Rural round-up

November 30, 2019

Good sheep meat prices will last – Annette Scott:

Despite global trade wars, Brexit and the impact of African swine fever the trade fundamentals for New Zealand’s sheep meat sector remain among the strongest in living memory.

Spring lambs at $9 a kilogram and record high mutton prices are not a flash in the pan, Beef + Lamb chief economist Andrew Burtt and senior insight analyst Ben Hancock say. 

And the fundamentals leading to record highs in the sheep industry look set to continue for at least the next three years.  . . 

Fonterra claims sustainability progress

It is not easy being green when you are not profitable, Fonterra leaders say in the co-op’s third annual Sustainability Report.

The past financial year was tough and one of significant challenges and fundamental change in the culture and strategy of the co-operative.

“Given the tough year we had it would’ve been easy to push sustainability to one side, whereas we have in fact continued to make progress,” chief executive Miles Hurrell said.

“We have underlined our commitment to the importance of sustainability and firmed up plans to do more on climate change, coal, waste and sustainable packaging.” . . 

New wool partnership ‘one of the biggest’ in New Zealand history – Angie Skerrett:

A new partnership between a Canterbury-based wool company and one of the world’s largest apparel and footwear companies is estimated to be worth more than a quarter of a billion dollars.

The New Zealand Merino Company (NZM) and VF Corporation have formalised a framework that will grow the market for ZQ certified merino wool.

ZQ natural fibre is the world’s leading ethical wool with growers having to adhere to the requirements set out in the ZQ Grower Standard. . .

US redwood sequoia company wins approval to buy more NZ land – Eric Frykberg:

A US company wanting to grow giant redwood trees here to sell the lumber back home has won the right to buy another 4000ha in New Zealand.

Tough restrictions on cutting down Redwood, or Sequoia, in the US means people cannot get enough of it to use as a building material.

The wood is especially popular for things like decking and outdoor furniture, as it is admired as both attractive and robust.

To meet the need, the Soper Wheeler Company of California set up the New Zealand Redwood Company in Taupō in 2001.

New Zealand’s moist climate allows higher growth rates for Sequoia than in California. . . 

New tool for farmers to measure their GHG :

Options for farmers have now broadened when it comes to managing their greenhouse gas (GHG) footprint on-farm.

The recent inclusion of urease-coated urea fertilisers as an option in the nutrient budgeting tool OverseerFM means farmers will now be able to demonstrate the benefits of its use in reducing farm emissions.

Urease-inhibited urea fertiliser, such as Ravensdown’s N-Protect, has dual benefits. It decreases volatilisation losses, therefore increasing agronomic efficiency by retaining more nitrogen (N) in the root zone. . . 

Dairy Environment Leaders trade gumboots for suits:

The DairyNZ Dairy Environment Leaders are hosting their 7th Annual farmer-led forum in Wellington from 2 – 4 December with a firm focus on supporting communities and embracing change, says DEL Chairwoman Tracy Brown.

“There is a lot of change currently facing our sector with issues like reducing emissions and improving water quality front of mind for both farmers and the general public” Mrs Brown said.

“Our Dairy Environment Leaders are rising to the challenge and leading from the front as they engage with supporters, critics and other farmers. . . 


Rural round-up

September 29, 2019

Meetings show farm frustration – Colin Williscroft:

High farmer turnouts at meetings trying to explain the Government’s freshwater proposals show the degree of frustration the sector is feeling, Central Hawke’s Bay farmer Sam Robinson says.

Robinson, who attended a meeting a meeting in Napier that attracted 300 to 400 farmers and growers said he and just about everyone else there do not disagree with the proposals’ objectives. It is the approach causing frustration among farmers.

Frustration was also the overwhelming feeling at a meeting in Carterton, targeted specifically at farmers and growers, Farmers Weekly columnist Alan Emerson said. . .

Fonterra faces painful reality – Stephen Bell:

Fonterra has confirmed a farmgate milk price of $6.35/kg MS for last season while recording a net loss after tax of $605 million, an improvement on the forecast loss of up to $675m.

It had sales revenue of $20.1 billion, down 2% with operating expenses of $2.3b, down 7% and capital spending of $600m, down 30%.

Th co-op is reshuffling its management team with its global operations chief operating officer Robert Spurway the only casualty. Fonterra said he chose to leave to return to directly running a company.

Chief executive Miles Hurrell said 2019 was incredibly tough for the co-op but also the year Fonterra made decisions to set it up for future success. . .

Fonterra CEO Miles Hurrell: ,I knew 100% what I was getting in to’ :

Financial results media scrum over, two interviews with journalists down and a swag more scheduled, Fonterra chief executive Miles Hurrell’s baby face is starting to take on some harder edges.

It’s been a marathon couple of months leading to Thursday’s formal presentation of the dairy cooperative’s grim annual results, tempered only slightly by the simultaneous unveiling of a bright and shiny new business strategy.

There are only so many times a man can smile while saying “mea culpa New Zealand”. . .

From city to country: Award-winning shepherd kicks career goals.

It’s a brisk winter’s night as Kristy Roa and her teammates jog onto a floodlit sports field in Gisborne.

The 20-year-old shepherd heads for the nearest goal, pulling on a clean set of goalkeeper’s gloves as she goes.

A whistle sounds and it’s not long before a muddy soccer ball is hurtling towards the left corner of the goal. . .

Farmers look after rare mudfish – Toni Williams:

Arable farmer Ian Mackenzie and his wife Diana, opened their Eiffelton property in Mid Canterbury to Foundation for Arable Research’s Women In Arable group, to have a close up look at how farming and environmental protection can work hand in hand.

Mr Mackenzie, a third generation farmer on the Akaunui Farm site, spoke about the efforts to help protect the endangered mudfish which live in the farm’s Purakaunui Creek.

The Mackenzies, even after more than 25 years dealing with mudfish on farm, were still learning about the rare breed, as there were few people who knew a lot about them. . .

Dubbo to host life facilitator Viv Adcock who can talk to animals including livestock – Lucy Kinbacher:

A life facilitator who says she can talk to animals will visit Dubbo in October to offer livestock producers an opportunity to better understand their animals needs.

Sunshine Coast based woman Viv Adcock will visit the property of Merino sheep breeders, the Coddington family, from October 11 to 13 to talk to their animals about a range of topics including nutrition, handling and welfare. Her work is based on building a connection with animals, along with using body language, to perceive an animal’s behaviour.

Ms Adcock said often failure to fall pregnant, lack of production or low yields for either meat or fleece were signals of bigger problems. . .

 


Rural round-up

September 27, 2019

Southland farmer pens powerful open letter to Jacinda Ardern – Esther Taunton:

A Southland farmer has written a powerful “open letter” to Prime Minister Jacinda Ardern, urging her to hear farmers’ concerns over proposed freshwater standards.

Ashley Lester’s letter said the eight-week consultation period on the Government’s policy reforms fell during the farm’s busiest time of year.

“To clarify, my team are working 12-hour days to take care of my stock, seven days a week,” she wrote. . .

Water, Protest and Engaging with the Process — September 2019 – Elbow Deep:

The Ministry for the Environment is holding a series of meetings around the country as part of their consultation process for the discussion document Action for Healthy Waterways.

Once the consultation has finished and all the submissions have been summarised, the Ministry will pass their advice on to Cabinet who will then issue a National Policy Statement for Freshwater.

That’s it. There’s no select committee hearing and no need for a law change, the NPS will provide direction to regional and district councils as to how they should carry out their responsibilities under the Resource Management Act.

Realising I needed to learn a lot more about the proposals I attended the Ashburton meeting along with some three hundred other concerned locals, and I’m very glad I did because I learned a lot. Not from the officials giving the presentation, as you might expect, but from the well informed members of the audience. . . 

 

Can Fonterra find a fresh future from a curdled past? – Gyles Beckford:

In 2001 the country’s dairy industry elite unveiled plans for a colossus to bestride the globe.

The world’s biggest dairy exporter needed a name – and the ad-men dreamed up Fonterra – a word derived from the Latin phrase ‘fons de terra’ meaning “spring from the land”.

Inaugural chairman John Roadley said the new name would initially mean little to shareholders, staff and the public.

“Our challenge is to ensure Fonterra means something special to our shareholders, our staff and all New Zealanders within our first year,” he said. . .

Fonterra creates jobs in South Taranaki after job cuts, $605 million loss announced – Jane Matthews:

As it struggles to deal with record $605 million losses, dairy giant Fonterra has set out a plan create more than 30 jobs at its South Taranaki site.

But Eltham’s 34-job gain has come at the cost of 65 in Paraparaumu, north of Wellington, where the company is closing a speciality cheese factory.

Fonterra chief executive Miles Hurrell announced the move on Thursday as the company revealed its massive losses during the last financial year. . .

Family turns boutique cheese maker – Toni Williams:

A boutique sheep-milking operation on the edge of Ashburton town is making cheese in the district while the sun still shines.

But decisions on its future will need to be made soon.

Hipi Cheese, owned and operated by Jacy and Allan Ramsay, of Ashburton, started more than four years ago as they worked through their sheep milking processes. Their first milking was in November 2017.

The couple, who both work other jobs, have a micro-farm block of just under 2ha which stocks 24 mostly East Friesian milking ewes but in the past few seasons has included Dairymead genetics with ”a dash of Awassi” . . .

Crops thirsty for more rain – Matt Wallis:

With no substantial rain and the forecast leaving us forever guessing, crops have “hit the wall” as soil moisture reserves have all but depleted coinciding with above average daytime temperatures, wind and multiple frost events.

The current state of the NSW crop is far from perfect and at a crucial stage now of pod filling and flowering while northern Victoria is now beginning to experience symptoms of the NSW crop as the conditions push further south.

While time may be on the side of those further south of the Murrumbidgee, much like Geelong’s chance of adding another premiership to the cabinet, the hour glass is quickly running out. . . 

 


Rural round-up

August 31, 2019

Farmers’ efforts to be rewarded – Neal Wallace:

The sheep and beef sector will soon learn if it is carbon neutral while the Government moves to let farmers offset their emissions.

Beef + Lamb chief insight officer Jeremy Baker believes some sheep and beef farmers are probably carbon neutral given their areas of native bush and tree plantations but they are not formally recognised.

Climate Change Minister James Shaw is asking his officials how existing carbon sequestration on farms can be recognised.

“The Government wants to see a system where positive choices farmers make that are good for the climate are recognised. . . 

Targets missed – Hugh Stringleman:

So will axe swing on Fonterra staff?

Dairy farmers and Fonterra unit investors must be prepared for more bad news from the co-operative on September 12 when the 2019 annual results are disclosed.

The directors and the senior management team have not yet achieved the major targets set by then-interim chief executive Miles Hurrell a year ago.

They were to reduce debt by $800 million, to reduce operating expenses to the level of 2017 and to achieve a return on capital of at least 7%.

His nominated target date was July 31 this year for the debt reduction and July 31 next year for the opex cuts and ROC. . . 

Research: old age in rural New Zealand:

A new study reveals what our oldest of old people need to be able to live independently in small rural communities.  In a first, research carried out by AUT shows what people aged over 85 (our fastest growing older adult group) most need to be able to confidently get to and from opportunities to socialise.  Lynn Freeman speaks with research lead Professor of Well-being and Ageing at AUT Stephen Neville.  The research is published in the International Journal of Qualitative Studies on Health and Wellbeing. . . 

Half a million litres of Pahiatua groundwater to be saved every day :

Half a million litres of Pahiatua groundwater (about the same as 18 milk tanker loads) will be saved every day thanks to the development and installation of a ground-breaking reclaimed water system at the local Fonterra site.

The site team came up with an innovative way to reuse water from condensation that’s produced during the milk powder manufacturing process. Robert Spurway, Fonterra’s COO Global Operations, says the water-saving initiative is a testament to the Pahiatua team’s innovative and can-do approach to sustainability.

“Pahiatua is already Fonterra New Zealand’s most water efficient site, and some clever thinking has taken it to the next level.” 

Simon Gourley is The Bayer Young Viticulturist of the Year:

Congratulations to Simon Gourley for taking out the prestigious title of Bayer Young Viticulturist of the Year 2019. Simon was representing Central Otago and is Viticulturist at Domaine Thomson.

This is the second year running the trophy has been taken down to Central Otago and the third time in total since the competition started in 2006. Annabel Bulk won the competition in 2018 and Nick Paulin in 2011.

Congratulations also goes to Ben Richards from Indevin in Marlborough who came a very close second. . . 

 

How does a vegetarian defend beef? – Zinta Aistars:

Here’s how Nicolette Hahn Niman shoots down the arguments against eating beef.

One doesn’t usually think of eating as a political act, let alone a revolutionary one, but for many, what lands on the dinner plate not only provides nourishment, but also has become a means for saving the planet. What should and should not land on that plate and how it gets there is where the controversy, and the politics, begin.

Kalamazoo native Nicolette Hahn Niman is an environmental lawyer, rancher, food activist, and vegetarian. She stirs up something of a revolution in her controversial new book, Defending Beef: The Case for Sustainable Meat Production, The Manifesto of an Environmental Lawyer and Vegetarian Turned Cattle Rancher, published by Chelsea Green in October 2014.

Hahn Niman’s first book, Righteous Porkchop: Finding a Life and Good Food Beyond Factory Farms (William Morrow, 2009), paves the path to her current work. Porkchop is an exposé of what ails BigAg, or big agriculture, the factory farms that Hahn Niman points out as major polluters across the planet, contributing to climate change, to the detriment of everyone’s health. It is also her love story, as vegetarian meets cattle rancher, Bill Niman, joining forces in marriage and business. . .


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.


Rural round-up

July 21, 2019

Meeting the gas challenge – Tim Fulton:

New legislation to reduce greenhouse gas emissions will hit farmers in the pocket. Tim Fulton reports.

Waikato farmer George Moss, who operates two dairy farms, believes running a small business can be just as difficult when meeting environmental targets as large scale farming.

Moss and wife Sharon operate two small dairy farms at Tokoroa in south Waikato. One is 72ha milking 180 Friesians and the other is 67ha milking 175 crossbreds. They also own an adjoining 40ha drystock block. . .

Fonterra co-op leader Miles Hurrell – we can turn this around – Jamie Gray:

Nearly a year into his job as chief executive of Fonterra, Miles Hurrell is a man on a very public mission.

Since late last year, the co-op has been pulling out all the stops to streamline itself, improve earnings and trim debt.

There has been no shortage of criticism and there’s a lot at stake. The livelihoods of about 10,000 farmer-shareholders depend on it, and Fonterra is New Zealand’s biggest exporter by far.

Stung by the co-op’s first-ever loss last year, Hurrell’s job is to turn around the supertanker that is Fonterra. . .

Berry farm gets government help to expand hydroponic operation – Esther Taunton:

A $2.37 million loan from the Provincial Growth Fund will allow a Northland company to expand its hydroponic berry-growing operation, creating dozens of new jobs in the process. 

However, not everyone is happy about the arrangement, with the Taxpayers’ Union saying Maungatapere Berries should have got a bank loan.

Regional Economic Development Minister Shane Jones announced the partnership on Friday, saying it would allow the Whangarei-based business to add four hectares of berries to its existing operation. . .

Fingerprinting food :

AgResearch is finding new uses for a machine that uncovers the unique fingerprint of food.

The Crown agency’s lab at Lincoln is using a mass spectrometer to quickly analyse the interaction of genes and the environment.

In a sign of technology advances in the field, work that previously took over an hour can now be done in seconds on samples of meat, milk, plants and wine.

It will open up new opportunities for food science and industry, AgResearch senior research scientist Dr Alastair Ross, who leads the metabolomics platform, says. . .

Handpicked is judges’ top pick

Meat co-op Alliance Group’s Pure South Handpicked 55 Day Aged Beef has won international honours in the World Steak Challenge for the second year running.

Handpicked 55 Day Aged Beef, which combines selection for exceptional quality and marbling with extensive wet ageing, took out a gold medal for ribeye and a bronze medal for fillet at the event in Dublin, Ireland, on July 10.

The latest honours repeat the premium product’s success at last year’s contest, which helps benchmark the quality of beef production against global competitors. There were more than 300 entries from 25 countries in the competition. . . 

A 20% drop in methane emissions would cause global cooling, says expert – Lauren Dean:

A leading environmental professor has said farming can become completely ‘climate neutral’ if agricultural methane emissions are reduced by just 20 per cent over the next 30 years. . . 

Myles Allen, a professor from the University of Oxford, who has served on the UN’s Intergovernmental Panel on Climate Change, claimed this kind of gentle reduction in methane emissions would be enough to fully compensate for the warming impact of carbon dioxide and nitrous oxide from agriculture.

Farmers have already been cutting methane emissions by 10 per cent every 30 years, through measures such as better slurry storage and application. . .

Ongoing stable methane emissions from cattle doesn’t change the climate – Alan Lauder:

Could it be that a lot of cattle producers world-wide are being unfairly blamed for progressing climate change because of the methane released by their cattle? Going one step further, in this contributed article Alan Lauder, long-time grazier and author of the book Carbon Grazing – The Missing Link,  suggests that the methane emissions of the Australian sheep and cattle industry are not changing the climate, because they have been stable since the 1970’s.

WE have to ask the question, is the current way of comparing methane and carbon dioxide, using the Global Warming Potential (GWP) approach, the best way to assess the outcome of the methane produced by ruminant animals like sheep and cattle?

I raise the point, keeping in mind that the debate is about “climate change”. We keep hearing the comment that we have to limit “change” to two degrees.

I am not suggesting that the science the IPCC and the world is relying on is wrong, but maybe it is worth having another look at how we are interpreting it in the area of ruminant animals. . .

 


Fonterra opening forecast $6.25 – $7.25 per kgMS

May 23, 2019

Fonterra has announced an opening forecast price of $6.25 – $7.25 per kgMS:

Key third-quarter financial performance numbers:

    • Sales volumes: 16.6 billion LME, up 4%
    • Revenue: $15 billion, up 1%
    • Gross margin: $2.2 billion, down 3%
    • Normalised operating expenses: $1.8 billion, down $73 million
    • Normalised EBIT: $522 million, down 9%
    • Capital expenditure: $419 million, down 28%
  • Revised forecast earnings per share range: 10-15 cents from 15-25 cents per share
  • 2018/19 forecast Farmgate Milk Price range: $6.30 – $6.40 per kgMS
  • Opening 2019/20 forecast Farmgate Milk Price range: $6.25 – $7.25 per kgMS
  • 2019/20 Advance Rate Schedule has been set off $6.75 per kgMS

A dollar range in the forecast is a wide one but its an uncertain world and it’s better to be clear about that.

Fonterra Chief Executive Miles Hurrell said that good progress is being made on the strategy review and reiterated that the benefits from those changes will take time to flow through into the Co-op’s financial performance. . .

Farmers and unit holders can expect to see some fluctuation in our earnings over the next couple of years and there will be one-off transactions and adjustments (some positive, some negative) as we reset the business and deliver on our new strategy.

“We are committed to keeping people updated as we make progress. Today’s update is:

    • We are commencing a strategic review of our two wholly-owned farm-hubs in China
    • We have agreed with our partner Nestle to review options for the future ownership of our Dairy Partners Americas (DPA) Brazil joint venture, including a potential sale of respective stakes
    • We are closing our Dennington site in Australia.

“These decisions relate to our new strategic direction – in particular, prioritising our New Zealand milk supply and simplifying our global portfolio, which, as we have said previously, requires us to review every part of business to ensure it meets the needs of the Co-op today.”

Changes had to be made and the new board and management are making them.


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