Training cheaper without Meat & Wool

01/07/2010

Meat and Wool New Zealand is no more. From today farmer levies fund only meat and the industry good organisation is now Beef and Lamb New Zealand (B+LNZ).

One of the major concerns about losing the levy from wool was training for shearers and wool handlers. However, the ODT reports that training fees have been agreed which could cost farmers as little as a cent a sheep.

Woolhandlers and shearing contractors are hailing the agreement, which will see Tectra set new training course fees to take account of the absence of wool levy funding, which will also ensure the industry can continue to leverage some taxpayer funding for training.

New Zealand Shearing Contractors’ Association president Barry Pullin said how each contractor implemented the new regime was up to them, but it reflected the fact other industries expected their staff to contribute towards training costs.

Those costs would be as little as 1c a sheep, substantially less than the 21c a sheep wool growers paid as part of their wool levy to Meat and Wool New Zealand.

“What’s wrong with that? If we can do it for 1c a head when previously under the name of wool harvesting it cost 21c a sheep, it’s got to be better,” Mr Pullin said.

With wool prices in the doldrums still, a reduction in the cost of training the people who shear and handle it will be very welcome.


Women win Meat Board elections

11/03/2010

The board of Meat and Wool New Zealand  has two new directors – both of them women.

Anne Munro of Fairlie has beaten long-serving director David Douglas of North Otago in the Central South Island electorate and in the Western North Island, Kirsten Bryant of Fordell beat Tony Gray of Pohangina Valley. Sitting director Ron Frew hadn’t sought re-election in that electorate.

The defeat of a sitting director, following the vote against wool levies last year which means Meat & Wool will soon just be Meat, reinforces the message farmers aren’t happy.

However, I think M&W is bearing the brunt of farmer frustration with the industry as a whole and there’s little if anything M&W can do about that.


Lamb drop up

24/11/2009

The national lamb flock increased  6.2% this spring  Meat and Wool NZ’s tailing survey shows.

A total of 28.95 million lambs were tailed this year, 1.7 million more than last spring when numbers reached a 51 year low.

North Island lamb numbers were up 9.1 per cent (1.1 million head) to 13.15 million head. South Island lamb numbers were up 4.0 per cent (0.60 million head) to 15.80 million head

Fewer ewes were put to the ram but good stock condition and generally favourable weather resulted in more multiple births and better lamb survival.

We had a 123 percent lambing nationally. This was 10.5 percentage points better than last season’s 111.1% when drought affected fertility. 

An increase in the conception rate for ewes, plus good weather conditions in early lambing led to excellent lamb survival boosting the number of lambs tailed.

The export lamb slaughter for 2009-10 is estimated to be 23.5 million head. This is an increase of 4.4% on last season and represents one million more lambs available for slaughter. However, some of these lambs will be retained for replacements to make up for the drop in stock numbers last season.

New season lambs have been receiving similar prices as last season. However farmers are expecting the price to fall off rapidly after the Christmas export trade due to the strength of the dollar.

Last season gave a welcome boost in returns for sheep meat but while international demand is strong it is not expected to translate into prices which are high enough to compensate for the relatively high value of our currency.


Where to with wool?

02/09/2009

Merino has got it right.

By itself or with possum, now renamed paihamu, it is a premium product.

Crossbred wool can’t match that and has been losing ground to synthetics for years.

Too much of the world prefers tiles to carpet. Too many of the parts which do like their floors covered have found cheaper and/or harder wearing alternatives to wool.

Alternative uses have been tried. The stab proof, fire proof vest and insulation both have promise but have yet to make enough traction to improve the value of crossbred wool.

The fibre pushes the right buttons for the environmentally concerned times: it’s a natural product and it’s renewable.

But in spite of that prices are so low the return barely covers the costs of shearing.

Frustration over that is no doubt part of the reason behind the vote against paying levies on wool to Meat and Wool New Zealand.

The organisation may well become Meat New Zealand now it’s lost farmers’ funding for its wool related activities but the loss of half its name is the least of its worries.

Loss of funding for wool research means the budget for meat research will have to go further. Some studies, in genetics for instance, would have been funded from both the meat and wool levies.

Another valuable resource paid for by the wool levy was shearer training. It might be possible for some of the people who did that to set up a separate business and continue the service, but it will be more difficult than it was under M&W’s umbrella with AgITO funding.

Sheep returns made a much-needed recovery last season when the price paid by meat companies went up. A shortage of stock here and overseas is expected to keep this season’s price at a reasonable level but the industry can’t afford to stand still.

Research and education in both meat and wool are still needed. Meat and Wool still has a mandate, and funding, to undertake industry-good activities for meat, but who’s going to do the work for wool?


Yes for meat no for wool – updated

31/08/2009

Farmers voted yes and no in Meat & Wool’s referendum on levies.

They voted for the continuation of levies on sheepmeat and beef but against the continuation of a wool or goatmeat levy.

M&W chairman Mike Peterson said the referendum sent a clear message there was significant dissatisfaction with past investments and the organisation needs to do better.

Under the Commodity Levies Act 1990 (CLA), each levy proposal must pass on both a one farmer one vote test, and also on a weighted or stock unit test. All of the levy streams passed on a weighted basis, but the wool and goatmeat levies were defeated on a one farmer one vote test.

That means the peo0ple with the most stock, who pay the biggest levies were outvoted by those with fewer stock who pay less.

The wool levy would have contributed $6.4 million to Meat and Wool’s budget and the goatmeat slaughter levy would have provided $58,000. The loss of both means the organisation will have to restructure.

The loss of the wool levy will have the biggest impact. Meat and Wool will have to curtail, and possibly stop, some of its core activities. Among these are on farm research, monitor farms and extension, shearer and wool handling training, Sheep Improvement Ltd (SIL), and the collection and provision of information relating to the wool industry by the Meat & Wool New Zealand Economic Service. 

 The current levy orders for sheepmeat, beef, goatmeat and wool are in place until April 2010.

Perhaps the winner was apathy – only 39.0% (7,820 participants) bothered to vote.

The results were:

                                                              One Person: One Vote                     Stock Numbers

Sheepmeat Levy                      YES                   3,280   53.72%                   50,071   62.46%

                                                         NO                    2,826   46.28%                   30,090   37.54%

 Beef Levy                                 YES                   3,566   51.52%                   31,919   59.32%

                                                         NO                    3,356   48.48%                   21,888   40.68%

 Goatmeat Levy                        YES                      118   46.83%                       228   52.29%

                                                         NO                       134   53.17%                       208   47.71%

Wool Levy                                    YES                   2,794   45.76%                   44,193   55.13%

                                                         NO                    3,312   54.24%                   35,968   44.87%

UPDATE:

Agriculture Minsiter David Carter says the result is a blow for the industry.

Agriculture Minister David Carter says the decision by farmers not to support the continuation of a wool levy is disappointing and will create difficulties for the industry.

“I respect the democratic process and the right for farmers to decide, but I am concerned that the ramifications of this decision have not been fully realised.

“The result of the referendum on the Meat & Wool NZ levy gives a clear go-ahead for the meat sector, but effectively leaves the wool industry without a mandated industry-good body at a time when this is desperately needed.

A factor those who voted no may not have understood is that it will now be very difficult for the industry to access funds from the Government’s Primary Growth Partnership initiative.


The other referendum

29/08/2009

Meat and Wool NZ’s referendum on its levy proposal closed yesterday.

It has been very contentious with several campaigns urging people to vote “no”.

However, it is possilbe apathy won because by Thursday there’d only been about a 30% return.

The announcement on the result will not be made until Monday. Read what you will in to that.


Fewer ewes but more lambs expected

06/08/2009

It’s less than 20 years since New Zealanders had more than 20 sheep each – there more around 70 million sheep and only 3 million people.

The human population has risen to more than 4 million and the ovine population is now around half what it was at its peak so we now have fewer than 8 sheep each.

Meat and Wool New Zealand’s latest survey  records a total sheep population of just 33.14 million.

The ewe population has dropped 3.4% in the past year to 22.7 million, the lowest since 1951-52. The number of hoggets dropped 2% to 9.4 million.

The decline in numbers was casued by drought and dairy conversions. But in spite of fewer ewes and hoggets this season’s lamb crop is expected to increase 2.1% to 27.81 million.

Beef cattle numbers also dropped. There were 40.7 million of them at the end of June, 1.7% fewer than last year.

The fall in numbers while demand for lamb remains firm should give farmers reasonable prices this season.

But price rises based on falling supply aren’t nearly as good for the long term health of the meat industry as those based on increased demand.

Falling numbers will also focus attention on the problem of excess capacity at freezing works.


Budget viewed from the paddock

29/05/2009

Agriculture Minister David Carter explains the Primary Growth Partnership.

The scope of the Primary Growth Partnership initiative includes pastoral and arable production; horticulture; seafood; forestry and wood products; and food processing.

Federated Farmers said the Budget will assist farm productivity and competitiveness.

“The Government has walked a tightrope in looking to boost productivity and competitiveness without flaming debt.

“That said, business is facing a very difficult environment and many New Zealanders are being insulated at the expense of business.  Its okay to ‘preserve entitlements’ for workers but without business owners, there would be no jobs. 

“Despite this, Federated Farmers is pleased to see the projected debt track trending downwards.  This means we will be returning to surplus a lot earlier than previously forecasted. 

“Any credit downgrade would have seriously impacted the interest rates farmers pay when farm incomes are highly constrained.  Every one percent on interest rates takes around $450 million out of farm incomes.

Feds approved of the funding for research,  is happy with the Infrastructure Board, was delighted to hear Bill English use the word water in his speech, is luke warm about funding for broadband, would like to see wool used for insulation and welcomes the commitment to reforming the RMA, Building Act and electricity markets.

“Federated Farmers understands the tightrope walked by Government in its first Budget.  Fonterra’s revised forecast, announced yesterday, tempered any expectations we had. 

“That said, there are positive indications for the future in respect of infrastructure, regulatory reform, water and research and development.  What Federated Farmers will be looking for is for acceleration in the areas that will drive the economy forward,” Mr Nicolson concluded.

NZBio  supports the investment in innovation. CEO Bronwyn Dilley said:

“Support for New Zealand’s future in the form of $1.1 billion operating and $747.3 million capital investment in transforming the New Zealand economy, including $205 million new funding for Vote RS&T, is a critical step in ensuring this country remains internationally competitive and a desirable place to work. . .

“This is a budget with foresight and strong commitment to New Zealand’s long term success. It signals a step change towards a high value, high skill, knowledge based economy for New Zealand, and the biotechnology industry will be an essential element in achieving that outcome.”

Meat and Wool NZ  welcomed the commitment to primary sector research.

Meat & Wool New Zealand Chairman, Mike Petersen said that the level of investment made available highlighted the Government’s recognition of the sector’s considerable earning potential.

“The budget has signalled that New Zealand is in for a challenging few years with the financial crisis that has dominated the world economies. However New Zealand is well placed for an earlier recovery than other countries with the sheep and beef sector leading the way.

“It’s pleasing to see the Government growing its support to the primary sector which makes up 64 per cent of exports and generates $24.5 billion for the New Zealand economy.”

Science NZ  welcomed the benchtop RS&T increase.

“The Prime Minister’s Science Prizes ($1m pa) and the appointment of the Prime Minister’s Chief Science Adviser also signal that the public are being appealed to in a new, high profile, way.

“This will help build a broad, national constituency for RS&T investment and careers. The business sector is engaging as never before, with a 20 per cent rise in its RS&T investment over the last two years. That is the thinking that will create higher wage jobs in New Zealand and build export businesses.

“The Budget recognises that RS&T is critical to improving New Zealand’s productivity and thus our national wealth and living standards.

The previous Prime Minister established PM’s awards for the arts.

I’m not averse to that, but by establishing prizes for scientists this Prime Minister is sending a message about the importance of science and signalling a change of focus towards innovation and productivity.


Tuesday’s answers

12/05/2009

Monday’s questions were:

1. Who wrote A Fence Around the Cuckoo?

2. Which are the five largest electorates, by area, in New Zealand?

3. Who said: ” Literature is the art of writing something that will be read twice; journalism what will be grasped at once”?

4. What was the name of the ship which carried the first shipment of frozen meat from New Zealand to Britian?

5. Who chairs Meat & Wool NZ?

Tuesday’s answers are after the break:

Read the rest of this entry »


Monday Quiz

11/05/2009

1. Who wrote A Fence Around the Cuckoo?

2. Which are the five largest electorates, by area, in New Zealand?

3. Who said: ” Literature is the art of writing something that will be read twice; journalism what will be grasped at once”?

4. What was the name of the ship which carried the first shipment of frozen meat from New Zealand to Britian?

5. Who chairs Meat & Wool NZ?


Australia dealys ETS, Select Committee deliberates in NZ

04/05/2009

Australian Prime Minister Kevin Rudd has announced his government’s Emissions Trading Scheme will be delayed a year.

Back here, the Select Committee reviewing our ETS has started hearing submissions.

Federated Farmers have asked for the scheme to be scrapped or substantially altered.

“The road to economic hell will be paved by an ill conceived ETS, because New Zealand doesn’t need the ETS to meet its Kyoto obligations,” said Don Nicolson, President of Federated Farmers.

Federated Farmers favours repeal of the ETS and non-punitive policy measures to transition New Zealand to a low-carbon economy. The Federation’s interim solutions put to the Select Committee include:

  • New Government-funded forest plantings via land leasing regimes, land purchases or other viable partnership arrangements. This will not just develop new permanent forestry sinks but also generate employment opportunities. This concept was also put to the Prime Minister’s Job Summit held earlier in the year;
  • A low-level carbon charge set at a rate that recovers just enough revenue to account for any emissions deficit;
  • Government purchasing the cheapest Kyoto emissions units available to meet New Zealand’s future liabilities, until the Kyoto Protocol lapses in 2012;
  • Lead internationally by advocating for each country to allocate a percentage of GDP towards climate change initiatives; and potentially,
  • Non-compliance, akin to the Canadian Government’s approach since 2005.

Feds’ other option was a substantial rewrite of the ETS to exclude primary food production and introduce economic tests.

“The primary production of food has no place in any emissions trading scheme,” Mr Nicolson continued.

“Precedent for this comes from Denmark. The Danish Government in March moved to specifically exclude the primary production of food from its Kyoto response.

Meat & Wool NZ and the Meat Industry Assocation  also want a rethink of the scheme.

They say including livestock in the scheme when no other country does puts farming at a signifincant risk and would have severe financial, social and environmental impacts.

They are using two case studies to show the affect the scheme would have. One of these is Southland farmers Julie and David Marshall:

Mr Marshall said the cost of paying for his emissions would equate to an extra $43,000 a year from about 2017 onwards.

The alternative would be to plant enough trees to offset his carbon footprint but, because of the unsuitable growing conditions near the coast, he would have to plant enough pine to cover half his 247ha property, he said.

MIA chair Bill Falconer said:

New Zealand’s 15,000 commercial sheep and beef farmers and about 80 processing plants collectively generated export earnings of $6.8 billion a year, which was in jeopardy under the current legislation.

“We could only contemplate an ETS for livestock if it properly incentives farmers to use proven mitigation technologies but leaves them no worse off compared to their overseas competitors,” he said.

The ETS is about politics and bureaucracy not the environment.

It is irrseponsible to impose significant costs on primary industry with the consequent social and economic impacts of that when there will be no environmental gain and possibly an increase in emissions.

There is no point in reducing emissions here if it will only lead to an increase somewhere else. We’ve signed the Kyoto Protocal but that doesn’t mean we have to sabotage our economy with an ETS which far exceeds what other countries are contemplating.

New Zealand and the environment would be better off if the energy and money going into the ETS was diverted to research  instead.


East Coast drought official

20/04/2009

The Gisborne/Wairoa Drought Committee has declared their region a drought area.

Agriculture Minsiter David Carter is meeting the committee today and says the declaration has triggered government drought measures including tax assistance, funding for farm mangement advice and funding for Rural Support Trusts.

Drought is like a chronic disease which creeps up on paddocks as each day’s dawn brings blue sky and sunshine, dashing hopes that today will bring rain.

North Otago has had more than its fair share of droughts and those who’ve farmed through them have learned  it is important to have a plan with dates for action, to destock early and ensure that animal welfare is paramount.

Meat & Wool NZ’s website  includes advice for planning and management during droughts.


Hot air will cost us dearly

09/03/2009

Submissions on the review of the Emissions Trading Scheme closed at the end of February and how many farmers got round to expressing their views?

I suspect it was very few of us as individulas so thank goodness for organisations like Federated Farmers and Meat & Wool NZ which will have done full and well considered submissions on our behalf.

Just how necessary this is was brought home at an agri-business discussion group meeting in Wellington on Friday.

Chatham House rules applied so I can’t go into details but we were given a very bleak message about the very real costs and no real benefits of including agriculture in an ETS.

We were also left in no doubt about how strong the green (though not necessarily Green) voice is in policy formation and how important it is for the agricultural lobby to speak up so we’re not all drowned in greenwash.

Apropos of this issue, Lambcut who has joined Roarprawn  discovered that New Zealand’s battle against burps and farts from farm animals has reached the Wall Street Journal. 

It’s headed Mutton Methane: Reducing Flatulence to Reduce Global Warming  and says:

In the U.S., the climate-change wrangle focuses on remaking the energy sector. Globally, however, livestock emissions outweigh emissions from the entire transport sector. Add in emissions from deforestation—which is often a consequence of razing trees for fresh pasture land—the plant and animal world makes up about 40% of global greenhouse-gas emissions.

That will feed in to the growing lobby which wants us all to go vegetarian to save the planet and we can be only slightly reassured by the comments the article engendered, most of which thought it was much ado about nothing but hot air.  Jon Morgan  looks at the comments and notes:

These people missed that the US had a large number of cattle that would benefit from New Zealand’s research. Though agriculture produced 9 per cent of the US’s greenhouse gas emissions, its farm animals were responsible for 19 per cent of the world’s emissions. New Zealand’s livestock produced 0.2 per cent of the world total.

If our research can be applied elsewhere, so much the better but those figures makes the submissions to the ETS review even more important because if agriculture is included in the scheme it would have a huge economic impact, no environemntal gain and all over just .2% of global emissions.

That the issue is on the front page of the Wall Street Journal should serve as a warning because the campaign against meat will grow and we  need facts to counter the emotion of the environmental activisits or the hot air will cost us all dearly.


Counting ETS costs

12/09/2008

Now that legislation which will impose an Emissions Trading Scheme on us has been passed the papers are starting to count the cost.

The ODT says the scheme will hit consumers and exporters:

It seems consumers will bear the cost of the emissions trading scheme while farmers and horticulturists fear their businesses and New Zealand’s key export industries could pay the ultimate cost and be forced out of business.

But Agriculture Minister Jim Anderton has moved to ease the sector’s concerns, saying through a spokeswoman, that if there was no greenhouse gas emission mitigating technology, the sector would get additional time to adjust.

Would you buy a used reassurance from this man?

A BP spokeswoman said yesterday’s international price of carbon credits was $44 a tonne, which would increase the price of petrol 12c a litre.

A Meridian Energy spokes-woman said the company believed the ETS was the best way to change consumer behaviour, and she said the company accepted Government predictions of its impact on energy prices.

Those were: retail electricity price to rise 1c to 2c per kWh, gas 0.9c to 1.7c per gJ and a 20kg bag coal of 90c to $1.50.

Fonterra said the higher production costs would filter through to higher consumer prices.

Meat and Wool New Zealand chairman Mike Petersen warned the $5 billion sheep and beef industry could disappear.

Other than reducing productivity or the number of animals carried, little mitigation technology was available.

Horticulture New Zealand president Andrew Fenton feared his members could also go out of business.

The $2.6 billion export earner would lose its competitiveness and consumers become reliant on food imports from Chile, South Africa and China which had higher greenhouse gas emissions, he said.

“As our growers slowly go out of business under the weight of ETS costs, New Zealand consumers are going to end up eating imported product grown in countries with much higher carbon output than ours is now.”

Lincoln University farm management lecturer Guy Trafford, has calculated the cost of ETS in 2013 for a 4000-stock unit sheep and beef farm at $36,088 a year and for a 350-cow dairy farm $40,804.

“The problem for agriculture is that it’s essentially a tax and there is still a huge anomaly, as we seem to be bringing it in for agriculture when most of the world is ignoring agriculture.”

What will be the impact on consumers?

It depends on the international price of carbon dioxide at the time the sector is included, but the general consensus is the cost of everyday items will rise.

BP says if the ETS applied to it yesterday, petrol would rise 12c a litre at the pump.

The Government says retail electricity will increase 1c-2c/kwh, gas 0.9c-1.7c/GJ, coal 90c to $1.50 a 20kg bag.

HortNew Zealand say it will cost the sector an extra $40 million a year and Lincoln University says in 2013 it will cost a sheep and beef farmer $36,000 and a dairy farmer $41,000 a year.

The Southland Times  says the ETS could cost 1000 jobs.

Southland’s economy would be hardest hit by controversial emissions trading legislation, an economic study has found.

 

Economic consultancy the New Zealand Institute of Economic Research found Southland would be hit hardest because of the importance of the dairy industry and the aluminium smelter to the local economy.

In contrast, Auckland and Wellington would be least affected because of the high concentration of service industries and public sector employment.

The Emissions Trading and Renewable Preference Bill passed into law by 63 votes to 57 on Wednesday.

The study, done before select committee hearings on the legislation, found agriculture, in particular, would suffer because costs of the scheme would fall heavily on export industries.

Metals manufacturing would also be hit hard, with capital falls of 6.5 percent and a 3.4 percent reduction in employment, it says.

The impact of the scheme on agriculture and related services and processing in Southland could result in employment reductions of about 1000 jobs, the report says.

And what will the impact on global emissions of carbon be? That too is up in the air but given New Zealand produces just .2% of the world’s emissions and most of that is from animals and the technology to reduce them is not yet available the answer is little if anything.

And, if carbon efficient businesses move from New Zealand to countries without an ETS and with lwoer environmental standards emissions may increase.


Champion CEO for Meat & Wool

03/09/2008

Dr Scott Champion has been appointed CEO of Meat and Wool NZ.

He is MWNZ general manager for market access services and takes over as CEO at the end of the month.

MWNZ chair Mike Peterson said:

 

“Scott has significant knowledge and experience of industry issues and as the leader of the Market Access and Services team, he has shown us an energy for building important industry relationships that deliver benefits for sheep and beef farmers and the wider industry.

 

“Scott has led the development of our beef and sheep meat marketing programmes and the market access work that contributed to improved access for meat and wool products through the China Free Trade Agreement (FTA) plus the recently announced ASEAN-Australia New Zealand FTA.  This is alongside the range of technical issues work that helps protect our beef, and sheep meat trade and the wool industry.

“Scott has also led a re-focussing of our North Asia beef programmes which now clearly differentiate New Zealand grass-fed beef. He has helped facilitate the growth of commercial industry investment alongside Meat & Wool New Zealand through new joint venture programmes for lamb in North America and beef in North Asia.”

Before joining Meat & Wool New Zealand, Dr Champion was the Research Development and Product Innovation Manager for the New Zealand Merino Company, based in Christchurch. Prior to that he was a lecturer in animal production and related subjects at the School of Agricultural Science, University of Tasmania, Hobart, Australia. Scott’s PhD thesis looked at sheep nutrition and its impact on wool growth.

 

Dr Champion said he was looking forward to the new role. “This is a time of significant change for the sector and while it’s pleasing to see stronger prices feeding back to farmers, we must use this window to generate better long-term returns for sheep and beef farmers.”

 

Dr Champion said he was committed to ensuring Meat & Wool New Zealand played its role in ensuring the sheep and beef sector contributed maximum value to the New Zealand economy.

 


Sheep & beef returns to rise

19/08/2008

Rising demand and falling supply will bring better returns in the coming season to farmers who have stuck with sheep and beef.

It’s not just the demand for protein which will boost returns, the price of strong wool is also rising and the falling dollar will help too.

The average profit for each farm in the sheep and beef sector will jump from just $19,400 in the 2007-2008 season to $53,000 in 2008-2009, said Rob Davison, executive director of Meat and Wool NZ’s economic service.

 Farmers have a lot of ground to make up because accountants in Otago reported sheep and beef farm clients making losses of more than 100,000 in the past year. And while the increase is very welcome, returns have a long way to go before they approach returns from dairying or dairy support.

Gross farm revenue next season is forecast to increase $575 million to $4.5 billion at the farm gate. Economists estimate farmers will spend $3.78 billion or 84 per cent of the earnings on running their farms, and paying costs such as fuel, shearing and local government rates.

“The remaining $720 million [16 per cent] is farm profit before tax which is spent on mortgage repayments, tax, capital equipment replacement and farm family living expenses,” Davison said.

But he said that while farm profits for next season will be better, they will remain below levels recorded in 2000 to 2005 because of high on-farm costs estimated at 10.4 per cent of revenue and production lost from the big “dry’ which hit many regions last year.

There won’t be much of the $53,000 left for capital replacement and living expenses when Inland Revenue and the bank get their money. The high on-farm costs are also a concern becasue they eat into profits when returns are rising and decrease more slowly if at all when prices fall.


Fewer lambs but still enough chops for bbq

10/08/2008

The t-shirt which proclaimed New Zealand’s ewenique – 60 million sheep can’t be wrong is well out of date with the national flock now down by more than a third from that number according to Meat and Wool New Zealand’s report on the year to June 2008. 

 

Breeding ewes dropped by 9.5% from 26.063m to 23.59m; and total sheep numbers declined 11.2% from 38.461m to 34.150m. This is the lowest number of breeding ewes since 1952 and the lowest total of sheep we’ve had since 1050.

 

The estimated lamb crop was 31.836m in June last year and declined by 13.4% to 27.599m.  Hogget numbers are estimated to have decreased 16.2% with a drop in the North Island of 7% and 26.6% in the South,

 

The sharp drop in numbers is attributed to concerns about the profitability of the sheep industry, last season’s drought and more attractive alternative land uses, especially dairy and dairy support.

 

Ewe condition at mating was poor because dry weather led to inadequate flushing feed and consequently lower rates of conception.

 

Scanning shows a lot of variability but the decline in ewe and hogget numbers mated and a lower expected lambing percentage is expected to lead to a decline in the total lamb crop of 4.2 million or 13.4%. 

 

Beef cattle are estimated to have decreased by between 0.3and 19.6 per cent although this was partially offset by herd rebuilding in Gisborne and of Hawke’s Bay.

 

These figures will be sobering reading for the meat industry. Kill numbers are expected to be down by 9 million in total throughout New Zealand. To put that into perspective a plant like Alliance’s Pukeuri works would kill about 2 million sheep a season.

 

That would indicate that closing of freezing works has not finished. However, Frogblog draws a long bow in concluding summer’s bbq chops are at risk because of dairy conversions. The 34 million sheep left will still provide enough chops and sausages.

 

The Frog is also wrong in asserting:

 

It’s funny how short term economic decisions, like the mad rush to industrial dairy, have long term economic, environmental and social consequences like climate change, water pollution and, it seems, diet.

 

There is nothing short term or purely economic about the decision to convert from sheep farming to dairy. It is a huge investment which is not undertaken lightly and has to be for the long term.

 

There are many positive social consequences from dairying which requires more staff and so leads to an increase in population, a boost in school rolls and the creation of jobs in servicing and support which flows on to rural towns.

 

Dairying doesn’t automatically lead to water pollution either. Regional Councils are taking a very strict approach to breaches of consent and the pollution of waterways and there are a lot of proactive approaches to safeguarding the environment from farmers, irrigation companies and dairy companies.

 


ETS costs too high for agriculture

25/07/2008

The costs from the proposed emissions trading scheme   will erode any improvement in red meat schedules and dairy payout.

This and other adverse impacts have prompted industry groups to call for more time to voice their concerns about the ETS amid widespread fears it will crush competitiveness for no environmental benefit.

There is absolutely no point in imposing costs on primary industry, or any other sector, if there is not going to be a measurable environmental benefit.

As the first country to include agriculture in such a scheme, the sector says its concerns have not been taken into account, prompting a pan-industry letter sent to Parliament calling for another chance to make submissions.The latest independent analysis of the scheme in its current form shows sheep, beef and deer farmers will be ‘hit hard’ by the ETS – much more so than their dairy counterparts.
Detailing a range of indicative costs for 2030 – the year when agriculture will pay full carbon emissions expenses – National Bank rural economist Kevin Wilson shows the cost of greenhouse gas (GHG) emissions per kilogram of product sold would be 38c for meat producers compared with 21c for dairy.
Given the dairy payout is historically higher per kilogram of milksolids than a kilogram of meat, it means sheep, beef and deer farmers would pay a higher proportion of income into offsetting emissions than dairy farmers.

The cost of emissions per hectare would equate to $185 for dairy and $84 for sheep and beef. Dairy also has a higher GHG cost per stock unit at $74, compared with $8.40 for sheep and beef.

Wilson told Rural News many variables will determine the ultimate costs, but the fundamental question is why New Zealand has agriculture in its ETS plans when no other countries do.
 
There is no satisfactory answer to this question, especially when New Zealand’s extensive grazing systems put us among the most productive producers of protein with the lowest carbon emissions in the world. 

He says 2018 – when agriculture would enter the scheme – is actually a lot closer that it seems given the changes that would need to be implemented: ‘Now is the time to start preparing potential management options.’Meat & Wool NZ chairman Mike Petersen is not surprised to hear the ETS costs to dairy farmers are lower because they generally sell more product and at a higher price.
But his major and immediate reason in pushing for change to the scheme is that New Zealand is the only country in the world to put agriculture in an ETS. ‘It’s a real concern to us,’ he says.
‘That’s why we are arguing there needs to be some recognition of the competitive factors that New Zealand agriculture will face as a result of being the only country in the world to do so.’

MWNZ was one of 14 industry groups calling for the chance to provide further submissions to the Climate Change Bill recently amended by the Finance and Expenditure Select Committee.

Petersen is concerned the ETS goes beyond meeting the nation’s international obligations, and warns carbon neutrality is not a sustainable long-term goal for New Zealand’s sheep and beef industry.

Another worry is ‘trade-offs’ being made in Parliament to pass the bill before the election, says Petersen.

Keeping Stock wonders if Helen Clark’s support of Winston Peters this week is because she needs his support fot the bill.

Wilson’s calculations are based on a conservative carbon cost of $25/tonne, plus stocking rates of 2.5 cows/ha for dairy and 10 stock units/ha for sheep and beef. It takes fertiliser application of 500kg/ha for dairy and 50kg/ha for sheep/beef, production of 875kg of milksolids/ha and 220kg of meat and fibre/ha, along with 7.4t of CO2 equivalent per square hectare emitted for dairy and 3.4/ha for sheep and beef.
 
No-one knows what the cost will be, it is unlikely to be lower but it could be much higher.

 


On-farm inflation 9.7%

15/07/2008

A 9.7% increase in costs for sheep and beef farmers in the year to March 2008 is the highest rate of on-farm inflation since 1986-87 when input prices rose 13.2%.

The previous year the price of inputs increased 2.7%.

Major increases were:

Fertiliser, lime & seeds:         30%

Fuel:                                      23.5%

Feed & grazing:                     13.7%

Interest:                                 9.0%

Electricity                               7.2%

Local Govt. rates                    6.6%

Although the high dollar reduced the price of imported goods, fertilsier, lime and seed prices still increased by 30%. The price of fertiliser increased from $260 to $480, another 60%, between March and June, June but that is not included in these figures.  

Local Government rates increased 6.6 per cent. This was the second largest increase in 17 years and in the last five years the overall increase was 33 per cent, an average of 6.6 per cent per year. The overall cumulative increase over 5 years to March 2008 was 22.7 per cent, while over 10 years the increase was 37.0 per cent.

In comparison the CPI rate of increase over 5 years was 14.0 per cent, well below the 22.7 per cent for sheep and beef farm input prices

If interest is excluded, the underlying rate of on-farm inflation in 2007-08 was up 8.3 per cent.

Meat & Wool Economic Service figures for the annual on farm inflation percentage change in the past 10 years:

including interest        (underlying % change) excluding interest

1998 -99         -2.0%                                          0.9%

1999-00                 2.8                                                             1.4

2000-01                 5.2                                                             6.0

2001-02                 1.7                                                             2.8

2002-03                 3.6                                                             3.4

2003-04                -0.2                                                             0.0

2004-05                 4.1                                                             3.7

2005-06                 4.8                                                             5.2

2006-07                 2.7                                                             2.7

2007-08                 9.7                                                             9.8

 


New era or just paying SFF’s debt?

06/07/2008

If debt is not behind this deal, than why would a cooperative want to invite into the fold a company like PGG Wrightson, a public company dominated by two major shareholders?

The question comes from Jon Morgan.  His answer follows:

 The spin merchants for Silver Fern Farms and PGG Wrightson are hailing their merger proposal as the dawn of a wonderful new era in the meat industry.

 Well, they would say that.

They may be right, but here’s an alternative view. Some industry observers feel the deal is more about Silver Fern (formerly known as PPCS) finding someone to pay its debt.

Under the deal, PGG Wrightson will pay $220 million for 50 per cent of Silver Fern, a cooperative owned by 9000 farmer shareholders.

In October PPCS posted a $40 million loss but was back in the black this year with a first-half profit of $11.2 million. Though it expects to make big savings from plant closures it still has to find the money to pay for them – the recent Oringi shutdown is costed at $12 million-$15 million alone.

Silver Fern’s immediate concern is to make sure its accounts are passed for the financial year ending August 31 and it has to show the auditors that its bondholders are secure. Two tranches of bonds are in the market – $50 million to be repaid next March and $75 million due in December 2010.

Though this deal with PGG Wrightson would not be approved by shareholders till September it may be enough to cover any auditors’ concerns.

The debt goes back to the costly Richmond takeover, achieved after a long and bitter battle in 2004, and has been exacerbated by Silver Fern’s failure to make any money for the past three years.

If debt is not behind this deal, than why would a cooperative want to invite into the fold a company like PGG Wrightson, a public company dominated by two major shareholders?

That’s the cynic’s view of what the deal will do for Silver Fern. What will it do for PGG Wrightson? Well, here you have to bear in mind a long-term view of the industry and remember that the man at the top of this company is the entrepreneurial Craig Norgate.

If you regard him as the new Ron Brierley, as Sir Ron’s old mate Sir Selwyn Cushing does, then you could look on this deal as the opening gambit of a power play. After winning control of the Silver Fern boardroom his next move is to lure the other South Island cooperative, Alliance, into a merger, during which he will allow his company to be bought out at a handsome profit.

If Alliance spurns such blandishments, he could launch a takeover instead. That’s much harder to do if the shareholders don’t actually hold tradeable shares. But Alliance is troubled by a dwindling supply of stock in the dairy-rich deep south and would be hard-pressed if a procurement war broke out.

He has a third option: to stay in a new Silver Fern- Alliance company and await further opportunities down the road. And they will come. There’s a mood for change in the industry – the failed Alliance mega-merger plan at least showed that the other meat companies were willing to talk about restructuring. It’s so much more painless when you can rationalise – meaning close meat plants and lay off workers – if you can do it in concert.

Before all this can happen there’s one immediate hurdle to jump. It’s a pretty big one – 75 per cent approval of Silver Fern’s shareholders. Almost all will be South Island farmers, a pretty fractious bunch of late.

They’ve been upset about Silver Fern’s prevarication over the mega- merger but now they know why. Maybe they’ll see the intervention of Mr Norgate as the price they have to pay to get the merger back on track. But then, losing control of their company for $5 extra a lamb may be too high a price for them. Time will tell.

Of course, Alliance could launch a pre-emptive strike and make a rival offer for Silver Fern. That would give the shareholders something to really think about.

The possible ramifications of this deal are enough to make your head spin. Another is the procurement situation. Combined, Silver Fern’s and PGG Wrightson’s stock-buying workforce will be more than 350. Will there be enough work for them all? And what about the contracts that PGG Wrightson now has to procure for other processors, such as Bernard Matthews and Progressive? The company says it will continue to fulfil them, but what happens when stock is in short supply? Its priority will surely be the company that it owns half of.

Stock throughput is any processor’s lifeblood. Bills have to be paid. Silver Fern’s debt will be transferred to PGG Wrightson’s balance sheet, but it will borrow to fund the deal and will need the cashflow.

Another issue for the wider industry is the trust it now has in Silver Fern. All the big companies, along with Meat & Wool New Zealand, backed the Meat Industry Taskforce, set up to find a strategy for an industry beset by tough trading times. The taskforce collapsed late last week when it lost the support of a key player, publicly unnamed but widely believed to be Silver Fern.

It would be unsurprising to find the other members of the taskforce do not hold Silver Fern in high regard. Which could be a problem for the industry’s hopes for expanding meat sales outside the main markets of Britain, Europe and United States. This depends on cooperation, but Silver Fern has not been very cooperative lately.

Again, Mr Norgate may be key to resolving this. His business acumen is widely admired by the companies.

If he decides to make a long- term commitment to the new-look Silver Fern he could smooth over the hurt feelings.

A lot depends on him. Is he there for the long haul or just passing through?

He says it all.


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