Rural round-up

12/12/2013

Audacious goal on South Canterbury demo farm:

Beef + Lamb New Zealand’s demonstration farm programme is about testing new and exciting ideas within a real farm context. So, when Andrea and Warren Leslie from South Canterbury were invited to join the programme, they were challenged to share their ultimate on-farm goals during an initial workshop of demonstration farmers. Warren says he made the mistake of standing up first.

“I said ‘I want to lamb 200 per cent’ and people said that’s not such a big deal. Then I added ‘without any triplets or singles’.” That quietened them. He wasn’t finished. The cattle goal was more challenging again: “We breed Murray Greys and sell a lot of bulls into the dairy industry. Wouldn’t it be great if 75 per cent of our progeny were male? I’m just putting it out there, to get the discussion going.” . . .

Fonterra farmgate milk price mixed blessing:

Farmers will have split views on Fonterra Cooperative Group confirming the farmgate milk forecast at $8.30 per kilogram of milksolids (kg/MS). While they will be pleased with that confirmation they will be less pleased to see the dividend forecast being cut by two-thirds to ten cents per share.

“The dividend is a direct marker to the financial performance of Fonterra as a company,” says Willy Leferink, Federated Farmers Dairy chairperson.

“Farmers will be happy to see the milk price confirmed but since 85 percent of the dividend payout goes to farmer-shareholders, they will have mixed feelings since it’s a 22 cents per share haircut.

“But knowing what my farms have produced in the season to date, it’s no surprise to find that Fonterra has been pushed to process what our farms have produced. . . .

Synlait Milk flags faster growth in 2014 as Fonterra cuts guidance – Paul McBeth:

(BusinessDesk) – Synlait Milk, the milk processor which joined the NZX in July, says earnings will beat guidance next year on cheaper raw milk prices and growing demand for its products. That contrasts with Fonterra Cooperative Group, which today slashed its guidance in the face of a margin squeeze.

International demand is favouring Synlait’s milk powder and anhydrous milk fat products, while recent announcements mean the season’s milk price won’t be as high as expected, the company said in a statement. Because of that, Synlait said first-half and annual earnings will probably beat forecasts in 2014. It predicted profit of $19.6 million on sales of $524 million in its prospectus.

“We now expect the company will benefit from both earnings growth in our value added categories, a favourable product mix, and lower than expected milk prices,” chief executive John Penno said. “This is likely to mean Synlait’s earnings for the half and full FY14 will be ahead of forecast.” . . .

Showcasing the best – Rebecca Harper:

It’s show time here in Feilding.

Growing up, the Hawke’s Bay A&P Show was a huge part of our family life. We went to a small country school and they closed the school and gave us all the day off, because we all went to the show.

Dad used to enter lambs every year and there was usually a coloured certificate to take home for a prize on the hoof or the hook.

I rode my pony and competed in the horse events and my brothers and I were given money for the rides. . .

Kiwis take Aussie shield – Tim Fulton:

New Zealand has run away with Australia’s agricultural and pastoral show shield.

The FCAS Shield has been contested by Australian states since 2000, while NZ entered the fray five years ago.

FCAS is the Federated Council of Agricultural Societies, an equivalent of the Royal Agricultural Society in NZ.

First, second, and third placings in premier show competitions are combined to find the shield winner. . . .

Rural women up front and centre – Abby Brown:

Members of Rural Women’s Scott’s Ferry branch showed off their underwear at the Royal A&P show on December 6.

The Y fronts and boxers were decorated as part of their Y Front campaign which encouraged men to be up front about prostate cancer and get checked.

The underwear decorated one wall of the advocacy group’s booth.

Another wall was decorated with plaster cast breasts, as the group also encouraged women to get checked for breast cancer. . .


Are Fonterra’s ethics up to scratch?

03/10/2008

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.


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