good way.

The Oamaru-based company has been awarded a silver medal in the blue vein division of the 2016 World Championship Cheese Contest in the United States, the world’s largest cheese, butter and yoghurt competition.

The contest, hosted by the Wisconsin Cheese Makers Association, attracted a record 2948 entries from 25 countries. Judges came from all over the world and included Fonterra research technologist Andrew Legg. . . 

Bankers aren’t farmers – Offsetting Behaviour:

On Radio New Zealand this morning, Andrew Little argued the government should lean on the banks to prevent their foreclosing on dairy farms, warning of that foreigners might swoop in and buy distressed NZ farms. 

  • Banks do not want to run farms. If they foreclose, they have to find somebody to run the thing pending auction. There are cows that need to be fed. The bank or the receiver takes on all the health & safety, and animal welfare, liability. The most heavily leveraged ones are the ones that’d be first to go; those are the ones where the banks have the biggest stake, and where the banks would take the greatest share of the loss in a fire-sale. A receiver’s fees will include all the farm-running costs. . . 

Dairy industry needs to stay competitive – DairyNZ:

DairyNZ says it is time to look at how the dairy industry can stay competitive in the wake of a record low Farmgate Milk Price and mounting debt.

It is stepping up its support to farmers and is running workshops across the country this week focussing on sharemilkers and farm owners working with sharemilkers.

Chief executive Tim Mackle said Fonterra has done well since it formed in 2001, and the main challenge for farmers – compared to other tough years – was the mountain of debt that had grown.

“Ten percent of the highest indebted farms have 30 percent of the total dairy debt – that’s $11 to $12 billion or $10 million each. But that doesn’t mean all those farms are at risk,” says Dr Mackle. . . 

Dairy prices affecting over one fifth of NZ SMEs:

More than one-in-five small and medium enterprises across New Zealand are feeling the effects of falling dairy prices, according to leading accounting software developer MYOB.

A snapshot result from the latest Business Monitor research commissioned by MYOB and undertaken by Colmar Brunton, found that 21 per cent of the more than 1,000 SMEs surveyed stated their business’ revenues were negatively affected by the dairy price. Even more concerning is the 25 per cent of SMEs that said general consumer confidence has been directly hit.

Across the country, it means that approximately 100,000 businesses employing upwards of one million New Zealanders are facing reducing revenue because of the dairy downturn. MYOB General Manager James Scollay says that the results show a significant impact on the New Zealand economy. . .

Dairy farming: it’ll be survival of the fittest – Jamie Gray:

Bank analyst has confidence in the sector’s ability to adapt but says that some of those ill-prepared for the downturn will go to the wall, writes Jamie Gray.

The dairy sector may be in for a period of adjustment of an order not seen since the 1980s, when farmers were hit with high interest rates, a high New Zealand dollar, and the removal of subsidies, says Rabobank NZ’s head of country banking Hayley Moynihan.

As dairy farmers prepare to enter what may be their third season in a row of negative returns, Moynihan said there will be casualties, but she has confidence in the sector’s ability to cope. . . 

dairy graphic

Stellar vintage predicted for Hawke’s Bay winegrowers:

All signs are pointing towards 2016 being another stellar year for Hawke’s Bay winemakers.

Paul Ham, Managing Director of Alpha Domus Winery, says the 2016 vintage is shaping up to be one of the best yet.

As one of the first wineries in Hawke’s Bay to harvest their early Chardonnay grapes, Alpha Domus is in a unique position to assess the coming vintage. “We’re really excited about the remainder of the harvest,” says Mr Ham. “It’s been a superb season and the grapes are looking outstanding on the vine.” . . .

Quality of NZ wool clip leaves exporters scrambling to fill lower-grade fibre orders – Tina Morrison:

(BusinessDesk) – New Zealand wool exporters scrambling to fill orders for lower-grade wool have driven up the price of what are known as oddments in recent weeks because the season to date has delivered an unexpectedly high-quality clip.

Wool oddments are the shorter parts of the fleece, such as from the belly, second pieces, eye clips, necks and those parts stained or otherwise discoloured. They are often baled and sold separately, but a paucity of lower-quality wool has meant exporters are blending oddments with other higher wool grades to make up orders, said Malcolm Ching, an executive at New Zealand Wool Services International in Christchurch. . . 

China Resources buys stake in NZ’s biggest apple exporter – Jonathan Underhill:

(BusinessDesk) – China Resources Ng Fung has acquired 15.3 percent of Scales Corp, New Zealand’s biggest apple exporter, for about $55.9 million from Direct Capital Investments.

The Hong Kong-based company today entered into an arrangement to buy the shares at $2.60 apiece, with settlement on about March 21. Scales said it welcomed China Resources “as a significant minority shareholder, and as a party who can provide support to Scales in its ongoing initiatives in China.” . . 

Social Media Stars Win Auckland/Hauraki Dairy Awards:

The 2016 Auckland/Hauraki Dairy Industry Awards winners are active among a growing group of dairy farmers turning to social media to support, share and gain information to help progress their dairy career.

At the region’s annual awards dinner held at the Indian Hall in Pukekohe last night, Brad Markham and Matthew Herbert were named 2016 Auckland/Hauraki Share Farmers of the Year, Hayden Kerr became the 2016 Auckland/Hauraki Dairy Manager of the Year and James Doidge the 2016 Auckland/Hauraki Dairy Trainee of the Year.

Mr Markham, Mr Herbert and Mr Kerr are all active and well-known among dairy farmers on Twitter. “We enjoy connecting with other farmers, in New Zealand and overseas, on social media platforms like Twitter,” Mr Markham and Mr Herbert say. “It can be a great way to share ideas. . . 

Accountants Get in Behind New Zealand Dairy Farmers:

NZ CA Limited announces Gold Sponsorship of 2016 Dairy Business of the Year

Improving farm profitability and developing resilient and sustainable farming systems are two of the key drivers behind NZ Chartered Accountants Limited’s (NZ CA) gold sponsorship of this year’s Dairy Business of the Year (DBOY).

Sue Merriman, NZ CA’s chairperson and also partner in Greymouth chartered accountants Marshall & Heaphy Limited, says, “The group is delighted to be a Gold Sponsor of the 2016 Dairy Business of the Year. With so many of our member firms located in provincial New Zealand and having dairy farm businesses as clients, it’s a logical move for the group to be involved in supporting and further developing these businesses. With the continuing slump in milk solid prices this year and the effect of this on farm businesses, it’s more important than ever that dairy farmers get good independent business advice from their chartered accountants. . . 

Fertiliser Company Takes Industry Lead to Identify Fertiliser Efficiency:

Fertiliser Company Hatuma Dicalcic Phosphate has taken an industry lead to identify fertiliser efficiencies for farmers

The company has invested over $1 million in research and is monitoring 12 sheep and beef farms totalling 16,500 hectares in the independent ‘Farming for the Future’ programme.

The programme set out to find how a lower nutrient input system can build both economic and environmental resilience within the farm gate. . . 

TECH Talks a highlight at national primary industry conference:

In two weeks Rotorua will be playing host to over 300 industry representatives from throughout the agriculture, horticulture and forestry sectors. MobileTECH 2016 is a two-day conference focusing on new technologies and innovations designed for our food and fibre industries.

As well as the New Zealand sector, MobileTECH has also attracted a solid contingent from across the Tasman. Some of Australia’s largest primary industry companies will be flying into Rotorua and joining the local industry for this event.

The strength of this programme, boosting over 36 speakers, is in bringing together under the one roof leaders from across a diverse range of primary industries with those who are developing, manufacturing and adopting these new technologies. . . 

 


If interest rates are a problem now . . .

November 12, 2013

An MYOB survey of rural businesses identifies major pressures:

Top 5 pressures for the primary sector in next 12 months

Pressure % of SMEs
Fuel prices 58%
Exchange rates 41%
Cashflow 35%
Interest rates 31%
Finance 25%

Interest rates are at historically low levels and are expected to go up next year but not significantly.

If that’s a concern now these businesses won’t want a change of government because policies announced so far by opposition parties would lead to much higher interest rates.

Fuel prices and exchange rates are also an issue – but a lower exchange rate would make imports, including fuel, more expensive.

New Zealand’s rural sector continues to find the going tough as it faces a high dollar, uncertain international markets and rising production costs. However, things are looking up, with more than double the proportion of SMEs expecting an annual revenue rise as had experienced one in the prior 12 months.

This is the finding of the latest MYOB Business Monitor, in which 39% of SME operators in the agriculture, fishing and forestry sector reported falling annual revenue, while only 15% saw revenue increase in the year to August. The sector’s growth was half the pace set by all SME’s surveyed, where 30% saw revenue increase.

MYOB General Manager Business Division James Scollay says the survey underscores some of the complex challenges facing the industries that lie at the heart of New Zealand’s economy.

“While there is much to be positive about for the SME sector as a whole this year, it has without a doubt been a more testing time for rural business operators. There’s good news on the horizon though, with 37% of agriculture, forestry and fishing SME operators expecting their revenue to increase in the next 12 months.

“A further 46% expect revenue to remain stable, while just 7% are forecasting a fall in revenue in 2014. The latter was the lowest proportion across all the industries we surveyed, along with finance and insurance.

“What this says is that although things haven’t been as good as we might have hoped in 2013, the primary sector seems set to turn a corner and enjoy a return to growth in 2014.

“We need to be mindful that the vulnerability from key pressures – many of them external – is still there, with rural business operators wanting more support, especially around the dollar. However, revenue is definitely heading in the right direction.” . . .

This gloomy view on the past year must be in areas where the drought had such a big impact.

It certainly doesn’t reflect sentiment in the south where business is going well and the forecast for the coming season is bright.

It’s certainly bright in #gigatownoamaru as it works to be the southern hemisphere’s first gigatown.


SMEs prefer National

October 1, 2013

Research released by research released today by MYOB,  shows the National Government enjoys the trust of the majority of SMEs when it comes to the economy and it’s the preferred party of a significant majority.

myob

The MYOB Business Monitor Report found 60% of the 1000+ SME business operators surveyed trust National the most to manage the economy, while only 10% trust Labour the most, 3% trust New Zealand First and 2% trust the Greens. 18% of operators don’t trust any party more than the other to manage the economy.

When it comes to policy management, the clear vote-winning initiatives are those focused on making it easier to meet the numerous compliance needs of running a business. 74% of operators said that in an election they would vote for the party who proposed to simplify taxation rules and red tape, with this ranking at the top of the list. 56% would vote for the party who proposed to simplify PAYE rules and processes, with this ranking second.

MYOB NZ General Manager, Business Division, James Scollay says the new research clearly highlights increasing confidence in an improving economy accompanied by a desire for government to reduce barriers to productivity.

“SMEs’ economic sentiment is clearly good news for the Government and is translating into trust in their current handling of the economy,” he says. “There is still improvement to be made, though, with almost one fifth of all SME operators saying they don’t trust any party over another to manage New Zealand’s economic future.

Most businesses in New Zealand are small to medium ones.

They are the ones least able to absorb the costs of compliance costs and deal with unnecessary regulations.

“Our research findings give clear evidence that SMEs are imploring government to reassess the need for particular regulations and processes involved with operating a business in New Zealand. They want their compliance load reduced wherever possible. This will no doubt assist in increasing their confidence in and satisfaction with Government. While there is of course a need to play by the rules, business owners don’t become their own boss to spend hours each month doing paperwork and ensuring they tick every box in the many compliance checklists.

“We urge Government to consider the impact of making business life a little easier, via reducing red tape, on local business owners’ ability to invest more time in planning, innovating and up-skilling themselves and their teams.”

The government’s Ausiness Growth Agenda is addressing many of the issues which concern SMEs.

LabourGreen policies including less flexible employment laws, more and higher taxes will make it much tougher for SMEs to operate and will be a disincentive to business growth.

Back to the survey:

Issues around the management of the Christchurch rebuild, which have been very public over the last three years, have not dented business operators’ confidence in the Government. National enjoys its strongest level of SME support in the city, with 66% of business operators signalling their trust in the Government on the economy. The Greens also has its highest level of support in the city, on 5%. Labour, on the other hand, has its lowest, also on 5%.

It will be interesting to see if this is reflected in the Christchurch east by-election.

The odds are against a National win. It ought to be a safe Labour seat and a sitting government has never taken a seat in a by-election. But this survey shows stronger support in the city for National which has a local candidate while Labour has parachuted in someone from Auckland.

In Wellington, Labour enjoys its best performance, with 17% of Wellington SMEs most confident in the party’s economic management. 58% in the Capital hold the most trust in National, and 3% do so with the Greens. In our largest population centre, Auckland, 59% trust National the most, as do 11% Labour, 2% Greens and 2% New Zealand First.

In the sectors, National enjoys its highest level of confidence among manufacturing businesses (68%), possibly reflecting the strong revenue results and expectations of the industry, also uncovered by the research. Nationals’ lowest level of support is amongst transport and warehousing businesses (48%). Labour has its highest level of trust in handling the economy among ‘other’ industries (17%), and lowest in the finance and insurance sector (5%).

The higher level of support for National among manufacturing businesses suggests they’re not buying into the opposition’s manufactured manufacturing crisis.

. . . The top three vote-winning initiatives were weighted towards SMEs’ desire to reduce the compliance load:
1. Simplification of provisional tax rules and processes – 74% would vote for the party proposing this
2. Simplification of the PAYE rules and processes – 56%
3. Development of one-stop online access to all government advice and support for business – 55%

The top three vote-losing initiatives were related to significant tax policy and superannuation:
1. Introduction of a Capital Gains Tax – 64% would vote against the party proposing this
2. Moves to raise the superannuation entitlement age – 52%
3. Extension of the fringe benefit tax to productivity tools such as mobile communication devices like mobile phones, tablets and laptops – 46%

Other policy favourites included tighter controls on foreign purchases of New Zealand land and infrastructure, which was supported by 54% and opposed by 14%, and Government-backed loans for small business start-ups, which was supported by 52% and opposed by just 6%.

“New Zealand’s business community is clearly keen for money that’s made in the country to stay in the country where possible, and for more funding to be provided to support the newest members of the business community,” says James Scollay.

The left like to portray themselves as champions of workers.

Their policies too often show they don’t understand the value and concern of the businesses which employ them, especially the SMEs which have less capacity to absorb compliance costs and deal with red tape.

This survey clearly shows that National’s policies are better for business, and the staff they employ, and the LabourGreen policies would not be.


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