Rural round-up

28/09/2013

Private Investors announced for Ruataniwha Water Storage Scheme:

Two well-known New Zealand companies have signalled their intention to potentially invest in the Ruataniwha Water Storage Scheme in Hawke’s Bay.

TrustPower Limited and Ngāi Tahu Holdings Corporation Limited (NTHC) have each signed a Memorandum of Understanding with Hawke’s Bay Regional Investment Company Limited (HBRIC Ltd) to potentially invest in the Ruataniwha Water Storage Scheme in Hawke’s Bay.  HBRIC Ltd is Hawke’s Bay Regional Council’s investment company and lead entity for the Ruataniwha Water Storage Scheme which, if approved, has the potential to improve the water quality and quantity in the Tukituki River and reliably irrigate up to 30,000 hectares of land. 

All parties emphasise their commitment to deliver the best possible outcomes for the Hawke’s Bay region, across environmental, social, cultural and economic values.  Today’s announcement comes after significant combined investigations by the two potential investors with HBRIC Ltd. . .

Putting NZ dairy innovation on the world stage:

New Zealand-owned dairy technology innovator, Waikato Milking Systems, will showcase its expertise in large-scale, high-volume milking systems at the World Dairy Expo in the United States.

The 100% New Zealand-owned and operated company will display a selection of its products at the show, including products specifically designed for high-producing, 24-hour dairy operations. The international show is in Madison, Wisconsin from October 1 to 5.

“The World Dairy Expo attracts leading dairy operators from all over the globe. It is a great opportunity to put New Zealand dairy innovation and technology on the world map,” Waikato Milking Systems Chief Executive Dean Bell says. “Our rotary milking systems are known for being reliable and robust with very little maintenance required – ideal for withstanding the rigours of 24 hour milking.” . . .

Central Otago country hotel wins accolade at national hospitality awards:

A Central Otago country hotel has taken out one of the top accolades at this year’s Hospitality New Zealand Awards for Excellence. Chatto Creek Tavern near Alexandra won the Best Country Hotel title.

The Hospitality New Zealand Awards for Excellence were announced in Queenstown last night. The Supreme Champion award was presented to The Batch Café in Invercargill. Winners were announced in 16 categories and encompassed a vast geographic spread of hospitality businesses throughout the country. . .

DINZ keen to ensure that AgResearch’s Future Footprint delivers for deer industry:

Deer Industry New Zealand (DINZ) is looking forward to working with AgResearch in the implementation of its Future Footprint plan, which AgResearch announced yesterday it would proceed with.

DINZ Deputy Chair, Jerry Bell, said today that “there has certainly been concern in our industry about the impact of the Future Footprint plan on deer research. Industry representatives have sought assurances that deer research will be not diminished and have received a strong commitment from AgResearch to our on-going deer research programme”.

“People at the Invermay campus have been absolutely critical in the success of our industry, but the reality is that deer research has been contributed to from a range of campuses for some time now. What’s of greatest importance is the quality of, and the investment in those people, not necessarily where they are”. . .

Top 40 Cooperatives And Mutuals Top $41Bn Revenue:

The 2013 New Zealand Cooperative and Mutual Top 40 list was launched by Minister of Commerce Craig Foss at the Cooperative Business New Zealand annual meeting in Wellington on 17th September.

Showing a combined annual revenue of $41,129,034,964 for the year 2011-12, the Top 40 cooperatives in New Zealand ranged from Fonterra Cooperative Group and Foodstuffs at the top through Southern Cross Healthcare Society and Mitre10 to Ashburton Trading Society, the Dairy Goat Cooperative and World Travellers, with the NZ Honey Producers Cooperative coming in at #40.

“I think it is important that New Zealanders sit up and take notice of cooperatives; they help drive the economy, respond to social change and create jobs in a variety of sectors. While they may often be low profile, they are significant economic actors,” said Minister Foss. . .

Progressive Enterprises confirms no sulphites in fresh meat:

Progressive Enterprises does not add sulphites to its fresh meat and the recent samples taken by the Ministry for Primary Industries, which showed positive results for sulphites, were not from any Countdown, SuperValue or FreshChoice supermarket. 

Progressive Enterprises is disappointed that media coverage of the MPI testing has provided an inaccurate and misleading impression that samples which tested positive for sulphites were found in major supermarkets. . .

Fonterra Farewells

Fonterra Co-operative Limited today farewelled its former Chief Financial Officer Jonathan Mason who retires from the Co-operative at the end of this week.

Fonterra Chief Executive Theo Spierings said Mr Mason would leave behind an invaluable legacy: “Jonathan joined us in 2009, in the midst of the global financial crisis. He led our finance team through those difficult times, and the Co-operative emerged from the crisis in a strong position. He then helped to deliver our new capital structure with the successful implementation of Trading Among Farmers.

“During his time here, Jonathan has also dedicated himself to building and strengthening our finance function and team. . .

Former CFO:


Rural round-up

27/01/2013

Maori Trust beats 1080 opponent in court:

A veteran oponent of using 1080 poison to kill possums has lost his latest bid in the courts to stop a Maori organisation using the compound.

David Livingston asked for a review of the Lake Taupo Forest Trust, after the Maori Land Court previously refused to grant an injunction against the trustees . . .

The use of dicyandiamide (DCD) to control nitrogen pollution in NZ – Bob Wilcock:

For the last 20 years New Zealand has been undergoing a rapid expansion in dairy farming, driven by commodity prices. New Zealand’s dairy exports, although small on a global scale of production, comprise 30-40% of internationally traded dairy products and are a major component of our gross domestic product (roughly 3%). Dairy farming is an intensive form of agriculture and its expansion into areas that were previously used for sheep and beef farming, combined with increased stocking rates in established dairy farming regions, has resulted in much greater leaching of nitrate to groundwater, and to surface waters receiving inputs of groundwater. . . .

Cargill to idle Plainview, Texas, beef processing plant; dwindling cattle supply cited:

Cargill today announced that it will idle its Plainview, Texas, beef processing facility effective at the close of business, Friday, Feb.1, 2013, resulting primarily from the tight cattle supply brought about by years of drought in Texas and Southern Plains states.  Approximately 2,000 people work at the Plainview facility, and they will receive company support.  Federal, state, county and city government representatives, as well as Cargill customers, suppliers and other key stakeholders were informed today of Cargill’s decision, concurrent with Cargill employees being notified.

“The decision to idle our Plainview beef processing plant was a difficult and painful one to make and was made only after we conducted an exhaustive analysis of the regional cattle supply and processing capacity situation in North America,” said John Keating, president of Cargill Beef, based in Wichita, Kan.  “While idling a major beef plant is unfortunate because of the resulting layoff of good people, which impacts their families and the community of Plainview, we were compelled to make a decision that would reduce the strain created on our beef business by the reduced cattle supply.  The U.S. cattle herd is at its lowest level since 1952.  Increased feed costs resulting from the prolonged drought, combined with herd liquidations by cattle ranchers, are severely and adversely contributing to the challenging business conditions we face as an industry.  Our preference would have been not to idle a plant.” . . .

Brazillian beef imports doubled in 2012 – Gemma Mackenzie:

UK imports of Brazilian beef doubled during 2012, but trade restrictions mean import levels are still 85% lower than in 2007, said Quality Meat Scotland.

Speaking at a recent “EU Imports and CAP” seminar in Bridge of Allan, QMS head of economic services Stuart Ashworth said that since trade restrictions were placed on Brazil in 2008, beef imports to the UK fell by 80% between 2007 and 2008, and continued to fall until 2011.
 
The European market was shielded from these imports as a result of significant import tariffs, however if trade restrictions were lifted, Scottish farmers faced the prospect of lower and more volatile beef prices, he warned. . .

Fonterra CFO announces retirement:

 One of the chief architects of Fonterra’s successfully launched listed units, chief financial officer Jonathan Mason, is to leave the co-operative.

The softly spoken former senior executive for the American wood products giant International Paper first came to New Zealand from 2000 to 2005 to be cfo at Carter Holt Harvey, which IP owned at the time, before returning to the US. . .

And a media release from the Pasture Renewal Charitable Trust:

Competition to boost awareness of pasture renewal:

Over 80% of New Zealand dairy farmers intend to renew run-out pastures this season, regardless of their financial outlook, reports a dairy farm survey released recently from CINTA.

This result highlights farmers know that annual pasture renewal is vital to their operations and yet actions do not always follow those intentions.

To encourage more action on pasture renewal, agribusiness organisations have the opportunity to get alongside farmers to discuss and encourage their annual pasture renewal programmes through the “Win a Free Paddock” campaign which runs from 20 January through until the closure date of 28 February.

Open to all farmers (from both the dairy and sheep/beef/deer sectors) the three prizes, valued at $8,000 each, will be drawn on 5 March 2013. The prizes consist of products and technical advice used in the pasture renewal process and may be redeemed direct from the winners’ nominated rural retailer.

On-line entries are encouraged at http://www.pasturerenewal.org.nz. Entry forms are also available from most rural retailers or direct from their representatives. Winners will have the option to undertake their pasture renewal in either autumn or spring depending on their farming system and location.

Run by the Pasture Renewal Charitable Trust (PRCT), the competition is an excellent chance to be “in the money” and “do something about the difference” between the best producing paddock on farm and the worst”, to boost overall farm productivity, says PRCT project manager Nicola Holmes.

“PRCT recognises the importance of trusted, long-term working relationships between rural retailer representatives, contractors, consultants and farmers and having them plan programmes and timing of pasture sowing to ensure the best results,” says Nicola.  “Right now plans for autumn pasture renewal activity for 2013 will be well underway on many North Island dairy farms.”

Farmers not committed to an annual pasture renewal programme miss the chance to significantly improve pasture quality on their farm, which in turn will ensure greater productivity, increased returns, improved animal health and more farm management options.

Nicola says The CINTA survey of 600 dairy farmers nationwide shows cropping programmes, not finances, are the biggest barrier to increased areas of pasture renewal on New Zealand dairy farms.

Around New Zealand the total percentage of pasture renewal falls well behind the 10-12% annually recommended by the Trust. Dairy farmers renew around 6-7% annually and the sheep and beef sector 2-3%.


Greens want milk price set by commissioner

23/09/2011

Fonterra has published a farm gate milk price manual which shows the link between global dairy prices, the amount farmers are paid and the retail price of milk here.

The Statement shows that the 2011 Farmgate Milk Price of $7.60 per kilogram of milksolids (kgMS) was based on revenue[1] of $9.51 per kgMS, less cash and capital costs totaling $1.91 per kgMS.

The 2011 Farmgate Milk Price is $1.50 higher than the previous 2010 Season’s $6.10 per kgMS. This is driven by an increase of $1.56 in net revenue, offset slightly by an increase of 6 cents in costs.

“These figures demonstrate what Fonterra has been saying all along – that the price New Zealand farmers are paid for milk, which in turn flows into retail dairy prices, reflects global prices for dairy commodities,” said Fonterra’s chief financial officer Jonathan Mason.

The 2011 milksolids payment to farmers of $7.60 per kgMS equates to approximately 66 cents per litre of liquid milk.

Over the past two Seasons, net revenues have increased $2.96, or 45%, but in the same period costs have increased by 8 cents or 4% – roughly in line with inflation.

When we export most of our milk, the global market price has a big influence on both the payout to farmers and the retail price.

Green Party MP Sue Kedgley gets the link but says:

“The Milk Price Manual confirms that Fonterra largely bases the domestic price of milk on the global price Fonterra would get by selling milk solids overseas,” said Ms Kedgley.

“We have heard evidence during the Select Committee Milk Price inquiry that the global milk price is hugely inflated by speculators trading in milk.

“This means that New Zealanders ability to pay for a staple food product is being adversely affected by global commodity speculators.

“The Green Party considers that domestic milk prices should not be determined by an inflated global milk price,” said Ms Kedgley.

“We consider a good first step in tackling this issue would be for the domestic price of milk to be set by set by an independent body or Commissioner, not Fonterra.”

Welcome to the socialist republic where the company which produces the milk would have to accept the price set by a commissioner.

The Argentinean government tried to keep the domestic price of beef down by imposing exorbitant taxes on exports. Famers faced with that market signal gave up on cattle and swapped to growing soya which gave them better returns.

Farmers here would make a similar response to an attempt to depress the domestic milk price which, in effect, would mean they were subsidising consumers.

If the Green Party wants to be taken seriously it’s MPs need to get a better grasp of economics.

They could start by looking at the law of supply and demand and the relationship between them and prices.

 

 


Fonterra’s farmgate price formula sound

23/07/2011

Competition in domestic dairy production has increased since Fonterra was formed and the way it sets its farmgate milk pirce is sound.

This was the finding of internationally renowned competition expert, Compass Lexecon, which has been ranked as one of the leading antitrust economics firms in the world by Global Competition Review for the past seven years.

Fonterra commissioned Compass Lexecon to provide an economic evaluation of the competitive environment for dairy processing and to also review the methodology for calculating the milk price paid to Fonterra’s farmer-shareholders.

The report found that:

  • There had been a growth in competition in the New Zealand dairy industry under the Dairy Industry Restructuring Act.
  • There has been a significant investment in expanded dairy processing capacity in New Zealand by competitors as well as Fonterra since Fonterra was formed. This investment in new more efficient plant was driving down manufacturing costs.
  • The way Fonterra calculates its milk price – based on global prices for commodities, less the costs of a notional competitor – was correct.
  • Domestic dairy prices in New Zealand have increased less than global prices for dairy product, largely because of the growth of supermarket home brands sold at a discount. (Around 70 per cent of domestic fresh milk sales in New Zealand are now home brands.)

Compass Lexecon endorsed the fact that the Fonterra milk price was based on the costs of a notional competitor using efficient processing facilities, rather than Fonterra’s actual manufacturing costs. It noted that there had been considerable expansion of dairy processing in New Zealand, with more efficient plant commissioned by both Fonterra and competitors: “Even if Fonterra (and other processors) … have higher average variable costs of processing, the farm gate milk price will be bid up by competitors utilising efficient plants,” the report concluded.

“The history of actual expansion by both Fonterra and independent processors … indicates a strong belief by both Fonterra and competitors that they can secure a supply of raw milk at a price that allows them to operate profitably.”

Fonterra Group Chief Financial Officer, Jonathan Mason, said the Compass Lexecon report essentially concluded that the New Zealand environment was fostering competition in the dairy sector and that the way Fonterra set its milk price was fair.

“The Milk Price reflects international dairy commodity prices, less the costs to produce and export those commodities. . . “

This should allay fears that Fonterra is using its dominent position in setting prices which disadvantage its competitors and consumers.

The company has announced that it will be reducing the domestic price of butter and cheese in response to falls in international prices.


Fonterra’s new CFO appointed

21/01/2009

Jonathan Mason, former chief financial officer for Cabot Corporation will be Fonterra’s new CFO.


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