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Australian News:Why more expensive milk won’t help farmers much

The supermarket giant Woolworths this week broke ranks and announced it was going to stop selling A$1 per litre milk. It will now charge A$1.10, or A$2.20 for two litres. Chief executive Brad Banducci made it clear that there was more to the decision than straightforward economics: We’ve heard the outlook will continue to be extremely tough for dairy farmers… This is affecting milk production and farm viability, which is devastating for farmers and the regional communities in which they live. The Labor Party has been threatening to impose a minimum farm-gate price. Will what Woolworths is doing help farmers? Only a bit. Milk prices are internationally set The so-called “milk wars” began on Australia Day 2011 when Coles announced it was cutting milk prices to A$1 a litre. Woolworths and Aldi followed suit. The milk market does not just consist of dairy farmers, supermarkets and customers. There are also the processors – companies such as the ASX-listed Murray Goulburn, Parmalat, Lion and Fonterra – that stand between farmers and supermarkets. Then there is the international market for dairy products like butter, cheese and milk powder. The biggest determinant of farm gate prices in Australia is not what the major supermarkets do, but world dairy prices. The Department of Agriculture says 37% of Australian milk production is exported. Add to that the roughly 35% that goes into locally consumed butter, cheese and milk powder that is subject to competition from imports. You can quickly see the prices of nearly three-quarters of the milk produced in Australia are set globally. Dairy Australia has a higher estimate. Because even fresh milk is subject to foreign competition, it believes 90% of the annual movement in farm-gate prices comes from changes in international prices. Those changes are beyond the effective control of Australian farmers and regulators. Many of them are the result […]

Has your business registered for the Food Act 2014?

It’s the final countdown for businesses that make, sell or transport food to meet the 28 February 2019 Food Act registration deadline. This includes food manufacturing, such as manufacturers of dried/dehydrated fruit or vegetables, confectionery, meat, poultry, fish products, dairy products and fresh ready-to-eat salads. New Zealand Food Safety (a business unit of the Ministry for Primary Industries/MPI), is urging owners/managers of all New Zealand businesses that make, sell or transport food, which have not registered yet, to find out immediately if they need to register a plan or programme under the Food Act 2014. The Food Act came into force on 1 March 2016 and introduced a common-sense, risk-based approach to food safety. New Zealand Food Safety’s Manager Food & Beverage, Sally Johnston said that under the Food Act all people growing, making, transporting and selling food had a responsibility to keep it safe and suitable. “Most New Zealand food businesses have now registered, which is excellent,” Ms Johnston said. “New Zealand Food Safety, local councils and industry organisations are working hard to help all remaining businesses to meet the 28 February 2019 deadline for registration. “If existing food businesses are not registered by the 28 February deadline, they will be operating unregistered businesses, their retail customers may refuse to accept their goods or use their services, and MPI and local councils may need to take enforcement action. So, immediate action needs to be taken to get registered. “We want make it easier for businesses to make safe and suitable food and comply with food safety requirements.” Under the Food Act, new food businesses have to register as soon as they start trading and existing food businesses (operating under the Food Hygiene Regulations 1974 or Food Act 1981) had from 1 March 2016 until 28 February 2019 to register […]

Farmers financially prepared NZFood website

Farmers financially prepared for setbacks

Farmers are well-placed to survive any potential financial uncertainty from major setbacks such as global warming, new Lincoln University research has found. Lincoln University academics Bruce Greig, Peter Nuthall and Kevin Old surveyed more than 400 farmers* and found the majority of farms are financially strong. Associate Professor Nuthall said it is “highly likely” farmers would survive most price downturns and the impacts of global warming. He said an assessment of the financial resilience of New Zealand farms was particularly important given changing weather patterns stemming from global warming may exacerbate supply shifts, and the opening of world markets through trade agreements could lead to fluctuating supply and demand, all increasing price volatility. However, their results showed most farmers and their farms are in “a zone of stable functioning in which they can operate and absorb financial shocks in at least the short term”. “Profit levels are not high relative to the investment, but this has been the case for decades and has not caused problems due to farmer and farm family resilience,” Associate Professor Nuthall said. “This does not mean some farmers have not struggled financially, particularly over periods of low payouts, including low wool prices, and periods of severe drought. New farmers with high initial debt will have found it difficult to meet their commitments in these periods. “The majority, however, have had the equity to cope, especially the significant numbers with 100% equity.” However, he said, action to maintain current financial levels through prudent production system selection and good financial management will be needed. Figures from the article. Farm equity is, on average, nearly 82% 62% of fruit/viticulture operations have 100% equity but this ranged down to 10% of the dairy farmers having 100% equity. 12.8% of farms had at least $8 million debt, and on the […]

2018 tractor and farm machinery on NZFood website

2018 tractor and farm machinery sales set new record

Sales of tractors and farm machinery hit a new record in 2018 and there are no signs of a slow down, says NZ Tractor and Machinery Association (TAMA) president, John Tulloch. TAMA figures to the end of December showed a total of 4640 retail sales across all HP (horsepower) categories compared to 4079 in 2017 and 4062 in the boom dairy year of 2014. Mr Tulloch said he expects the strong sales trend to continue through 2019 unless there was a global event that had a sudden impact. “Of course we never know what the weather will throw at us but most of our customers are used to dealing with climate variations, even extreme ones. We’ve had a wet season but that could well be followed by a dry season.” The dairy industry, which accounts for a large proportion of TAMA sales, was looking to improve based on the last four global dairy trade auctions. The latest auction on January 15 resulted in a GDT price index increase of 4.2%. The increases were reflecting the flow-on impacts of the European summer drought on local dairy production there, Mr Tulloch said. The current Australian drought would also affect production across the Tasman. “When global supplies are tight and demand is good then prices have to go up. This would be a welcome relief to our industry after recent difficulties for dairying.” The improving outlook combined with new environmental restrictions being introduced in New Zealand might see more dairy farmers, especially those in the South Island, move to wintering cows inside. Under-roof wintering causes less damage to pastures and results in less effluent run-off. It also boosts the condition of dairy cows. “As profit returns to dairy we expect that farmers will look at the benefits of wintering inside. These cows are […]

Fonterra to help farmers get greater milk price certainty

Fonterra has announced that it will introduce a new financial tool to help farmers gain more certainty of what they will be paid for their milk for the season. The new Fixed Milk Price can help them with budgeting, planning, and managing on-farm profitability. Fixed Milk Price joins a set of seven innovative financial tools to assist farmers in sharing up and investing in their farms. These tools include the Share-up Over Time Contract, Invest as You Earn, Dividend Reinvestment Plan, Strike Price Contract, Contract Fee for Units and Farm Source’s Reward Dollars for Shares and Smart Finance. Farm Source and Global Operations Chief Operating Officer Robert Spurway says, “as a Co-operative owned by 10,000 farming families, we are committed to making a difference for Fonterra farmers and providing flexible options will help them share up, invest on farm, and manage financial exposure.” “This season reminds us of the volatility in the global marketplace and the impact it can have on the milk price. While the Co-op manages this volatility as best it can when selling our products, we recognise that it’s farmers who feel the brunt of it. “In addition to providing farmers with the opportunity to get more price certainty, the Fixed Milk Price will also provide the Co-operative with certainty on the margins it can achieve on a portion of milk supplied. It’s a win-win,” says Mr Spurway. In the development of this new tool, Fonterra incorporated feedback from our farmers on previous pricing tools and ensured that Fixed Milk Price is more transparent, flexible and accessible. How it will work All Fonterra farmers will have the opportunity to participate on a monthly basis (excluding January and February). The Fixed Milk Price will be referenced to the NZX Milk Futures Market, minus a service fee of no […]

Top tips for feeding cows this summer

Generating and adhering to a daily feeding plan could be the key to getting cows through an expected hot summer. That’s the message from GrainCorp Feeds technical support manager Ken Winter who says effective nutrition management can be easy and rewarding if dairy farmers focus on a daily plan. Winter says a focus on nutrition for cows is essential in summer, and a lack of preparation in previous months can impact on the summer period. “In summer, we find in many cases that the main barriers to getting cows to realise their genetic production potential are underfeeding or poor feed utilisation” he says. “Often there is a lot of feed in the system, but the hot weather reduces cows’ appetites. Less feed intake means more waste and less production.” He says another reason for a sharp drop in production over the summer months could because by underperformance in the spring. This has typically been from underfeeding and overgrazing. This can be avoided with feed planning early in the season, and matching feed intake with desired output. “Fundamentally, it is important that stocking rates match predicted growth rates, poor performing paddocks are cropped where possible, and that farmers have an ‘insurance policy’ in the form of extra feed on hand to successfully get through the drier months,” he says. Supplementing with specific nutrients and minerals will depend on the individual herd and farming environment, but Winter believes protecting the liver and immune system throughout the year should be “paramount”. “Zinc supplemented early enough and long enough can protect stock against facial eczema. Molasses, salt, Levucell SC and quality concentrates will help reduce heat stress while improving dry matter intake and fibre digestion. Products like Melofeed, Selenium and Vitamin E will improve the immune function,” he says. “The key message is that […]

Food production innovation to be adopted overseas

A Tasmanian engineering innovation in strawberry and other hydroponic food production is set to be adopted by major berry producers in the UK and Europe. Rod Marshall, Managing Director of Marshall Machinery in Launceston, has returned from meetings in the UK and Europe, in response to expressions of interest from international berry producers. At these meetings, Mr Marshall demonstrated and promoted the unique “COIR-RX” hydroponic substrate processing machine, which has been entirely researched, developed and manufactured by his company in Tasmania. Worldwide, crops such as strawberries, tomatoes and capsicums are planted within plastic substrate bags containing coir, rock-wool, or other materials, then disposed of at the end of each growing cycle. Until now, the process to separate the plastic from substrate and plant material, then package materials for recycling, has been a massive, mainly manual process for growers, or simply dumped into landfill. The COIR-RX processing machine replaces this manual process with a mobile platform that travels along the ends of strawberry rows to feed in the materials, separate them, then automatically capture, compress and wrap the plastic for recycling. The machine also ejects the organic material which becomes an effective mulch. A single COIR-RX machine can process up to 2000 one-metre long substrate bags per hour. This takes less than 5% of the time and half the cost of the current laborious process of removing, transporting, picking through materials, manually sorting and bagging. The system is also vastly more discriminating while sorting, ensuring a much more pure separation result for both plants and plastic. Mr Marshall said, “After years of research and development, we now have a functional machine that is proving itself in actual field use.” “Marshall Machinery is now ready to respond to expressions of interest it has received from major berry producers in the UK, who […]

How climate change will affect food production and security

Julian Heyes, Head of School of Food and Advanced Technology@ISHS_CMFV, Massey University According to the United Nations, food shortages are a threat due to climate change. Are food shortages a major threat to New Zealand due to climate change? Climate change is altering conditions that sustain food production, with cascading consequences for food security and global economies. Recent research evaluated the simultaneous impacts of climate change on agriculture and marine fisheries globally. Modelling of those impacts under a business-as-usual carbon emission scenario suggested about 90% of the world’s population – most of whom live in the least developed countries – will experience reductions in food production this century. New Zealanders are fortunate to live in a part of the world blessed with relatively fertile soils, adequate water supplies and mild temperatures. This gives us a comparative advantage for agriculture and horticulture over many other countries, including our main trading partner, Australia. New Zealand produces more than enough food for its population. Exports exceed local consumption, and climate-change induced food shortages should not be an imminent risk for New Zealand. But behind every general statement like this lies some rather more troubling detail. Overcoming domestic challenges As residents of a developed country, we are accustomed to accessing the world’s resources through supermarkets. New Zealanders take for granted that most foods (even those we do not produce, like rice or bananas) will be available all year round. Asparagus, new potatoes and strawberries are examples of foods New Zealanders may expect to see only at particular times of the year, but if apples or kiwifruit are out of stock, people usually complain. Our expectations are based on imports of products when they are out of season in New Zealand. The availability of those imports may be seriously compromised by climate change. A recent Ministry for the […]

Manufacturing – A year in review

-Dieter Adam, Chief Executive, The Manufacturers’ Network. It is the time again to look back on the year that was – how did our manufacturing sector do, and what were the major developments that impacted our sector in another year of political change, both in New Zealand and around the world? Internationally, issues around trade have dominated much of the economic headlines, with the trade war between the USA and China, but conflict between the USA and Europe not far behind – not to mention Brexit, the trade implications of which appear to be just as uncertain as the question of whether it’ll actually happen or not. While these trade disagreements have not yet had a major impact New Zealand exporters, they remain as a downside risk if they start impacting the wider flow of goods and supply chain which our companies are involved in. The exchange rate experienced some depreciation throughout this year, however, much of this has been eroded over the last month. While 2018 has experienced a more favorable exchange rate than the highs experienced in 2014 and 2016, it remains systemically higher than the average of the previous decade, with the AUD cross-rate remaining as the biggest concern. Domestically in 2018, we have seen a number of policy changes which will impact our sector. The improvements made to the Government’s R&D policy, increasing the proposed tax credit rate to 15% while halving the eligibility threshold to $50,000, have been a good step forward, and the move to use a committee for monetary policy decisions at the Reserve Bank makes solid sense. On the downside, the Employment Relations Amendment bill has been moving through the parliamentary process largely unchanged, with the only material concession being a weakening of the requirement to participate in collective bargaining by introducing […]

Free trade with Korea a boon for Kiwi exporters

– Jack Stenhouse, NZTE Trade Commissioner for South Korea. The eleventh largest economy in the world, the Republic of Korea, is home to some technology and manufacturing giants – names we all recognise, like Samsung, Hyundai, LG and Daewoo. Korea’s economic success is founded on access to world markets, and that’s great news for New Zealand exporters. While it’s still early days, the Korea-New Zealand Free Trade Agreement signed in 2015 looks to be delivering on its promise to boost business and strengthen ties between our two countries. This relationship has been reinforced by President Moon Jae-In’s visit to New Zealand this week. J-Nomics and the rise of consumer spending Korea is our fifth largest goods export market, and two-way trade recently surpassed NZ$4 billion in value. Since the New Zealand-Korea Free Trade Agreement (FTA) came into force three years ago, two-thirds of our exports now enter Korea duty free, a figure that will eventually reach 98 percent. This softening of Korea’s traditionally protective trade policies translates to further opportunities for Kiwi exporters, and Korea’s focus on lifting wages and creating jobs brings more good news. President Moon Jae-In’s economic reforms, dubbed ‘J-Nomics’ aim to raise wages among lower and middle income earners, and increase domestic consumer spending. This, combined with a solid growth outlook, means Korea remains a reliable market for New Zealand businesses. While forestry products account for a decent amount of our exports to Korea (to the tune of almost NZ$500 million), it’s an even more attractive and significant market for our food and beverage exporters, where the FTA has seen trade in the F&B sector increase by 35 percent to top NZ$700 million. We’re winning because Korean consumers value our reputation for safe, reliable and premium products, but there’s definitely room for ongoing marketing investment to increase consumer […]

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