Rural round-up

November 12, 2019

‘Huge gaps” in environmental data – Colin Williscroft:

Shortcomings in New Zealand’s environmental reporting system undermine rules designed to protect the environment, a new report says.

A review of the reporting system Parliamentary Commissioner for the Environment Simon Upton identifies huge gaps in data and knowledge and calls for concerted action to improve the system.

He says the data gaps, along with inconsistent data collection and analysis, make it hard to construct a clear national picture of the state of the environment – and whether it is getting better or worse. . . 

Fonterra confident of making progress – Sally Rae:

While there are more big strategic decisions ahead for Fonterra this year, chairman John Monaghan is “very confident” in the progress the co-operative is making.

Addressing yesterday’s annual meeting, Mr Monaghan said the 2019 financial year was a year of significant challenges and change within the co-operative, as it continued to fundamentally change its culture and strategy.

It was another tough year of significant change for farmers which included the Government’s policy announcements on climate change and freshwater, the effect the Reserve Bank’s proposal to tighten capital reserve rules had on banks’ willingness to lend, and the response to Mycoplasma bovis.

Fonterra’s decision not to pay a dividend and significantly impair a number of assets was a surprise to many farmer shareholders. . . 

Underpass creates safer stock route – Alice Scott:

In 1930, Jim MacDonald’s father was one of many stock drovers on what is now State Highway 87 to take sheep through from Waipori to the Waipiata saleyards; he would pick up different station mobs on horseback with a couple of heading dogs.

These days the MacDonald family require three staff, high-visibility vests for people and dogs and flashing hazard lights on the top of their utes, and that is just to get the stock across the road.

This year Mr MacDonald said the time had come to install a stock underpass as it was no longer safe to cross stock over State Highway 87.

“We’ve had a few dogs go under the wheel of a vehicle and the logistics have just become very difficult. The road just seems to get busier and busier. . . 

Seized fruit tree cutting imports stoush: Nursery owners meet with MPI – Eric Frykberg:

Nursery owners are meeting officials of the Ministry for Primary Industries (MPI) in Wellington to try to resolve a continuing stand off over seized cuttings of new varieties of fruit trees.

They have said the Ministry overstated the case when it said progress was being made to resolve the matter, and many claims were still outstanding.

The problem began 16 months ago with the dramatic seizure of 48,000 fruit tree cuttings by officials from MPI. . . 

Horticulture New Zealand welcomes conclusion of the Regional Comprehensive Economic Partnership (RCEP) negotiations:

Horticulture New Zealand has welcomed the successful conclusion of the RCEP negotiations, saying trade agreements are critical to the ongoing success of export industries like horticulture. 

‘Last year, New Zealand exported more than $3.6 billion to 128 different export markets,’ says HortNZ Chief Executive, Mike Chapman. 

‘This year, that figure is expected to grow by a further 3.8 percent.  Such high levels of growth can only be achieved if export trading conditions are supportive, and barriers to entry are reduced constantly.’  . . 

Successful conclusion of the Regional Comprehensive Economic Partnership (RCEP) negotiations welcomed by Onions New Zealand:

Onions New Zealand welcomes the successful conclusion of the RCEP negotiations, saying trade agreements like these underpin the success of the New Zealand onion sector.

‘The RCEP covers trade among New Zealand and 14 other Asia-Pacific countries, except India.  That is, half the world’s population,’ says Onions New Zealand Chief Executive, James Kuperus.

‘Without reduced tariffs and clear trading arrangements, it is extremely difficult to export from the bottom of the world to larger economies like Asia and Australia. 

‘Agreements like these mean more onions can be exported with the higher returns going directly back into regional New Zealand communities. . . 


Rural round-up

November 11, 2019

Farmers back Fonterra mostly – Neal Wallace:

The prevailing mood might have been optimism among Fonterra shareholders at the annual meeting but a residual bitterness lingered, evidenced by two calls for chairman John Monaghan’s resignation.

About 200 shareholders attended the meeting in Invercargill on Thursday at which shareholders Jan-Maarten Kingma and Peter Moynihan both called for Monaghan’s head, saying there needs to be accountability for the decisions leading to Fonterra’s poor financial performance.

After the meeting Monaghan said he was not surprised by the resignation calls or the contrasting mood of the meeting, which reflected the broad church that is the co-operative. . . 

Learning from experience – Colin Williscroft:

Working the land is a challenging business at the best of times and for Central Hawke’s Bay farmers Ben and Libby Tosswill it’s important to focus on what they can change and try not to loose too much sleep over what they can’t, as Colin Williscroft found.

Ben and Libby Tosswill have been farming at Birch Hill Station for about 10 years, having returned to New Zealand from London where they worked in corporate finance and banking.

Trading the bright lights of the big city for the open landscape of Hawke’s Bay hill country has been a big change but the couple relish the lifestyle it’s provided them and their three boys – Fletcher, 8, Alex, 6, and Jack, 2. . .

Fit bits for cows? Tracking collars aim to reveal bovine personalities – Maja Burry and Simon Rogers:

It’s hoped new research looking at the different grazing personalities of Hereford cows will help high country farmers better use their land.

Lincoln University PHD candidate Cristian Moreno is using GPS tracking collars to monitor the differences in how some cows in the same herd graze and to establish which genetic and environmental factors influence their behaviour.

Mr Moreno said while he was still in the early stages of analysing the five million GPS data points that he had collected, he’d already found some cows would tend to walk about 2km in a day, while others would more than double that. . . 

New chairwoman in charge at trust – Toni Williams:

Jane Riach has taken over the helm on the board of Kanuka Mid Canterbury Regeneration Trust, helping to balance biodiversity, predator control and planting for purpose in the district.

Mrs Riach, who was approached to take on the chairwoman’s role, is equipped with organisational skills to help keep trust members on track and moving in the right direction.

She says the trust team was full of people already passionate about the work they were doing and had an abundance of energy and enthusiasm.

She, and husband Hamish, who is chief executive officer at Ashburton District Council, have been in town for just over a year, and Mrs Riach is already an active member in the Ashburton community. . . 

Meet Steve the seaweed man

As a horse-riding musterer on the wild Wairarapa coast, Steve Matthews used to watch deer gathering on the beach to feast on seaweed thrown up by the rough seas.

On retirement, he was inspired to start his own small business foraging and selling the stuff. Demand is huge but he plans to stay small-scale unless new regulations put him out of business.

Steve was brought up in Titahi Bay and has lived on rugged Wairarapa coast most of his life, shepherding and later managing a couple of farms.

“I was always on the beach as a kid… I love the sea.” . . 

Farmers helped to come up with carbon reduction plans – Conan Young:

Moving dairy cows indoors could be part of the answer to bringing down emissions on farms.

Farmers faced having five years to come up with their own tool to price and pay for the carbon and methane coming off their properties or being forced by the government to join the Emissions Trading Scheme.

For the first time since the ETS was introduced over a decade ago, there was a very real prospect of farmers being charged for their climate change inducing emissions. . 


Rural round-up

September 24, 2019

Consultant fulfilling passion for agriculture – Sally Rae:

He might not have ended up pursuing a hands-on farming or shearing career but Guy Blundell has still forged a profession in agriculture.

Mr Blundell is managing director of Compass Agribusiness, an agribusiness advisory, agri asset management and client partnership specialist.

Established a decade ago, it has head offices in both Arrowtown – where he lives – and Melbourne, where his business partner former Otago local Nigel Pannett leads the team, and has just opened a Dunedin office. . .

Fear, anger and mistrust in government at Mystery Creek freshwater meeting – Gerald Piddock:

Hundreds of angry farmers have confronted government officials at an environment roadshow. 

The Government’s freshwater policy reforms consultation event hit Waikato on Monday with over 500 people packing out the venue at Mystery Creek.

What officials heard was mistrust, cynicism and anger about the proposals from the largely rural audience. . .

Hawke’s Bay farmer’s heartfelt Facebook post goes viral :

A heartfelt social media post from Hawke’s Bay farmer Sam Stoddart has gone viral. In it he points out the strong connections New Zealand farmers have with the communities around them.

Stoddart told The Country he was surprised by the strong reaction to his post, which has had nearly 6000 reactions and nearly 3000 shares.

“For a vent to mates out of frustration on Facebook it certainly has gained some momentum.

I can’t believe the positive feedback though. For over 700 comments only about five are negative. Maybe the rural urban divide isn’t as big as we think. . .

Fonterra chairman John Monaghan due to step down in 2020 :

Fonterra chairman John Monaghan says he is due to retire next year and will work with the board to plan succession, but the company says he has not made up his mind about whether he will leave.

Monaghan was due to retire by rotation at next year’s annual meeting, at the end of his three-year term. 

“Having seen through the introduction of our new strategy, operating model, and with our divestment and debt reduction efforts well progressed, I will be working with the board in 2020 to facilitate chair succession. The timeline for that succession will be agreed by the board nearer to the time,” Monaghan said on Friday. . .

Food award finalist for preserved apricots in wine – Yvonne O’Hara:

Augustines of Central founder and Food Award finalist Gus Hayden, of Wanaka, is bottling “nostalgia”.

He was delighted and “pretty surprised” when he found out his preserved apricots in riesling and sugar syrup was one of 20 finalists in the Cuisine Artisan section of the New Zealand Food Awards.

Mr Hayden, who is a chef with Cardrona Terraces, Wanaka, uses spray-free apricots from two suppliers on Burn Cottage Rd, Cromwell, and Earnscleugh, near Alexandra. . .

Isn’t it time we stopped commoditising the crap out of everything. – St John Cramer:

Discounting destroys value and has always been a clear signal you’ve run out of ideas. So you end up pulling the crude cord called discounting.

Discounting is rife in Ag because it sometimes seems like it’s the only strategy we have left to compete which is always a race to the bottom.

We haven’t been very smart.

Discounting is disastrous for profits because the profit you didn’t make on that sale has to be replaced by the profit on the next sale. Worse, you condition your customers into lower prices and devalue your market positioning in the process. It also robs your business of the capital it needs to invest and grow in itself. . .


Fonterra getting worse to get better?

August 13, 2019

Just a few days ago Andrea Fox asked: Fonterra what is going on?

Yesterday we found out. Fonterra’s email to shareholders and media release made grim reading:

Chief Executive Officer Miles Hurrell said that as a result of the full review of the business which has taken place across the year, as well as the work done so far to prepare its financial statements for FY19, it has become clear that Fonterra needs to reduce the carrying value of several of its assets and take account of other one-off accounting adjustments, which total approximately $820-860 million.

“Since September 2018 we’ve been re-evaluating all investments, major assets and partnerships to ensure they still meet the Co-operative’s needs. We are leaving no stone unturned in the work to turn our performance around. We have taken a hard look at our end-to-end business, including selling and reviewing the future of a number of assets that are no longer core to our strategy. The review process has also identified a small number of assets that we believe are overvalued, based on the outlook for their expected future returns.

“While the Co-op’s FY19 underlying earnings range is within the current guidance of 10-15 cents per share, when you take into consideration these likely write-downs, we expect to make a reported loss of $590-675 million this year, which is a 37 to 42 cent loss per share. . . 

The company is making several one-off financial adjustments:

  • Our accounting valuation for DPA Brazil will be impaired by approximately $200 million. This change is mainly due to the economic conditions in Brazil. While they are improving, consumer confidence and employment rates are not at the level required to support the sales volumes and price points our forecast cashflows were based on. 
  • “As a result of the previously announced sale of our Venezuelan consumer business, and the closing of our small Venezuelan Ingredients business, due to the country’s economic and political instability, we have made an accounting adjustment of approximately $135 million relating primarily to the release of the adverse accumulated foreign currency translation reserve.  
  • “Our carrying value for China Farms will be impaired by approximately $200 million due to the slower than expected operating performance. While the extent in which we participate is under strategic review, the fresh milk category in China continues to look promising and is growing. 
  • “In our New Zealand consumer business, the compounding effect of operational challenges, along with a slower than planned recovery in our market share has resulted in us reassessing its future earnings. We are now rebuilding this business and, as part of this, have sold Tip Top which allows the team to focus on its core business. The combined impact is a write-down of approximately $200 million. 
  • “Our Australian Ingredients business is adapting to the new norm of continued drought, reduced domestic milk supply and aggressive competition in the Australian dairy industry. This includes closing our Dennington factory, which combined with writing off the goodwill in Australia Ingredients, results in a one-off impact of approximately $70 million (this includes the $50 million previously announced as part of the Dennington announcement).

“These are tough but necessary decisions we need to make to reflect today’s realities. . . 

Chairman John Monaghan said that in-light of the significant write-downs that reflect important accounting adjustments Fonterra needed to make, the Board had brought forward its decision on the full year dividend for FY19.

“We have made the call not to pay a dividend for FY19. Our owners’ livelihoods were front of mind when making this decision and we are well aware of the challenging environment farmers are operating in at the moment.

“Ultimately, we are charged with acting in the best long-term interests of the Co-op. The underlying performance of the business is in-line with the latest earnings guidance, but we cannot ignore the reported loss of $590 – $675 million once you look at the overall picture.

Board’s must act in the best interests of the company which is not always in the best short-term interest of shareholders.

“Not paying a dividend for the FY19 financial year is part of our stated intention to reduce the Co-op’s debt, which is in everybody’s long-term interests. . . 

The action that is being taken is a result of bad investments in the past.

Quitting them is both necessary and sensible, but where to from here, what have the board and management learned and what changes must still be made?

Sometimes when a company is in a mess it has to get worse before it gets better.

Suppliers and shareholders will accept the getting worse for a short time  but will run out of patience if the company can’t show it is on the way to getting better soon.


DIRA update disappoints

June 7, 2019

Proposed changes to the Dairy Industry Restructuring Act are a missed opportunity:

. . . Fonterra Chairman, John Monaghan says that while the Government has recommended tweaks to the rules under which Fonterra has to give its farmers’ milk, effectively at cost price to foreign-backed competitors, the playing field is still tipped against New Zealand dairy farmers.

“Our farmer-owned Co-operative wants an industry that promotes investment across regional New Zealand and where profits are kept in New Zealand.  We stand for an industry where New Zealand farmers are paid well for their milk and the unique attributes of our environment are protected and enhanced.

“Given the significant increase in competition within the New Zealand dairy industry, we’re disappointed the Government did not recommend removing the requirement for us to supply our farmers’ milk to large, export-focused businesses altogether.

Farmers now have plenty of choice of processors and other companies should no longer need the safety net of Fonterra milk.

We welcome the Government’s decision to give Fonterra the right to refuse membership to our Co-op where a farm is unlikely to comply with our terms of supply, or where the farm is a new conversion. These changes will support our Co-op’s ability to meet our customers’ demands and continue leading the industry toward a sustainable future for our farmers and the rural communities in which they live and farm.” . . 

Forcing Fonterra to collect milk from anyone, anywhere has encouraged farm conversions in places where, had there been a choice, Fonterra would have turned them down. It has also given the company too little latitude with farmers that don’t meet its standards.

Fonterra Shareholders Council is disappointed with the proposed changes:

Today our farmers will be feeling ignored and frustrated. Despite their efforts to engage in meaningful consultation on changes to DIRA their voice has largely gone unheard as we continue to kick the can down the road with respect to essential change to this important piece of legislation. We do however acknowledge that we are only one of many stakeholders whose interests need to be considered.

This was an opportunity to focus on the wider industry, not just Fonterra, and to optimise value creation for New Zealand from the dairy sector. We are concerned the opportunity to shift DIRA’s purpose to the future and to enable the highest value creation from our milk hasn’t been fully taken up.

The proposed changes to open entry and exit, whilst helpful, do little to address the concerns of our farmers. Recognising the importance of dairy to regional New Zealand, the changes do not go far enough to address the current strong competition for milk and the risk of over-capacity. It’s disappointing that the industry wide solution to enable the removal of open entry, which was developed with Federated Farmers, has not been taken up.

The proposed changes to the milk price regime are of deep concern. Government having the right to nominate a member to the Milk Price Panel is a step too far and gives rise to a direct conflict with the independent oversight of the regime by the Commerce Commission.

MPI also had concerns aobut this:

. . . O’Connor plans to limit Fonterra’s ability to determine a key assumption in setting the base milk price, known as the asset beta.

He will also be able to nominate a member to Fonterra’s milk price panel, although that wasn’t taken to cabinet in the paper and regulatory impact assessments.

MPI did say external appointments to the panel were proposed in submissions but not considered.

“MPI considers that this would create issues of confidentiality and commercial sensitivity, potentially placing Fonterra at a competitive disadvantage,” it said. . . 

Back to the Shareholders Council:

There was strong farmer support for better milk price transparency from other processors and this has not been heard.

Our farmers support the need for a strong domestic market for consumers. However, access to regulated priced milk for all export focused processors should have been removed.

We are disappointed there is no firm position on the expiry of DIRA and when the New Zealand market for milk collection – whether national or regional – will be considered sufficiently competitive. And there is also no transition pathway to de-regulation. . . 

Fonterra’s dominance justified regulation when DIRA was first enacted but there is now sufficient competition from and strength in other companies to begin looking towards eventual deregulation.

Federated Farmers sees useful changes and a missed opportunity in the proposals:

“We’re disappointed that open entry provisions won’t be changed, other than relating to new conversions,” Feds Dairy Industry Group Chairperson Chris Lewis says.

“It’s nearly 20 years since this legislation was passed to ensure that with the formation of Fonterra, competition for farmer milk supply, and dairy product choice for consumers, was preserved.  The market is now mature enough, and competition among a host of processing companies robust enough, for Fonterra to be given some discretion over who it is required to pick up milk from.”

Today’s decisions announced by Agriculture Minister Damien O’Connor will give Fonterra some leeway over accepting milk from land newly converted to dairy, “and that’s good,” Lewis says.  “We await detail on what the definition of a ‘new conversion’ is.

“We’re also pleased that the amended DIRA will give more clarity on when Fonterra can refuse supply when a farmer is well below industry standards relating to the environment, animal welfare, greenhouse gas emissions and the like.

“There are some farmers who have demonstrated their unwillingness to come up to the standard of all the other shareholder/suppliers out there.

“As with other aspects of the government’s announcements, the devil will be in the detail,” Lewis says. . . 

The government had the opportunity to make major changes to the DIRA, recognising changes in farming and the expansion of processing since the company was established in 2001.

Instead it’s just tinkered, leaving Fonterra and its shareholders to carry the costs of supplying competitors, most of which are overseas companies.


Rural round-up

March 6, 2019

Miles Hurrell permanently appointed Fonterra chief executive officer:

Fonterra Co-operative Group (FCG) has announced the permanent appointment of Miles Hurrell as its Chief Executive Officer (CEO), with immediate effect.

Mr Hurrell had been the Co-operative’s interim CEO since August last year.

Fonterra Chairman, John Monaghan says the Co-operative’s Board has been impressed by Mr Hurrell’s leadership and commercial skills as it continued to breathe fresh air into the Co-operative. . . 

Fonterra caught in death valley :

The sale of Tip Top is crucial to Fonterra’s aim of reducing its debt by $800 million before the end of this financial year, dairy industry commentator Peter Fraser believes.

Fast-moving consumer goods companies can command some very high multiples of earnings when being traded.

Fraser is an economist who advised the Ministry of Agriculture during Fonterra’s restructuring attempt a decade ago and has commented on the dairy industry since.  . . 

M. Bovisfoundonthreefarms – Sally Rae:

Bulk milk testing from all dairy farms has confirmed Mycoplasma bovis infection on three farms, the Ministry for Primary Industries’ latest stakeholder update says. All three properties had previously known links to the bacterial cattle disease.

Another 51 farms would be further investigated as part of routine surveillance while testing was yet to be completed from about 50 farms that calved later in the season.

Testing would begin shortly after calving because the bacteria was more likely to be shed during times of stress, such as after calving and the start of lactation, the update said. . . 

Alex woolhandler to represent NZ at champs – Sally Rae:

It’s bonjour France for Alexandra-based woolhandler Pagan Karauria. Karauria (30) will represent New Zealand at the world championships in Le Dorat in July, after gaining selection at the Golden Shears in Masterton on Saturday night.

Her success was even more remarkable given she suffered life-threatening injuries in a vehicle crash in Central Otago 10 and a-half years ago and has battled with the lasting effects since. . . 

Indoor lambing unit is in enviro contest – Joanna Grigg:

Richard Dawkins of The Pyramid has entered his family sheep and cattle business in the 2019 Cawthron Marlborough Environmental Awards and is up against forestry, marine, wine industry, landscape/habitat, community innovation and business innovation entries for the supreme title.

The winners will be named on March 22.

The Pyramid is in contention for the Federated Farmers Award for sheep and beef entries.  . . 

Farm loan delinquencies highest in 9 years as prices slump – Roxana Hegeman:

The nation’s farmers are struggling to pay back loans after years of low crop prices and a backlash from foreign buyers over President Donald Trump’s tariffs, with a key government program showing the highest default rate in at least nine years.

Many agricultural loans come due around Jan. 1, in part to give producers enough time to sell crops and livestock and to give them more flexibility in timing interest payments for tax filing purposes.

“It is beginning to become a serious situation nationwide at least in the grain crops — those that produce corn, soybeans, wheat,” said Allen Featherstone, head of the Department of Agricultural Economics at Kansas State University. . . 

 


Rural round-up

March 4, 2019

EU makes a galling offer – Nigel Stirling:

The European Union is pressing New Zealand to drop the use of some cheese names in free-trade talks but is refusing to open its own dairy markets to increased competition in return.

Negotiators met for the third round of talks in Brussels last week. NZ’s lead negotiator Martin Harvey said the talks had made progress since being launched in July last year and the EU had already tabled an offer on agricultural market access.

“The EU has made us an offer but it is not satisfactory.” . . .

Milk price up but decisions loom – Neal Wallace:

Fonterra decided not to pay an interim dividend because of its debt reduction priorities and steps to improve its operational performance, chairman John Monaghan says.

Fonterra lifted its forecast farmgate milk price range 30c to $6.30-$6.60/kg MS on the back of improved demand from Asia, specifically China, and bad weather slowing production in Australia and Europe.

Countering that, geopolitical pressure in Latin America has made trading conditions difficult in some countries, chief executive Miles Hurrell said. . .

History made as Canterbury woman qualifies for for FMG Young Farmer of the Year final:

A North Canterbury shepherd has made history after qualifying for the prestigious FMG Young Farmer of the Year Grand Final.

Georgie Lindsay, 23, won the fiercely-contested Tasman regional final in Culverden last night, beating seven other contestants.

She’s the first woman from the sprawling region to make it through to the grand final in the contest’s 51-year history. . .

Chance to lower N leaching – Ken Muir:

Southern Dairy Hub business manager Guy Michaels said the key takeaway from last week’s field day at the Hub near Wallacetown was that there is a range opportunities for farmers to save money and reduce nitrate (N) leaching. ”While it is still early days for our research, our monitoring programme being carried out in association with AgResearch is starting to provide a picture of the differences in nitrate leaching in different situations,” he said. . . 

Enterprising family’s team work bears fruit – Sally Brooker:

Usually, it’s the kids who leave home. In the Watt family, it was the parents.

Julie and Justin Watt own Waitaki Orchards, just east of Kurow. Their eight children have become so involved in the business that they have stayed to run different aspects of it.

“Justin and I and the youngest are in Duntroon,” Mrs Watt said when the Oamaru Mail called in last month. “We were the first to leave home.” . . . 

The high school where learning to farm is a graduation requirement – Mary Ann Lieser:

A group of teens gathers quietly in the predawn darkness. Dressed in warm clothing, they meet before breakfast to help capture and pack broiler chickens to be taken to a slaughterhouse. They fed, watered, and watched the birds grow; now they prepare them for their final trip. Eventually, the birds will return as meat and be cooked for the teens to eat.

High school students at Olney Friends School, located on 350 acres near Barnesville, Ohio, witness the cycle of birth and death time and again during their four years on campus. Founded in 1837 to serve the children of Quaker families, Olney has always had a farm program and students have been involved in its operation to varying degrees. . .

 


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