Young Country

August 13, 2009

New Zealand Farmers Weekly has a lot of competition from other give-away papers which turn up in rural mail boxes but consistent quality, original stories and intelligent commentary make it a must read.

The people behind it also have courage because they’ve launched a magazine, too.

Young Country is, as its name suggests, aimed at younger rural people but should appeal to a wider audience.

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The cover story of the current issue features  Alex, Anna and Pip Ewing, the third generation to farm Cattle Flat Station in the Matukituki Valley beyond Wanaka.

Their father, Charlie, took over the property from his father and he has worked hard over the years to make sure the same opportunities existed for his children.

His daughters have not only accepted those opportunities created for them, they have grabbed them with both hands  and are beginning to stamp their own mark on the family’s farming and helicopter businesses through hard work, grit and determination.

I got my money’s worth from this story by itself, and there’s plenty more good reading in the magazine: two sides of the debate over irrigating Canterbury; some of the people who are improving performance on Maori farms; a look at rural broadband; carbon farming . . .

A recession may not be the best time to launch a magazine, but if this one continues as it has started it should not just survive but prosper.


Word no longer bond

June 1, 2009

A friend who’s a cropping farmer had signed up deals selling grain for winter feed to dairy farmers which they are now cancelling.

Earlier in the year the Farmers Weekly reports that dairy farmers were walking away from maize deals, leaving contractors with as much as a third of their crop unsold.

The milk payout has fallen and next season’s forecast is lower than this season’s. The price of grain has also fallen, but would these farmers have paid more had the price gone up after they’d signed the deal?

In our area we like to think we can still do business on a handshake, but thses examples show there is a growing number of people for whom their word is no longer their bond.


Hidden agenda in NZX purchase of CPL?

May 6, 2009

I greeted uncrtically the news that NZX was buying Country-Wide, publishers of most of of the papers which get delivered free to rural mail boxes, including my favourite NZ Farmers Weekly.

Others aren’t so innocent.

Cactus Kate finds some sharp knives in the NZX Haystack .

Jenni McManus reports  that Trans-Tasman editor in chief Max Bowden has made a Commerce Commission complaint because he thinks NZX is trying to act as regulator in a market in which it would be a participant.

At issue: whether an organisation calling itself a regulator should be cornering the market in anything, let alone a commercial enterprise, by acting as both a player and the market enforcer.

Adolf at No Minister smells something fishy and asks:

How can it be that the regulator of share trading activities in New Zealand companies an be allowed to itself operate trading companies which are not part of its core activity, namely regulation? What happens when one of its own companies transgresses?

Roarprawn also smells something whiffy and agrees with Fran O’Sullivan who questions why the stock exchange is putting on gumboots.

Expanding into publications during the economic downturn is a bold move.

The Cross memo explains that the NZX is getting into an “advertising-reliant media publication” in this climate. She contends print media are the best way to contact farmers while internet access remains slow and inconsistent for rural New Zealand.

“This protects to a certain extent rural publications from the downturn in advertising in mainstream/daily media publication and, second, farmers’ behaviours as the majority still read physical papers instead of accessing the internet for their news and information.”

The memo predicts it will be more than five years before farmers swap to online news services.

I’m not so sure about that, improvements to rural boradband services are moving quickly. We’ve got wireless broadband but discovered by accident we could get a much better service through the phone line now.

I’ve always used “you don’t do rural broadband” to put off people wanting us to change to telephone providers. But when I used that line with a cold-caller on Monday I was told they did and we could get broadband access via our phone line. I phoned Telecom to check and was told that our exchange had been upgraded and our phone line could now deliver broadband.

If that service is as good as promised more country people will turn to the internet for news rather than waiting for the papers which come with the mail – which for us isn’t until early to mid afternoon.

This point is made by Quote Unquote who also has questions about the NZX purchase of CPL.

. . .  there are some astute comments about magazine publishing in general which Weldon could consider – in particular, Rundle’s key line:

To go into the magazine trade now is like starting a stable just as the first Model T Ford rolls off the line.

We’ve been getting a regular stream of change-of-address emails from farming friends who have discovered they no longer have to rely on dail-up access to the internet.

The service we get in the country still doesn’t deliver the ultra-fast speeds available in cities, but it won’t be far away and when it comes, our readinghahbits will change.

You can’t tuck a PC into your back pocket as you do with a paper when you’re heading up the back paddock . But if you’ve already read the news on the net  over breakfast you won’t need to.

The question of who’s going to pay for the news on internet will wait for another day.


NZX buys Country-Wide Publications

April 28, 2009

Country-Wide Publications is being sold to NZX for an undisclosed sum.

CPL Owners Dean Williamson and Tony Leggett, who bought CPL in 1997, have grown the business to produce 78 publications a year under seven mastheads, and from a turnover of $250,000 in 1997 to over $7 million in 2008. CPL publications reach all 86,000 farmers in New Zealand at least once every week.

Roarprawn doesn’t think it’s a good investment, but I do.

Fielding-based CPL publishes several rural papers including NZ Farmers Weekly, Country Wide South and Country Wide North and the recently acquired Dairy Exporter.

All are give aways which are delivered to rural mail boxes and all are quality publications which concentrate on rural news, issues and features. Unlike some giveaways the majority of their stories are fresh rather than rehashed press releases, are well read by farmers and attract good suppport from advertisers.

The CPL media relesase says:

Dean Williamson said, “This is an exciting next step for both the CPL business and the rural sector as a whole. Bringing NZX and CPL together creates a raft of new opportunities. Both are innovative companies focused on growth.”

Tony Leggett said, ” We understand our market and our business model reflects that. We give farmers the information they need, and astute advertisers appreciate that. We focus on value.

“Print media remains the right medium to reach farmers at this point in time. As we see increased broadband penetration in rural areas, we are likely to see more interest in our online offerings and will continue to develop products in this space,” said Leggett.

CPL operations will remain based in Feilding, managed by Dean and Tony. “This is a long term investment in the New Zealand rural sector,” said Weldon.

This isn’t the NZX’s first foray into rural business, it already owns Agrifax,  Dairy Week and Pro-Farmer Australia.


Are Fonterra’s ethics up to scratch?

October 3, 2008

NZ Farmers Weekly has an interview with Warren Leslie, the Dairy Board’s last chief executive, who said:

he would have “moved heaven and earth” to declare a product recall immediately he had information about poisoned milk.

He also said the Board had discussions with San Lu, in which Fonterra has a 43% stake, two years before Fonterra was created but they had other priorities.

“The whole arrangement in China needed to be very carefully thought through … if you don’t start with really good milk you can’t make the range of product we can here.

“The first thing you have to do is to try to get the standards raised. In any investment we might have made anywhere, we would have wanted to put our own people in, get our own standards in place and generally raise the bar,” Larsen said.

Does that mean the Dairy Board would not have been keen on a joint venture, or only invested in a majority shareholding?: “That would have been a matter for the board, but certainly from a management point of view the answer to that is yes.”

Larsen said his reaction to the SanLu crisis was “one of great sadness”.

“If you look at the chart of risk that most corporates use, the model we had had a big centrepiece and it in were the words ‘food safety’. Food safety is absolutely and utterly non-negotiable. Other risks are negotiable in business but if you are a food company your reputational risk, your brand equity is all on the line, and you do not put it at risk.”

So would Larsen, as Fonterra did, have initially settled for a quiet trade recall of Sanlu product, as advised by local Chinese government authorities? : “Like hell I would’ve.”

The NBR reports that former independent chairman of Fonterra’s disbanded ethics committee Dr Simon Longstaff also has concerns about the San Lu investment and said had the committee still been in place:

he was ‘almost certain’ it would ahve been involved from the outset in putting procedures in palce for setting up the joint venture with San Lu . .

Dr Longstaff is now the executive director of the St James Ethics Centre in Sydney. He said ethical considerations for Fonterra include:

* the “health and safety of the consumers of these products” – though Dr Longstaff accepts it’s extremely difficult to try to protect consumers against malicious conduct of others.

* Concerns for the welfare of Fonterra, and its capacity to generate wealth for New Zealand.

* The duty of a really significant New Zealand company not jsut to look after the singular interests of its farmers but also to recognise that whatever it does has the capacity to affect New Zealand’s reputation; and

* Whether the board or senior management have maintained a capacity to deal with these ethical issues in a complex world which “refuses to be tamed by our ignorance”.

“Most ethical questions are not good versus bd, right vbersus wrong – it’s competing interests all being [weighed],” Dr Lognstaff said. “The thing about making good decisions – it’s not jsut a matter of common sense. It requires engagement, confidence and you’ve got to care. If anyone in the company was involved in a decision which sought to place the interest of the company or its partners in China ahead of the children, then that in my mind would be fudnamentally wrong. A betrayal of the ideals of New Zealand.”

I don’t believe that Fonterra deliberately put commercial interests ahead of children’s lives. But I do wonder if the company had all the information it needed before it went into partnership with Sanlu; and the delay between its representatives on the board discovering there was a problem with melamine poisoning in the milk and the public recall indicates major deficiencies in its procedures for dealing with serious quality issues.

Inquiring Mind comments on and links to the NBR article here.


Embedded water new hurdle

August 2, 2008

First it was food miles, now it’s the carbon footprint and soon it might be embedded water.

The NZ Farmers Weekly (not on line) warns that virtual or embedded water – the amount used to produce food – could be the next hurdle primary producers have to leap over for export markets.

…this is a natural extension of carbon footprint analysis, only more specific to New Zealand’s pasture and irrigation-based farming systems.

If we thought we were in trouble on our carbon footprint, consider what the bean-counters might make of our water use. It’s questionable how well placed New Zealand would be, for instance, if European Union food officials started routinely asking for an audit of our water use from farm to shipment or flight.

The push for livestock traceability would pale in comparison.

Fortunately judging by a Crop and Food Research project announced last week, agricultural scientists seem to have seen the threat coming. The Crown Reserach Institute aims to develop plants with much-imporved root systems that require less water, pesticides and fertiliser, enabling New Zealand to compete strongly in overseas markets where consumers are increasingly demanding “green” food products.

This project tagged “roots for sustainability” seems a natural response to farmer demands for cheaper and longer-lasting plant growth – and better profitability. But like so many forms of farming innovation, it can also be seen as a response to changing political and social trends.

Mainstream awareness of embedded water is unlikely to be far away and NZ would be in the spotlight because of its growing dependence on man-made irrigation schemes.

When the world is short of food there will be something amiss if we are penalised for using innovative techniques which boost production providing we use them efficiently and sustainably.

Hopefully Crop and Food research is correct in asserting that its project … will see more effective water, nutrient and pesticide use, with reduced nitrate leaching and nitrous oxide emissions.

All of which have environmental and economic benefits.

To alternatively do little is to allow the concept of embedded water to leak into people’s way of thinking and for farmers’ reputations to again take a battering. If this latest environmental concept indeed sticks between people’s ears, agriculture will need to come up with quick answers and real solutions.

Pointing out that putting unnecessary hurdles in the way of producers inevitably leads to higher costs for consumers won’t do it. We need to be prepared to counter both the facts and the emotion this notion will generate.


PGW SFF deal demutualisation by stealth?

July 21, 2008

The proposed joint venture between PGG Wrigthson and Silver Fern Farms is demutualisation in sheep’s clothing according to Alan Robb.

He is an adjunct professor in the co-operatives programme at St Mary’s Unviersity, Canada, and an independent financail analyst and commentator based in New Zealand.

Writing in The NZ Farmers Weekly (not yet on line) he says:

In return for its $220 million, PGW will receive shares giving 50% of the voting equity. It will also have the right to appoint half of the board of directors. The share issue is likely to prevent SFF continuing as a co-operative.

The Co-operative Companies Act 1996 requires that not less than 60% of the voting rights are held by transacting shareholders. As PGW will hold Capital Shares with 50% of the voting equity and the transacting shareholders will have Supplier Shares it seems clear that SFF will no longer qualify as a co-operative.

Farmers who are considering the proposal should be aware of this defect. Will SFF cease to be a co-operative?

…If the board cannot see a future for SFF as a co-operative it has a duty to resign and allow those who are committed to co-operative principles and values to work with other co-operatives in the meat industry.

I spoke to SFF chair Eion Garden a couple of weeks ago about whether the company would be able to retain its co-operative status if the deal with PGW went ahead. He said that PGW will be transacting shareholders. Chief executive Keith Cooper told the ODT  the same thing:

PGG-Wrightson would be a transacting shareholder, supplying goods and services to the meat processor and marketer.

“The most important thing is to preserve all the characteristics of a co-operative, with a rebate structure, ownership and governance structure.”

But what does this mean? That PGW is a transacting shareholder by dint of its contract to procure stock of SFF’s behalf?  Wouldn’t that make PGW a third-party trader? I don’t have a problem with third parties, but PPCS, as SFF was known until its recent rebranding, has been adamant that it didn’t use third parties.

If this is the case it raises another question: why would PGW be allowed to own 50% of the company’s shares when all other transacting shareholders have their shareholdings capped at a much lower level?


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