Rural round-up

March 16, 2016

Whitestone blue wins silver in world champs – Sally Rae,

Whitestone Cheese has got the blues – but in a good way.

The Oamaru-based company has been awarded a silver medal in the blue vein division of the 2016 World Championship Cheese Contest in the United States, the world’s largest cheese, butter and yoghurt competition.

The contest, hosted by the Wisconsin Cheese Makers Association, attracted a record 2948 entries from 25 countries. Judges came from all over the world and included Fonterra research technologist Andrew Legg. . . 

Bankers aren’t farmers – Offsetting Behaviour:

On Radio New Zealand this morning, Andrew Little argued the government should lean on the banks to prevent their foreclosing on dairy farms, warning of that foreigners might swoop in and buy distressed NZ farms. 

  • Banks do not want to run farms. If they foreclose, they have to find somebody to run the thing pending auction. There are cows that need to be fed. The bank or the receiver takes on all the health & safety, and animal welfare, liability. The most heavily leveraged ones are the ones that’d be first to go; those are the ones where the banks have the biggest stake, and where the banks would take the greatest share of the loss in a fire-sale. A receiver’s fees will include all the farm-running costs. . . 

Dairy industry needs to stay competitive – DairyNZ:

DairyNZ says it is time to look at how the dairy industry can stay competitive in the wake of a record low Farmgate Milk Price and mounting debt.

It is stepping up its support to farmers and is running workshops across the country this week focussing on sharemilkers and farm owners working with sharemilkers.

Chief executive Tim Mackle said Fonterra has done well since it formed in 2001, and the main challenge for farmers – compared to other tough years – was the mountain of debt that had grown.

“Ten percent of the highest indebted farms have 30 percent of the total dairy debt – that’s $11 to $12 billion or $10 million each. But that doesn’t mean all those farms are at risk,” says Dr Mackle. . . 

Dairy prices affecting over one fifth of NZ SMEs:

More than one-in-five small and medium enterprises across New Zealand are feeling the effects of falling dairy prices, according to leading accounting software developer MYOB.

A snapshot result from the latest Business Monitor research commissioned by MYOB and undertaken by Colmar Brunton, found that 21 per cent of the more than 1,000 SMEs surveyed stated their business’ revenues were negatively affected by the dairy price. Even more concerning is the 25 per cent of SMEs that said general consumer confidence has been directly hit.

Across the country, it means that approximately 100,000 businesses employing upwards of one million New Zealanders are facing reducing revenue because of the dairy downturn. MYOB General Manager James Scollay says that the results show a significant impact on the New Zealand economy. . .

Dairy farming: it’ll be survival of the fittest – Jamie Gray:

Bank analyst has confidence in the sector’s ability to adapt but says that some of those ill-prepared for the downturn will go to the wall, writes Jamie Gray.

The dairy sector may be in for a period of adjustment of an order not seen since the 1980s, when farmers were hit with high interest rates, a high New Zealand dollar, and the removal of subsidies, says Rabobank NZ’s head of country banking Hayley Moynihan.

As dairy farmers prepare to enter what may be their third season in a row of negative returns, Moynihan said there will be casualties, but she has confidence in the sector’s ability to cope. . . 

dairy graphic

Stellar vintage predicted for Hawke’s Bay winegrowers:

All signs are pointing towards 2016 being another stellar year for Hawke’s Bay winemakers.

Paul Ham, Managing Director of Alpha Domus Winery, says the 2016 vintage is shaping up to be one of the best yet.

As one of the first wineries in Hawke’s Bay to harvest their early Chardonnay grapes, Alpha Domus is in a unique position to assess the coming vintage. “We’re really excited about the remainder of the harvest,” says Mr Ham. “It’s been a superb season and the grapes are looking outstanding on the vine.” . . .

Quality of NZ wool clip leaves exporters scrambling to fill lower-grade fibre orders – Tina Morrison:

(BusinessDesk) – New Zealand wool exporters scrambling to fill orders for lower-grade wool have driven up the price of what are known as oddments in recent weeks because the season to date has delivered an unexpectedly high-quality clip.

Wool oddments are the shorter parts of the fleece, such as from the belly, second pieces, eye clips, necks and those parts stained or otherwise discoloured. They are often baled and sold separately, but a paucity of lower-quality wool has meant exporters are blending oddments with other higher wool grades to make up orders, said Malcolm Ching, an executive at New Zealand Wool Services International in Christchurch. . . 

China Resources buys stake in NZ’s biggest apple exporter – Jonathan Underhill:

(BusinessDesk) – China Resources Ng Fung has acquired 15.3 percent of Scales Corp, New Zealand’s biggest apple exporter, for about $55.9 million from Direct Capital Investments.

The Hong Kong-based company today entered into an arrangement to buy the shares at $2.60 apiece, with settlement on about March 21. Scales said it welcomed China Resources “as a significant minority shareholder, and as a party who can provide support to Scales in its ongoing initiatives in China.” . . 

Social Media Stars Win Auckland/Hauraki Dairy Awards:

The 2016 Auckland/Hauraki Dairy Industry Awards winners are active among a growing group of dairy farmers turning to social media to support, share and gain information to help progress their dairy career.

At the region’s annual awards dinner held at the Indian Hall in Pukekohe last night, Brad Markham and Matthew Herbert were named 2016 Auckland/Hauraki Share Farmers of the Year, Hayden Kerr became the 2016 Auckland/Hauraki Dairy Manager of the Year and James Doidge the 2016 Auckland/Hauraki Dairy Trainee of the Year.

Mr Markham, Mr Herbert and Mr Kerr are all active and well-known among dairy farmers on Twitter. “We enjoy connecting with other farmers, in New Zealand and overseas, on social media platforms like Twitter,” Mr Markham and Mr Herbert say. “It can be a great way to share ideas. . . 

Accountants Get in Behind New Zealand Dairy Farmers:

NZ CA Limited announces Gold Sponsorship of 2016 Dairy Business of the Year

Improving farm profitability and developing resilient and sustainable farming systems are two of the key drivers behind NZ Chartered Accountants Limited’s (NZ CA) gold sponsorship of this year’s Dairy Business of the Year (DBOY).

Sue Merriman, NZ CA’s chairperson and also partner in Greymouth chartered accountants Marshall & Heaphy Limited, says, “The group is delighted to be a Gold Sponsor of the 2016 Dairy Business of the Year. With so many of our member firms located in provincial New Zealand and having dairy farm businesses as clients, it’s a logical move for the group to be involved in supporting and further developing these businesses. With the continuing slump in milk solid prices this year and the effect of this on farm businesses, it’s more important than ever that dairy farmers get good independent business advice from their chartered accountants. . . 

Fertiliser Company Takes Industry Lead to Identify Fertiliser Efficiency:

Fertiliser Company Hatuma Dicalcic Phosphate has taken an industry lead to identify fertiliser efficiencies for farmers

The company has invested over $1 million in research and is monitoring 12 sheep and beef farms totalling 16,500 hectares in the independent ‘Farming for the Future’ programme.

The programme set out to find how a lower nutrient input system can build both economic and environmental resilience within the farm gate. . . 

TECH Talks a highlight at national primary industry conference:

In two weeks Rotorua will be playing host to over 300 industry representatives from throughout the agriculture, horticulture and forestry sectors. MobileTECH 2016 is a two-day conference focusing on new technologies and innovations designed for our food and fibre industries.

As well as the New Zealand sector, MobileTECH has also attracted a solid contingent from across the Tasman. Some of Australia’s largest primary industry companies will be flying into Rotorua and joining the local industry for this event.

The strength of this programme, boosting over 36 speakers, is in bringing together under the one roof leaders from across a diverse range of primary industries with those who are developing, manufacturing and adopting these new technologies. . . 

 


Rural round-up

December 22, 2015

Federated Farmers praises farmers on Lake Brunner improvement:

Federated Farmers is praising the efforts of local farmers in improving the water quality of the West Coasts largest river, Lake Brunner.

Years of hard work by the Lake Brunner farming community has resulted in the water quality target, set out by the government, being reached five years ahead of schedule.

“The early achievement of the target is a great example of how we can reverse deteriorating water quality when farmers work together to reach a shared objective,” says Federated Farmers West Coast President Katie Milne. . . 

Curse of the Christmas tree – Lachlan Forsyth:

It’s arguably the biggest pest in New Zealand, but one of the least known.

Pinus contorta, otherwise known as wilding pine, may look like a lovely Christmas tree, but it is a vicious weed which is strangling the life out of our forests.

It has already infested seven percent of the country – 1.7 million hectares.

Left unchecked, it’ll infest 20 percent of New Zealand within two decades.

Not to be confused with pinus radiate, the common tree in forestry blocks, pinus contorta is a nasty, twisting tree, and it is rampant. . . 

Rabobank Global Beef Quarterly Q4: Ongoing Tight Supply to Support Prices:

Tight supply will support prices in 2016 as demand is expected to remain firm even though supply pressure is easing. China and the US will be the main import markets to watch in 2016—in particular the strength of demand, given high prices. According to Rabobank’s Global Beef Quarterly Q4 2015 report, Australia, Brazil, India and the US will be the main exporters to watch—in particular the supply of cattle and beef, in response to rebuilding pressures at different points in the cycle.

China continues to play a critical role in the global beef market despite a slowing economy. Although the domestic market has been volatile due to the impact of the grey channel, it will continue to offer sustainable opportunities for the rest of the world. . . 

NZ lamb exports likely to drop this season amid weak demand in China, UK – Tina Morrison:

(BusinessDesk) – New Zealand farmers are heading for lower returns for their lambs this season amid weakness in the country’s two largest export markets in China and the UK.

While prices for the first of the new season lambs processed in October and November for the UK Christmas chilled market were similar to last year, that won’t be enough to offset weakness in the broader market as the season cranks up to its peak production period from now through till May, according to AgriHQ senior analyst Nick Handley. . . 

1080 report shows poison being used responsibly:

The latest report by the Environmental Protection Authority on the use of 1080 in New Zealand provides further reassurance to the public that the poison is safe and is being used responsibly, Environment Minister Dr Nick Smith says.

“1080 is a vital tool in protecting our native wildlife, like Kiwi, and preventing the spread of bovine tuberculosis. The area of land treated has doubled to almost one million hectares because of the “Battle for our Birds” but with very few incidents. This is a huge credit to the professionalism of the Department of Conservation (DOC) and TBFree New Zealand. . . 

Landcorp inks agreement with iwi for Sweetwater farm in Northland – Tina Morrison:

(BusinessDesk) – Landcorp Farming, New Zealand’s largest corporate farmer, will continue to be involved in the management of Northland farm Sweetwater after iwi take ownership of the property under a Treaty of Waitangi settlement.

Northland iwi Te Rarawa and Ngai Takoto will take ownership of the 2,480 hectare property near Kaitaia tomorrow, as part of a 2010 settlement. Landcorp, which has been managing Sweetwater in consultation with the iwi, will continue to provide farm management expertise, livestock and technology under a new joint-management and profit-sharing arrangement, the Wellington-based state-owned enterprise said in a statement. . . 

HBRIC Ltd Update:

Hawke’s Bay Regional Investment Company Ltd (HBRIC Ltd) is confident it can confirm a preferred investor mix for the Ruataniwha Water Storage Scheme before the end of the year.

HBRIC Ltd told today’s Hawke’s Bay Regional Council meeting that intensive work is being done with three potential investors and it continues to target the end of the calendar year to confirm investors for the scheme. However it says it won’t make the decision public until very early in the New Year. . . 

Kaingaroa Timberlands profit rescued by foreign exchange gain as log prices fall – Sophie Boot:

(BusinessDesk) – Kaingaroa Timberlands, the nation’s biggest forestry business, posted a 37 percent gain in full-year profit as a foreign exchange gain more than made up for a drop in international log prices.

Net profit rose to US$332.8 million in the year ended June 30, from US$243.7 million a year earlier, according to the company’s financial statements. Profit included a US$281 million gain on foreign exchange movements, compared to a year-earlier charge of US$149.7 million. Revenue fell 22 percent to US$355.2 million, of which the bulk came in reduced log sales. . . 

Rural and Southern businesses best place for work life balance:

If you are planning to start a new business in the New Year and still want to have some time to enjoy the best of the Kiwi lifestyle, it could be worth thinking about moving to the country or heading down South.

According to the latest MYOB SME research, a net 54 per cent* of business operators working in rural New Zealand are satisfied with their work/life balance, while only 45 per cent of those working in the city are happy with how they split their time between work and leisure. . . 


If interest rates are a problem now . . .

November 12, 2013

An MYOB survey of rural businesses identifies major pressures:

Top 5 pressures for the primary sector in next 12 months

Pressure % of SMEs
Fuel prices 58%
Exchange rates 41%
Cashflow 35%
Interest rates 31%
Finance 25%

Interest rates are at historically low levels and are expected to go up next year but not significantly.

If that’s a concern now these businesses won’t want a change of government because policies announced so far by opposition parties would lead to much higher interest rates.

Fuel prices and exchange rates are also an issue – but a lower exchange rate would make imports, including fuel, more expensive.

New Zealand’s rural sector continues to find the going tough as it faces a high dollar, uncertain international markets and rising production costs. However, things are looking up, with more than double the proportion of SMEs expecting an annual revenue rise as had experienced one in the prior 12 months.

This is the finding of the latest MYOB Business Monitor, in which 39% of SME operators in the agriculture, fishing and forestry sector reported falling annual revenue, while only 15% saw revenue increase in the year to August. The sector’s growth was half the pace set by all SME’s surveyed, where 30% saw revenue increase.

MYOB General Manager Business Division James Scollay says the survey underscores some of the complex challenges facing the industries that lie at the heart of New Zealand’s economy.

“While there is much to be positive about for the SME sector as a whole this year, it has without a doubt been a more testing time for rural business operators. There’s good news on the horizon though, with 37% of agriculture, forestry and fishing SME operators expecting their revenue to increase in the next 12 months.

“A further 46% expect revenue to remain stable, while just 7% are forecasting a fall in revenue in 2014. The latter was the lowest proportion across all the industries we surveyed, along with finance and insurance.

“What this says is that although things haven’t been as good as we might have hoped in 2013, the primary sector seems set to turn a corner and enjoy a return to growth in 2014.

“We need to be mindful that the vulnerability from key pressures – many of them external – is still there, with rural business operators wanting more support, especially around the dollar. However, revenue is definitely heading in the right direction.” . . .

This gloomy view on the past year must be in areas where the drought had such a big impact.

It certainly doesn’t reflect sentiment in the south where business is going well and the forecast for the coming season is bright.

It’s certainly bright in #gigatownoamaru as it works to be the southern hemisphere’s first gigatown.


Business backs National

November 6, 2011

A survey by MYOB shows that National is a sure thing for business voters.

Despite some unpopular policies and a slight fall off in popularity, National will still capture the vast majority of the business vote according to the latest MYOB Business Monitor.

The MYOB Business Monitor survey of over 1000 business owners around the country shows that National is most likely to get the vote of 59% of business owners in the November election, down slightly from the previous Monitor survey in March when the Government polled 62%, but still well ahead of Labour on 11%. . .

MYOB general manager Julian Smith says, a month out from the election, business owners have signalled a clear choice for a continuation of the fifth National Government.

“Although the MYOB Business Monitor surveys a wide range of business owners right around the country – from sole traders to those running larger enterprises – Kiwi business owners across the board have been consistent in their support for National,” says Julian Smith

Support for the Government is even higher among small business owners (71%) and those with a turnover of between $1-5million (72%). By sector, National is most popular with business owners in the Finance and Insurance sector (67%) and in the Agriculture, Forestry and Fishing sector (65%). Labour finds its strongest support amongst Transport and Warehousing business owners, with 22% of them saying that they will vote Labour, compared with 49% of them likely to vote National.

That is stating the obvious for anyone who has compared the policies we’re likely to get under a National-led government with those we’re likely to get under a Labour-led one.

National’s policies are designed to promote economic growth and show the party understands the important role that businesses play in doing that.

Labour’s policies would add costs and complexities to doing business and employing people.

The capital gains tax, other tax increases, changes to ACC, the increase in the minimum wage and the 1970s employment policy will add tens of thousands of dollars to the cost of doing business and increase both the cost and risk of employing people.

In addition, farmers will face extra costs through the early entry tot he ETS, changes to the RMA and water allocation.

The survey found a small majority of businesses were in favour of asset sales and the policy they opposed most strongly was the CGT.

It also found that businesses can be socialist when other people’s money might come their way:

Businesses would clearly like to see the Government direct more investment into the economy, with things like funding for R&D (popular with 58%), a ‘Buy Kiwi-made’ policy for all Central and Local Government agencies (51%), and more investment in key transport infrastructure (51%).”

More investment in infrastructure is sensible but a buying Kiwi-made policy is getting dangerously close to subsidising businesses which can’t compete on their own.

“However, the one policy that is far and away the most popular for business is the simplification of provisional tax rules, supported by nearly three-quarters (74%) of all businesses,” says Julian Smith.

“This particular policy isn’t on any party’s radar at the moment, but what it emphasises is how complex and time consuming businesses find the current tax regime, and how much any party would stand to gain by making a concerted effort to make life easier for business.”

Good tax might be an oxymoron but simple taxes are better. Time and energy wasted complying with complex tax law, and any other regulatory requirements, are time and money not spent getting on the the businesses which create jobs and contribute to economic growth.


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