Rural round-up

May 10, 2016

What impact do milk solids payouts have on the economy?:

Milk solids payouts have been in the news a lot of late with a rollercoaster ride of pricing that has shaken the farming sector’s confidence.

But what impact do these fluctuating prices have on the broader economy?

In the May year 2013/14, Fonterra paid its milk suppliers $8.40/kg for milk solids (excluding the dividend for shareholders). That is $1.3 million for the average dairy herd at the time of 413 cows producing 153,012 kg of milk solids. . . 

Farmers desperate for rain – Rhys Chamberlain:

The seemingly endless summer produced balmy days across Otago but the unseasonably warm start to autumn has caused further headaches for drought-hit farmers.

Niwa statistics show Dunedin is on track to record its second-lowest autumn rainfall on record with about three weeks to go before winter officially starts.

Although another 6mm of rain fell yesterday, Dunedin recorded just 53mm of rain between March 1 and May 7, just 6mm more than the 1939 record low. . . 

Chinese meat processors look to NZ ahead of chilled meat deal:

The new John Key-brokered deal to gain access for chilled meat to the China market is already attracting Chinese meat processors to the Bank of China (NZ) Agri-Business Investment and Trade Conference in anticipation of China relaxing the rules.

During Prime Minister Key’s recent visit to China, he was given an undertaking that the meat protocols between the respective regulatory authorities would be reformed to allow chilled meat exports to China. The deal, when it goes through, will add multi-millions to New Zealand’s trade with China. . . 

Organic dairy farmers reaping just rewards:

The huge rise in the milk payout to organic dairy farmers is a welcome encouragement for the dairy sector to move towards clean, green and high-value production, according to the Soil & Health Association.

Fonterra just announced a big jump in the milk payout to organic farmers, due to increasing global demand. For the 2016-17 season organic farmers will receive $9.20 per kg of milk solids, up from the current organic price of $5.65. Non-organic milk solids fetch just $3.90.

“Consumers worldwide are demanding safe, healthy food, and are prepared to pay for high quality, GE-free, organic dairy products,” said Marion Thomson, co-chair of Soil & Health. . . 

Silver Fern Farms Propose to Relocate Islington Venison Operations to South Canterbury:

 As a result of the pending expiry of its lease, and change in surrounding land use, Silver Fern Farms is consulting with staff at its Islington venison processing plant on options for closing the site and building a new integrated venison processing plant at its Pareora site, in South Canterbury.

Silver Fern farms currently leases land on the Waterloo Road site. The lease is shortly due to expire and the current plant buildings on the site are planned to be demolished to make way for new commercial developments at the Waterloo Business Park.

Silver Fern Farms Chief Executive Dean Hamilton says staying on the Waterloo Business Park site is no longer an option for the company. . . 

Pipfruit New Zealand gains role in protecting NZ biosecurity:

New Zealand’s $700 million pipfruit industry says it will have greater confidence in the country’s biosecurity system now that it will play an influencing role in helping to manage and govern biosecurity and risk.

Pipfruit New Zealand’s chief executive Alan Pollard said growers have welcomed the Government Industry Agreement for Readiness and Response (GIA) and supported the partnership with Government. . . 

Dairy Trainees Embark On Eye-Opening Study Tour:

The 11 finalists in the 2016 New Zealand Dairy Trainee of the Year competition begin a three-day study tour today, visiting award-winning farmers, Fonterra Innovation and Massey University’s No 4 dairy farm.

The trainees will also have a health check, visit a robotic farm, a goat farm, a raw milk farm and hear from a range of speakers on the state of the dairy industry and also on setting and achieving goals.

The tour will finish in Wellington where the group will join finalists in the New Zealand Share Farmer of the Year and New Zealand Dairy Manager of the Year competitions. The final aspect of their judging, an interview, will take place on Friday before the winners of the three competitions are announced at the 2016 New Zealand Dairy Industry Awards national awards dinner at the TSB Arenaon Saturday night . The winners will share about $170,000 in cash and prizes. . . 

Judges Begin Search For National Winner Of Ballance Farm Environment Awards:

The New Zealand Farm Environment Trust has assembled a strong line-up of judges to decide the next recipients of the esteemed Gordon Stephenson trophy.

Comprising six people with a broad range of skills and experience, the National Winner Judging Panel will select the next trophy holders from the eleven Supreme winners in the 2016 Ballance Farm Environment Awards (BFEA).

The recipients will be announced at New Zealand Farm Environment (NZFE) Trust’s National Sustainability Showcase in Northland on June 22, becoming ambassadors for the primary industry in a role that will take them around the country and beyond as they promote the importance of sustainable farming. . . 

Duncan Venison Unveils The “Bistro Fillet,”

A New, Innovative Premium Venison Cut:

Duncan Venison, one of New Zealand’s original venison producers, has developed a brand new item, which it has named the “Bistro Fillet.” The restaurant quality cut will be available to the public from 1 July, through a recently developed online store at duncan-nz.com.

Andrew and Vinnie Duncan, owners of the company, discovered the fillet when looking into ways to make the venison leg more useable, consistent and convenient for restaurants. They found a way to trim and portion the meat in that area, which has resulted in a tender, top quality cut that is ready for immediate cooking and serving. . . 


Rural round-up

May 9, 2015

Low-Cost Pasture-Based Dairying Still Our Best Bet, Say Farm Environment Leaders:

New Zealand dairy farmers shouldn’t lose sight of their competitive advantage, say farm environment ambassadors Mark and Devon Slee, who recently returned from a study tour of the Northern Hemisphere.

In late March the Canterbury dairy farmers and National Winners of the 2014 Ballance Farm Environment Awards embarked on a 25-day trip to the United Kingdom, Netherlands and Ireland, visiting a wide range of dairy farms

Mark says a key aim of the tour, which was facilitated by the New Zealand Farm Environment Trust and supported by a range of industry groups, was to study intensive dairy farming systems in Europe and to find out how farmers were using technology to improve sustainability. . .

Pacing global changes a big ask for Fonterra – Fran O’Sullivan:

Tim Groser’s warning that the dairy sector would effectively have to guts it out during a period of low milk payouts was timely.

It’s perhaps easier said than done maybe from the perspective of a Trade Minister.

But dairy farmers are a resilient lot. They’ve been through cyclical times before.

Yet, last week’s Fonterra announcement that the co-operative has downwardly revised its 2014/2015 payout forecast back to $4.50/kg milk solids (from $4.70) was still a hard knock for those that had factored the higher track into their own financial planning.

Federated Farmers pointed out just how difficult it was for some dairy farmers with their comment that the average Canterbury dairy farmer was now facing a loss of 91c for every kilogram of milk solids that they produced. . .

ANZ Bank was most aggressive in rural rate swaps sales to farmers, ComCom says – Paul McBeth:

(BusinessDesk) – ANZ Bank New Zealand, the country’s biggest lender, was the most aggressive in pitching interest rate swaps to farmers, over which it subsequently agreed to pay $19 million in compensation, the Commerce Commission says.

General counsel competition Mary Anne Borrowdale told Parliament’s primary production select committee that of the three banks to settle with the regulator, ANZ had the most customers involved and was investigated over both the way it was able to move its margin and the break fees it charged farmers for an early release. While ANZ announced its settlement with the regulator before ASB Bank and Westpac Banking Corp, it only just made its offer to farmers yesterday. The three banks’ collective settlements totalled $24.2 million. . .

Landmark animal welfare legislation welcomed by veterinarians:

The New Zealand veterinary profession welcomes today’s landmark passage of the Animal Welfare Amendment Bill which brings greater clarity, transparency and enforceability of the country’s animal welfare laws, further strengthening New Zealand’s excellent reputation for animal welfare.

The New Zealand Veterinary Association (NZVA), which played a key role in helping to shape the Bill, says some of the key changes include the legal recognition of animal sentience, which is sensation or feeling in animals, for the first time in New Zealand law.

NZVA President Dr Steve Merchant says: “Veterinarians are at the vanguard of animal welfare advocacy and public support is behind us in the call for greater clarity on issues concerning animal welfare and increased sanctions for animal cruelty. . .

 

 High prices and volumes for avocado growers:

Avocado exporter Avoco says its growers are celebrating the end of a season where they not only got a bumper crop – but decent prices for their fruit too.

Avoco said strong end-of-season demand from Australia lifted returns for growers – to $15 per tray for large avocados and $14 per tray for smaller fruit.

Avoco director John Carroll said the company exported a record volume of fruit – 4.5 million trays, out of a total 7 million trays – and still managed to get good returns for its 700 plus growers. . .

Anchor Gives More New Zealanders an Organic Milk Choice:

Anchor is making organic milk more accessible to New Zealanders with the nationwide launch of Anchor Organic.

Fonterra Brands New Zealand Managing Director Tim Deane said that with other organic milk brands only available in certain regions or very expensive, Anchor is on a mission to make organic milk more widely available at a fair price.

“We want to put organic milk in reach of more New Zealanders. We’ve done just that through our nationwide distribution and providing Anchor Organic at an everyday price that works out at only about 20 cents extra per glass compared to our standard Anchor milk,” said Mr Deane. . .

Wool Prices Bounce:

New Zealand Wool Services International Limited’s General Manager, Mr John Dawson reports that a weaker New Zealand dollar, limited wool volumes pressuring exporters and renewed client interest, combined to lift local prices across the board.

Of the 6,350 bales on offer, 99 percent sold.

The weighted indicator for the main trading currencies was down 1.79 percent compared to the last sale on 30th April.

Mr Dawson advises that Fine Crossbred Full Fleece and longer shears were 7 to 10 percent dearer, stimulated by resurgent Chinese interest with shorter types 3 to 6 percent firmer. . .


Organic milk not sustainable

August 23, 2011

Fonterra’s organic milk operation is another casualty of the GFC:

Fonterra’s Group Director Supplier and External Relations Kelvin Wickham says the co-operative remains committed to the organics market but as growth in this market has significantly slowed since the global financial crisis, Fonterra needs to make changes to its organic operations.

Organic milk attracted a premium for producers but enough consumers aren’t willing to pay extra for it.

Mr Wickham says the organics market was hit hard by the global financial crisis and market indications are it will not recover to previous levels.

“All categories felt the effects but particularly the category in which we sell – packaged dairy foods – where prices and volumes are still below 2008 levels.

“Research shows people are now less willing to pay the premium for organic products. In addition, consumers are gaining more confidence that everyday products are being produced more sustainably and are more acceptable so they no longer see the need to pay the premium for most organic products.

When budgets tighten luxury products are the first to go and organic milk is in that category.

A lot of the support for organic products is based on emotion rather than science and if consumers think or feel that ordinary food they buy is being produced in a safe and sustainable way they don’t need to spend more on speciality organic produce.

Fonterra is meeting suppliers this week to tell them its plan which includes:

Concentrating Fonterra’s North Island organic suppliers in one hub around its key certified organic processing site – Hautapu. This will reduce the number of Fonterra’s organic suppliers.
Reducing the amount of product processed at Fonterra’s other two certified organic sites – Waitoa and Morrinsville.
Prioritising the organic product range to focus on cheese which provides the best returns.
Focusing on emerging Asian and Australasian organics markets where there are stronger returns and growth potential.

Mr Wickham says the first two points will mean considerable transport and manufacturing cost savings for Fonterra’s organic business.

“Our organic farmers are currently spread right across the North Island. This means substantial transport costs for the business.

“In addition, focusing most of our organic product through a single site will mean we are able to create efficiencies of scale in processing the milk.

Carting milk the length and breadth of the North Island hardly fits the sustainable model. It’s a waste of fuel and adds substantially to costs.

“We understand the big commitment many of our farmers have made to the organics programme and that this transition will not be an easy one to make. The decision to reduce our organics operation was not taken lightly but we need to get the business back into a break-even situation.

“We will honour all of our organic contracts through to their formal termination dates, which in some cases are four-five years away and we will work with our farmers as they make the transition out of the organics programme.”

This decision will be hard for the farmers who’ve gone to the trouble and cost of changing to organic production but it will be better for the co-operative if the organic operation stops losing money.

It could also provide opportunities for boutique dairy producers who might be able to buy the organic milk and use it as a point of difference in markets which are less price sensitive.

 

 


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