Rural round-up

February 21, 2020

Drought, coronavirus rattle dairy – Sally Rae:

Westpac has cut its farmgate milk price forecast from $7.40 to $7.20 and ASB has trimmed its forecast by 10c to $7.40, as economists keep watch on the effects of coronavirus and drought.

At this week’s GlobalDairyTrade auction the headline index was down 2.9% and most products fell. Key export product whole milk powder fell 2.6%.

The result was unsurprising given the continuing uncertainty surrounding the coronavirus outbreak, Westpac market strategist Imre Speizer said in a note.

The steps China had taken to contain the outbreak, such as limiting the population’s movement, had kept many factories closed. . . 

Fonterra ramps up emergency water deliveries to parched Northland– Andrea Fox:

Dairy heavyweight Fonterra is trucking, free of charge, hundreds of thousands of litres of emergency water supplies daily to the drought-stricken Far North.

The drought relief effort will see tankers carrying 90,000 litres of water a day each to Kaikohe and Kaitaia, and new water deliveries just started to Dargaville and Rawene, a spokesperson said.

Sixty tankers a week have been delivering water to emergency holding tanks in Kaikohe and Kaitaia, while Dargaville will get 10 tankerloads or 300,000 litres every two days and Rawene one tankerful or 30,000 litres daily. . .

Rain lifts river levels in Marlborough but region not out of the woods yet – Maia Hart:

A drop of February rain has given water irrigators in Marlborough an extended grace period. 

Several rivers in Marlborough were days away from being “shut off” from irrigators on February 6. 

Marlborough District Council hydrologist Val Wadsworth said Rai Valley irrigation had been shut off for a week but the river had “quite a good lift” earlier this week, which meant it had been turned back on. 

“In some places there was quite a bit of rain, in the Rai Valley there was 50mm,” Wadsworth said.  . . 

Balclutha hens rule the roost on Country Calendar – Melenie Parkes:

In Balclutha, there’s a family rearing some of the happiest hens you’re likely to find.

These merry cluckers are ‘pasture free range’, meaning they have the run of the land.

“There’s 1200 acres that we’re roaming around on here and there’s 6300 chooks, so there’s a lot of space,” says Michelle Pringle who, along with husband Tony, sells their eggs under the Agreeable Nature label.  . . 

Fresh producers must yell loudly – Richard Rennie:

Fresh fruit and produce companies around the world risk having their long-held and proven health claims stolen by the new arrivals on supermarket shelves, plant-based food products.

One of the biggest emerging trends in consumer behaviour in six regions surveyed globally is healthy living, Cathy Burns, chief executive of giant United States trade organisation Produce Marketing Association, told Zespri’s Momentum conference.

“This includes a desire to shed things from the diet that are not good for me and it has become a proxy term for intelligence and social acceptance. . . 

Stratford breaks SI drought -:

Invercargill shearer Nathan Stratford won the Southern Shears open final in Gore at the weekend, his first in the event after 24 years of trying.

The result brought him 70 open final victories as he became the first South Island shearer to win the event since 1994 when Edsel Forde, from Winton, won the final for a fifth time . . 


Rural round-up

January 26, 2020

New policy might limit farming – Neal Wallace:

Farmers fear new biodiversity policy could force councils to make them restore areas of indigenous flora and fauna on their land.

The Government has released its proposed draft National Policy Statement for Indigenous Biodiversity, which leans heavily on councils to identify, monitor and manage areas with significant indigenous biodiversity.

Within five years councils will have to identify and map significant natural areas using standard national criteria, manage any adverse effects on those areas and survey native wildlife in and outside the areas to determine if they are threatened or affected by land use activities. . .

Sarah’s Country: Are we fit for a better world? – Sarah Perriam:

Sarah’s Country’s debut episode focuses on the key elements of this vision for New Zealand that includes a swing towards regenerative agriculture, capturing the value of the billion-dollar plant protein trend and offsetting our carbon emissions with environmental integrity, not ‘thin air fake’ credits.

Sarah Perriam, the host of Sarah’s Country, is this week joined by guest co-host Kate Scott. Kate is a director of LandPro and a 2018 Nuffield Scholar living in Central Otago. . .

Farm sales start to look up:

Farm sales were down 21.6% for the three months ended December 2019 versus the year prior ­— but sales look to be lifting.

Data released today by the Real Estate Institute of New Zealand (REINZ) shows that farm sales increased by 22.3% in the three months ended December 2019 compared to the three months ended November 2019, with 345 and 282 sales respectively. . .

$8 payout possible – Peter Burke:

The guessing game has begun to predict what dairy farmers will get for their milk this season.

The consensus in the sector is that the price will be positive: numbers ranging from $7.15/kgMS to $7.50/kgMS, although ASB rural economist Nathan Penny is sticking his neck out and suggesting it could reach $8/kgMS.

Fonterra says its forecast is in the range of $7.00 to $7.60 with the midpoint being $7.30.

Dr. Mitloehner issues warning on increasing herd sizes – Charles O’Donnell:

While there is not necessarily a need to cut herd sizes for the purpose of climate change mitigation, increasing numbers is also not the way to go, according to Dr. Frank Mitloehner.

Dr. Mitloehner, a well-known professor and air quality specialist, was speaking at an event called ‘Climate Action in Agriculture: A Balanced Approach’ in Dublin today, Tuesday, January 21, which was organised by the Irish Farmers’ Association (IFA).

The German-born Californian-based professor spoke out against the perceived necessity to cut herd sizes. However, when asked about the growing numbers of animals in the dairy industry, he warned that going in the opposite direction by increasing numbers would pose a climate issue. . . 

Government urged to block high carbon food imports :

Britain cannot risk importing food with a higher carbon footprint than food which has been produced in the UK, a new report says.

Released by the Committee on Climate Change (CCC), it says British farming produces some of the most sustainable food in the world and that emissions from UK beef is half that of the global average.

Land Use: Policies for a Net Zero UK presents a detailed range of options to drive emissions reductions in England, Scotland, Wales and Northern Ireland. . . 

 


Fonterra forecast drops 25c

August 31, 2018

Fonterra has dropped its forecast payout for the current season by 25 cents.

Fonterra Co-operative Group Limited today revised its 2018/19 forecast Farmgate Milk Price from $7.00 per kgMS to $6.75 per kgMS.

Fonterra Chairman, John Monaghan, said the change was in response to stronger milk supply signals coming from some of the world’s key dairy producing regions.

“Over the past quarter, we have seen increased milk supply out of markets including Europe, the US and Argentina. These regions have a big influence on the supply and demand balance and therefore global prices. For example, the one per cent increase in US milk production represents just under 100 million litres of extra milk.

“At the same time, demand for whole milk powder and dairy fats is showing signs of slowing in some parts of Asia, Africa and the Middle East,” added Monaghan.

Fonterra CEO, Miles Hurrell, said the weakening NZD/USD exchange rate had only partially offset the decline in global dairy prices, and it was important to give farmers a realistic assessment of the market.

“It’s still very early in the season and a lot can change over the coming months. A drop in the new season Milk Price forecast will be frustrating to our farmers, but it’s important we give them the facts so they can make informed decisions in their farming businesses,” said Hurrell.

The timing of today’s update is in line with DIRA requirements for Fonterra to review the Milk Price every three months. The Co-operative last considered the Milk Price in May.

This isn’t unexpected and $6.75 is still a reasonable amount, though no-one should bank on that not being revised down again.


Rural round-up

May 25, 2017

Top dairy woman says industry must ponder its future – Pam Tipa:

A major issue facing the dairy industry is “how much to grow,” says the 2017 Fonterra Dairy Woman of the Year, Jessie Chan-Dorman.

“What is a sustainable growth aspiration for our industry? [We need to] actually put a stake in the ground about what sustainable growth looks like,” Chan-Dorman told Rural News.

“That conversation [is needed] not just among ourselves but – like it or not – with all the wider parties, the New Zealand public, who have an interest in where the dairy industry is heading. . .

Event manager carves out dairy career niche – Sudesh Kissun:

The first solo woman winner of the Dairy Manager of the Year title, Hayley Hoogendyk, hopes to be a role model for others switching to a career in farming.

Hoogendyk (28) left her job as an events manager and took up dairy farming five years ago.

In March she won the Manawatu Dairy Manager of the Year competition; earlier this month she was crowned the national winner at the Dairy Industry Awards final in Auckland.

Hoogendyk told Rural News she had not expected to win. . .

Milk price great news:

Today’s Fonterra milk price forecast of $6.50 for the 2017-18 season, coupled with the revised price of $6.15 for the current season, is great news for dairy farmers, says DairyNZ.

It is great news too for the country as it will boost the regional and national economies.

While welcoming the forecast increase, DairyNZ’s chief executive Dr Tim Mackle says he needs to challenge farmers to ‘make hay while the sun shines’.

“By this I mean that farmers need to take advantage of the milk price increases to pay down debt, and carry out the likes of deferred maintenance,” he says. . .

Fonterra forecast signals dairy industry revival:

The revival in fortunes of dairy farmers has been highlighted today by Fonterra’s announcement that they are increasing the milk price for the current season-lifting its payout from $6.00 to $6.15/kg milksolids for the year ending 30 May 2017.

Fonterra’s favourable forecast wasn’t unexpected and reflects the recent trend of increasing global dairy prices, which has fostered more confidence amongst the markets.

“Many dairy farmers throughout the country will be enjoying their lunch today. This is great news and comes after a turbulent few years where the industry has been under the pump,” says Andrew Hoggard, Federated Farmers Dairy Industry Chair. . .

Higher milk pay-out puts $3.5bn into farmers’ pockets – Fonterra – Alexa Cook:

A milk pay-out of $6.15 a kilogram of milk solids this season will give farmers an extra $3.5 billion compared to last season, says Fonterra.

The co-operative has lifted its pay-out for the season by 15 cents and announced an opening forecast for next season of $6.50 kg/ms.

Milk prices have come a long way from last season’s pay-out of $3.90, and the dairy index is now at its highest in about three years. . .

Ways to keep nutrients out of waterways – Nicole Sharp:

How can we reduce sediment, phosphorus and E. coli getting in to waterways?

AgResearch scientist Tom Orchiston put the question to farmers along with giving advice on good management practices onfarm at Dairy NZ’s Farmers Forum on May 4.

Sediment in waterways reduced the habitat and disrupted the eco-system in streams, he said. . . 

Lewis shows her class – Alan Williams:

Vivienne Lewis is responsible for the results of one of the biggest shearing jobs in New Zealand and the work has won her the NZ Wool Classers Association crossbred wool merit award.

Her team handled the shearing of the 30,000 ewes, 10,000 two-tooths, 12,000 lambs and 700 rams on the sprawling Ngamatea Station near Taihape in the central North Island.

It was a very big clip and the Canterbury Wool Scour-sponsored award was won for the manner of its preparation and classing and presented at the association’s annual meeting in Christchurch in mid-May. . . .

Beef + Lamb New Zealand confirms board positions:

The Directors of Beef + Lamb New Zealand have re-elected Northland farmer James Parsons as the Chairman for another year.

Parsons has been the Chairman of Beef + Lamb New Zealand since 2014 and has represented the Northern North Island as its Farmer Director since 2009.

The Board has also elected Gore farmer, and Southern South Island Farmer Director Andrew Morrison, as the Deputy Chairman, when it met for its May meeting. . .


From $4.25 to $6.15

May 25, 2017

A year ago Fonterra announced an opening forecast milk payout of $.425 for the 2016-17 season.

The forecast has gradually crept up as world prices increased and yesterday the co-operative announced a forecast payout of $6.15.

Chairman John Wilson said the increase reflects the strong fundamentals supporting global dairy markets. “World dairy prices have risen in recent months and as we near the end of the season we have more visibility and certainty which makes us confident of our $6.15 position,” Mr Wilson said.

Fonterra also confirmed its forecast earnings per share range of 45 to 55 cents for the 2017 financial year, as it continues to target a full year dividend of 40 cents per share. “Some of the challenges we faced in the third quarter could continue, but the business is committed to a strong fourth quarter particularly in Ingredients sales. This means we have been able to confirm the earnings per share range.” Mr Wilson said.

“The higher forecast Farmgate Milk Price of $6.15 per kgMS and the target dividend of 40 cents per share gives a forecast cash payout of $6.55 for a 100% shared-up farmer which is good news for our farmers and their communities,” he said.

In a further signal of confidence in the market outlook for dairy, the Co-operative is forecasting an improved Farmgate Milk Price of $6.50 per kgMS for the 2018 season. The forecast earnings range for the 2018 financial year will be announced around the beginning of August.

“The increase in the forecast Milk Price for the current season and the improved forecast for 2017/18 will be welcome news for our farmers following two challenging seasons on farm,” Mr Wilson said.

“Stronger production in March and April has partly offset lower peak milk production and collections are now expected to be down 3% for the season, a much better outcome for our farmers than had been anticipated earlier in the year,” Mr Wilson said.

The last few seasons have been very tough, especially for those new to the industry who didn’t have the good payouts the preceded the downturn.

The increased forecast for the current season and an even better one for the coming season is very welcome.

It will be interesting to see if it has an impact on farm sales.

Some farmers, and some banks, have been holding selling farms until the payout increased in the expectation land prices  will too.


Fonterra forecast payout up 75c to $6

November 18, 2016

Welcome news:

Fonterra Co-operative Group Limited today increased its 2016/17 forecast Farmgate Milk Price by 75 cents to $6.00 per kgMS.

When combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers in the current season is forecast to be $6.50 to $6.60 before retentions.

Chairman John Wilson said the increase reflects improvements in pricing since September, following the gradual rebalancing of global supply and demand.

“We’ve seen falling production in the major exporting regions, particularly Europe and Australia, and an unprecedented decline in New Zealand milk supply due to wetter than normal spring conditions across most regions. On balance, demand continues to be firm. As a result there has been a steady improvement in global dairy commodity prices and this is reflected in the improved forecast.

“We are very mindful that farm incomes will be affected this year because of lower milk production so we will be doing everything possible to build on our good start to the financial year and deliver the highest possible total payout to our farmers,” said Mr Wilson.

First Quarter Performance Update

Fonterra’s first quarter revenue of $3.8 billion is up six per cent on the same period last year. Sales volumes are up two per cent to 4.9 billion litres liquid milk equivalent (LME), while the gross margin of 22 per cent remains largely unchanged.

Chief Executive Theo Spierings said the first quarter revenue gains reflected broad-based volume and margin growth across the business, and an ongoing focus on cost controls.

“Our operating expenses have reduced by two per cent to $621 million and we continue to keep a close rein on them, in line with the financial discipline shown last year,” he said.

The Co-operative has moved an additional 128 million litres LME into higher-value consumer and foodservice products compared with the same period last year.

“The consumer and foodservice business achieved an improved gross margin of 31 per cent, up from 28 per cent. This reflects the increasing strength of our brands in key markets and our focus on chef-led solutions in foodservice.”

Mr Spierings said while the first quarter performance was pleasing, the Co-operative’s earnings face emerging head-winds for the remainder of the financial year.

“Our current milk collection forecast is 1,460 million kilograms of milk solids (kgMS), down seven per cent on last season, and this is constraining sales.

“In addition there is a potential impact from the price of Milk Price reference products, such as whole milk powder, rising faster than non-reference products.”

Mr Spierings said that, given the Co-operative’s stronger sales performance and lower production volumes, it continues to monitor its inventory and contracted sales position closely.

Chairman John Wilson said the Co-operative has had a strong start to the year.

“The unchanged earnings guidance range of 50 to 60 cents took into account the fact that a higher milk price had the potential to influence margins across the business. However, we do expect this volatility to continue which could impact both milk price and earnings guidance. We will keep our farmers and investors updated as we move through the year,” he said. . .

The wet spring has led to lower production over most of the country but if the forecast is realised, all but the least efficient farms will be safely above break-even.

Debt repayment will be a priority on most farms, but this level of payout will enable more spending on businesses that service and supply farms.


GDT and Fonterra’s forecast payout up

September 21, 2016

The GlobalDairyTrade price index increased by 1.7% in this morning’s auction.

That was less than analysts and expected and whole milk was down .2%.

However, Fonterra is obviously confident that the upward trend in prices will continue and has increased its farm gate forecast milk price:

Fonterra Co-operative Group Limited today increased its 2016/17 forecast Farmgate Milk Price by 50 cents to $5.25 per kgMS.

When combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers in the current season is forecast to be $5.75 to $5.85 before retentions.

Chairman John Wilson said that since the Co-operative last reviewed its forecast Milk Price in August, global milk supply has continued to reduce and demand has remained stable.

“Milk production in key dairying regions globally is reducing in response to low milk prices. Milk production in the EU for 2016 is beginning to flatten out and our New Zealand milk collection is currently more than 3 per cent lower than last season.

“While we have seen some improvement in GDT auction prices recently, the high NZD/USD exchange rate is offsetting some of these gains.

“There is still volatility in global dairy markets and we will continue to keep our forecast updated for our farmers over the coming months,” said Mr Wilson.

It’s only a forecast.

Farmers and sharemilkers will still be very cautious but it’s very welcome news for the industry, those who service and supply it and the wider economy.


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