Dairy price fall affects everyone

07/05/2015

The fall-out from falling dairy prices isn’t confined to farmers:

. . .there are 7 billion reasons it will affect all of us. Seven billion dollars is the amount that is set to be wiped from the New Zealand economy this year.

Fonterra is forecasting a total payout to farmers this season of $4.70 to $4.80 per kilogram of milk solids ($4.50 forecast payout plus a likely dividend of 20 to 30 cents per share). That compares to last year’s record payout of $8.50 ($8.40 payout plus a cash dividend of 10 cents per share).

The average break-even point for farmers this year is $5.40, after you factor in both the cost of running the farm and the debt interest payments.

It is the reason farmers are cutting costs. That will be felt in towns and cities across New Zealand, from shops in rural towns to cities where manufacturers make equipment used on farms (like irrigation systems).

That will flow through to the taxes that the Government collects, making it even harder to put together this month’s Budget. . .

Although most New Zealanders live in towns and cities, what happens on farms and to the goods they produce still has a very big influence on the wider economy.

When produce prices fall, farmers tighten their belts which affects what they’re willing, and able to buy. That affects everyone who services and supplies them which flows into the wider economy and the tax take.


Rural round-up

30/04/2015

Dairy industry ‘paper’ flawed

Federated Farmers is disappointed to see Massey University supporting attempts to use academia to tarnish the dairy industry by pretending a student’s academic hypothesis is established fact.

“The paper is being discredited by the authors’ academic peers as being sloppy,” says Andrew Hoggard, Federated Farmers Dairy Chair.

“Unfortunately Joy, Death and Foote’s conclusions are drawn off assumptions, which are out in the world now and we have to rely on the intellect of its readers to see through its many untruths.”

“We support the authors’ desire to have ‘accurate reporting of real costs’ but the student’s thesis only looks at the negative externalities under very poor and inaccurate assumptions of the dairy industry while ignoring the positives. Therefore it could not possibly arrive at an accurate conclusion.” . .

 Downward revision for Westland Milk Products’ pay-out to shareholders:

The decline in international prices for milk has resulted in Westland Milk Products, New Zealand’s second biggest dairy co-operative, revising its predicted pay-out for the 2014-15 season.

Westland’s board has advised shareholders that the predicted pay-out is now $4.90 – $5.10 per kilo of milk solids (kgMS) before retentions. This is down from the previously announced range of $5 to $5.40 per kgMS.

Chief Executive Rod Quin says prices were such that a $5.20 pay-out seemed possible before the recent auctions, as buyers looked to New Zealand to secure supply ahead of the dry conditions during January and February. . .

 

Rates a balancing act of who’s going to foot the bill – Chris Lewis:

Rates are being set across the country as local government prepare their Long Term Plans (LTP) for the next three years.

These plans set out the council’s long term focus, describe the activities it intends on providing and specifies which community outcomes are to be achieved. More importantly, from the rate payer’s perspective, who is going to foot the bill for these activities?

Across the country Federated Farmers staff and elected members are busy squirrelling away on council’s plans. One of the things members don’t fully understand is where our membership money is spent. It has taken me a while to get my head around all the different activities the Federation covers and the effort that geos in to keeping 85 councils around New Zealand honest and fair for rural communities. . .

Ministers welcome scientific progress in cutting agricultural greenhouse gases:

Climate Change Issues Minister Tim Groser and Primary Industries Minister Nathan Guy have welcomed news of a breakthrough by New Zealand researchers which offers the potential to cut greenhouse gas emissions from sheep and cattle by 30 to 90 percent without cutting production.

This breakthrough in methane inhibitors was made by researchers working through the New Zealand Agricultural Greenhouse Gas Research Centre and Pastoral Greenhouse Gas Research Consortium.

“Livestock methane is New Zealand’s single largest greenhouse gas emissions source, making up 35 percent of our total emissions in 2013,” says Mr Groser. . .

Tight times force farmers to adopt new tactics – Tony Field:

Dairy New Zealand is warning farmers to prepare for tough times next season as well as this one.

It says the average farmer needs $5.40 in income per kilogram of milk solids just to cover farm working expenses and interest and rent this season. Fonterra is forecasting a payout of $4.70 per kilogram of milk solids this season.

Industry body DairyNZ says “bank balances for most dairy farmers will be heading south this winter and spring, producing some short-term but significant cashflow management challenges for farmers”. . .

Secret recipe through the seasons:

There’s a lot to be said for a fertiliser which does double duty, giving an instant boost of nitrogen to promote autumn growth, followed by the slower release of sulphur.

That’s the verdict of King Country sheep and beef farmers, George and Sue Morris who followed advice from their Ballance Agri-Nutrients representative to give PhaSedN a try.

The product is a granulated combination of SustaiN, elemental sulphur and lime. While the nitrogen offers an immediate boost to pasture, the elemental sulphur delivers a long-term supply of sulphur. It is an ideal combination where there is a high sulphur need such as sandy, peat and pumice soils or if there is high rainfall or a high risk of sulphur leaching. . .

 

 

Snapshots of US agriculture – Conversable Economist:

An extraordinary shift happened in the US agricultural sector during the last century or so. Robert A. Hoppe lays out the facts in his report “Structure and Finances of U.S. Farms: Family Farm Report,
2014 Edition,” written as Economic Information Bulletin Number 132, December 2014, for the U.S. Department of Agriculture. Indeed, when I hear arguments about how difficult (impossible?) it will be for the US workforce to adjust to the coming waves of technology, my thought quickly jump to the shift in agriculture.

For example, back around 1910, about one-third of all US workers were in agriculture (blue line, measured on the right-hand scale).  It’s now about 2%. The absolute number of jobs in agriculture declined, too, but the big change was that more than 100% of the job growth in the U.S. was in the non-agricultural sector. I haven’t researched the point, but my guess is that many people around 1910 would have viewed these changes as somewhere between  impossible and inconceivable.  . .  Hat tip: Utopia


Politics Daily

12/06/2014

This is an attempt to replace Dr Bryce Edwards’ daily political round-up while he’s taking a break. I’m not pretending to be balanced. While I link to a range of news stories, the blogs I link to are usually from the centre to the bluer end of the political spectrum or the more reasonable or witty bits of the pink to red end. You’re welcome to leave links to other news and blogs in comments.

Election

Claire Trevatt @ NZ Herald – NZ Game of Thrones – does Cunliffe dare to play?

David Farrar @ Kiwiblog – Caucus can safely roll Cunliffe from next week

John Armstrong, Adam Bennett & Isaac Davison @ NZ Herald – Election 2014: Parties ready but are you?

CameronSlater @ Whale Oil – The magic “Seven reasons” that will drive this election

Pattrick Smellie @ Stuff – Early date a savvy move from PM

Vernon Small @ Stuff – Curious case of deal with Craig

David Farrar # Kiwiblog – National’s potential election deals

Cameron Slater @ Whale Oil – Paranoid Winston Peters dumps candidate?

Nookin @ Keeping Stock – A guest post on a new Labour policy

Pete George  @ YourNZ – Civilian Party and United Future announce campaign deal

Beehive

Chris Finlayson – Agreement in Principle signed with the iwi and hapū of Te Wairoa

Chris Finlayson – Screen NZ formed to boost NZ’s profile on world stage

Todd McLay – Intergovernmental FATCA agreement signed

Tony Ryall – Health Minister opens $67m Whakatane Hospital

Steven Joyce – International education numbers set to grow

Gerry Brownlee – Performing arts precinct off to an exciting start

Hekia Parata – Pegasus School opens

OCR

Brian Fellow @ NZ Herald – Wheeler yanks the leash

Tony Field @ TV3 – OCR rise good for savers

David Farrar @ Kiwiblog – OCR goes to 3.25%

Crime

Rachel Smalley – Labour politicising a terrible tragedy

Inventory 2 @ Keeping Stock – Smalley tears into Labour

David Farrar @ Kiwiblog – Violent crime

Education

Inventory 2 @ Why don’t they mention the PPTA?

David Farrar @ Kiwiblog – Labour against paying the top teachers more

Other

David Farrar @ Kiwiblog – Misrepresenting the current abortion law

Cameron SLater @ Whale Oil – David Cunliffe upsets Chief District Court Judge

David Farrar @ Kiwiblog –

Cameron Slater @ Whale Oil – Fine tuning immigration to drop Auckland House prices? Reserve Bank says yeah… Nah

Pete George @ YourNZ – Labour vs Reserve Bank on immigration

Cameron Slater @ Whale Oil – Trevor Mallard continues to show that for Labour, facts are optional

Matthew Beveridge – Compare and Contrast: Chris Tremain and Todd Barclay


Rural round-up

26/09/2013

Dairy prices double-edged sword for NZ – Tony Field:

Rising global dairy prices are proving a double-edged sword for New Zealand; it’s great for farmers and the economy, but it also means prices are going up in the shops.

The autumn drought dented Fonterra’s milk production and means this year’s payout is slightly down on a year ago.

But farmers like Peter Schouten are cheered by predictions of a record payout for the season that’s just begun.

“I am absolutely over the moon with it,” says Mr Schouten. “It gives us a really good chance to play catch-up, with a lot of the farm maintenance, the replacement of gear, tractors, ATVs – you name it.”

The economy could be $5 billion better off too. . .

Fonterra farmers cheer payouts as dividends held unchanged, headwinds loom –  Jonathan Underhill:

(BusinessDesk) – Fonterra Cooperative Group is promising a record payout to its farmers next year, while keeping dividends unchanged, underlining the competing needs of its suppliers and the investors in its exchange-traded units.

Fonterra Shareholders’ Fund units ended the day up 0.4 percent to $7.10, having initially sold off after the world’s biggest dairy exporter posted its full-year results. Normalised earnings before interest and tax fell 3 percent to $1 billion, meeting the guidance it gave in July and missing its prospectus forecast.

Sales fell 6 percent to $18.6 billion in the 12 months ended July 31 and net profit rose 18 percent to $736 million, or 44 cents a share. The company paid a dividend of 32 cents a share, the same as it is forecasting for next year and as it paid in 2012. . .

Satisfactory return for Farmers, implemented changes to ANZ business welcome:

The Fonterra Shareholders’ Council, which safeguards the interests of the dairy Co-operative’s 10,500 Shareholders, said the final payout of $6.16 ($5.84 farmgate Milk Price and $0.32 dividend) for a fully shared-up Farmer announced today was an accurate reflection of the season.

Council Chairman, Ian Brown: “Given the pressure placed on Fonterra by this year’s drought and the unpredictability experienced in international markets the Co-operative has delivered a satisfactory return for Farmers.”
Mr Brown said the success of the integrated ANZ (Australia/New Zealand) business, which has encountered tough market conditions of late, is vital for Fonterra.
“The ANZ business has been working hard to adapt to the changing Australian business environment.
“Accordingly, changes have been made to the ANZ business, there’s a cost associated with these and the Council will continue to monitor the situation.” . .

Ngāti Kahungunu harvesting our future:

Ngāti Kahungunu Iwi is developing an Export Strategy. As part of the wider Māori Economic Development Strategy, we are increasing the export capacity of Māori farmers into the market, in other words from the ‘Nuku to the Puku’.

Ngāti Kahungunu Iwi Incorporated and Wairoa Taiwhenua are hosting a Kahungunu Farming Conference at Takitimu Marae in Wairoa on Thursday 10th October 2013. The purpose of this Farming Conference is to bring together Māori Farmers, Land owners, people who utilise primary resources and anyone else who might be interested in connecting, exploring, sharing ideas and being a part of the Ngāti Kahungunu Export Strategy.

Ngāti Kahungunu Iwi Incorporated is proposing that Ngāti Kahungunu Farmers and all Māori Farmers would be better off by supplying directly to the market and retaining all the earnings in the supply chain rather than waving goodbye to the animals and the profits at the farm gate. . .

Precision Seafood Harvesting’ to be unveiled at the 2013 NZ Seafood Industry Conference

It is less than a week to go until the2013 NZ Seafood Industry Conference, where, in a world first for the fishing industry, the first underwater pictures of the New Zealand developed ‘Precision Seafood Harvesting’  technology will be shown to reveal the revolutionary new fishing method . . .


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