Dairy

National accounting and business advisory firm Crowe Horwath is calling on all stakeholders in the dairy industry to work together to help the sector get through the current difficult period of lower milk solid prices. On the back of dairy companies announcing a string of forecast milk price downgrades and prices continuing to plunge at the Global Dairy Trade (GDT) auctions, predictions are the current hard times for the dairy sector could potentially last another 18 months to two years. Crowe Horwath says given the scale of the challenge now being faced by the industry, doing nothing is not an option for anyone involved, including farmers, banks, farm consultants and business advisors. To back its call, the company is encouraging a collaborative national response across New Zealand agribusiness to address the challenges and ensure farmers receive the best advice and support to get through. Crowe Horwath Head of Agribusiness Neil McAra says the payout has dropped further and looks to be staying lower for longer than anyone expected and this means action is required. Crowe Horwath has met with key players in the industry including the banking sector, farm advisors and rural support networks to help prepare a Best Practice Action Plan for its advisors to work through with their dairy clients. “In the first instance as business advisors we need to manage financial stress, which means knowing what the banks need from our clients and ensuring we help them in providing this, McAra says. “Secondly, it’s about working with the other industry players to facilitate a comprehensive support network being wrapped around the farmer. Our action plan provides guidance along these lines for our advisors. McAra says a collaborative approach is vital with several key players needing to be involved. “Farmers and rural professionals need to understand each other’s […]

Chinese owned Yashili International Holdings will collaborate with French dairy giant Danone on its new $212 million plant in Auckland, as part of a wider deal for the Chinese milk formula maker to buy Danone’s Dumex China brand amid tightening competition in the world’s largest infant formula market. Yashili, which is 25 percent owned by Danone and one of China’s top 10 infant formula makers by sales, said it plans to acquire Dumex Baby Food for an undisclosed amount. Danone will use the proceeds to buy shares in milk producer China Mengniu Dairy, which owns an indirect 51.04 percent stake in Yashili. The filing to the Hong Kong stock exchange also said Yashili and Danone intend to collaborate in New Zealand with respect to a manufacturing plant with the aim of “achieving synergies and support in various areas”. The official opening of Yashili’s Pokeno plant has been delayed eight months until October while the company awaits the required approvals under China’s complex food safety regulations. The company has been negotiating with Fonterra Cooperative Group and Open Country Dairy for raw milk supply. Yashili had previously imported milk powder from New Zealand for 10 years. The factory will be the biggest single drying plant for infant milk in Asia, processing 300,000 litres of milk daily when it reaches full production. All of its products will be exported to China, where its website said infant formula sales are expected to grow to $32 billion by 2017. Danone’s local subsidiary, Danone Nutricia, ended its supply contract with Fonterra after the August 2013 botulism scare and launched a $1 billion law suit against the dairy cooperative in compensation for disrupted sales. It has since been sourcing product from Synlait and other manufacturers and last year bought two Kiwi dairy processing companies, Sutton Group and […]

In tight times dairy farmers are looking for new ways to add cash to their back pocket and CRV Ambreed believes the cash can often be found in the bull calf. CRV Ambreed’s breeding team manager, Aaron Parker, says a bull calf could provide an extra $4,000 upfront if they are suitable for CRV Ambreed’s breeding programme. A proven bull can provide an additional $7,000 in income from graduation payments – sometimes more if a royalty option is chosen. With calving now underway, this source of extra income could be dropping in the paddock right now. However, Parker says the financial benefits are just one spoke in the wheel. New Zealand dairy farmers will only be competitive long-term with greater genetic diversity and advancement across the national herd. “CRV Ambreed is future focused and we’re building our portfolio to suit the broad range of environments, conditions and farming systems that our clients will be operating within in years to come,” Parker explains. “While elite bull calves are more commonly sourced through contract mating, stud breeders and our embryo transfer programme, it’s the open market – farmers nominating their bull calves for our breeding programme – where the more unique bulls are discovered,” he says. Legacy Friesian bull Firenze and current Jersey star Murmur are two examples of where farmers have offered bulls to CRV Ambreed through the open market, which have not only gone on to reward their breeders, but also the dairy industry as a whole. In the end, Parker says the more bulls in CRV Ambreed’s breeding programme, the greater genetic diversity and the higher genetic gain for New Zealand’s entire national herd. “Every New Zealand dairy farmer benefits by having a herd that produces more high value milk and lasts longer,” he adds. “Farmers we haven’t worked […]

Dairy Women’s Network has received feedback on how its latest professional development offering is being perceived by its members – with impressive results. The network launched its new Dairy Modules programme for the first time in November 2014 and has since had the programme evaluated by the renowned Net Promoter Score system, confirming world class standard. In the past eight months, with the help of its partners, Dairy Women’s Network has delivered free modules on negotiating fair contracts, goal setting, rostering-on-farm, better use of smartphones, budgeting, animal welfare and calf rearing to more than 100 participants in 41 different towns throughout rural New Zealand. The independently rated modules have received excellent scores using the Net Promoter Scores system, which are measured from -100 to 100+ with the Network’s various scores sitting between 53+ to 70+. Dairy Women’s Network chief executive Zelda de Villiers said a score of 30+ is considered “good”. “The three reports that have been completed on smartphones, goal setting and animal welfare, have resulted in upper echelon scores which we are really thrilled about,” she said. “It is particularly heartening to read many verbatim comments from participants in the reports saying things like: “what I have learnt today is unbelievable”, “excellent presenters” and “very informative and motivating to continue on”. “Given that our organisation’s vision is to support and inspire women to succeed in the business of dairying, we are very proud of these results.” The modules replace the organisation’s previous professional development programmes called Dairy Days and Financial Days – nationwide roadshows which ran annually from 2005 to 2014. “In comparison, Dairy Modules are developed with the members’ knowledge of on-farm training needs to ensure the training is practical, farm-focused and developed and delivered by farmers for farmers in a way in that our members prefer […]

Short gestation dairy genetics is expected to generate more than $11 million in extra milk production for New Zealand farmers this spring. LIC experienced unprecedented demand for its extended range of short gestation genetics last mating season (Sept-Dec 2014), for its ability to naturally deliver offspring up to 10 days early, bringing late calving cows forward and increasing days in milk. The farmer-owned co-operative, which breeds around three-quarters of the country’s dairy cows, had previously been researching the genetics solution for more than 15 years on behalf of its farmer shareholders. As a result, an estimated 148,613 calves are due to be born an average 7.5 days earlier this spring, and those animals will have a big impact on a farm’s bottom line says Malcolm Ellis, LIC’s SGL breeding programme manager. “Seven or eight days are pretty significant for a farm’s calving pattern and production, especially in these times of lower payout – because the sooner the cow calves, the sooner she’ll be back in the shed making milk. “Cows that calve early can provide a range of benefits to the farm but ultimately it means more money for the farmer and let’s be honest, I’m sure they could all do with a bit more of that at the moment.” The cows will also start cycling earlier and get back in-calf quicker, Ellis said, providing flow-on benefits beyond than the current calving period. He calculates the extra days in milk to be worth up to $11.2 million in milk production this spring, or $75.60 per cow based on the opening forecast milk price of $5.25 per kg milk solids (MS) and the average daily production of a cow at this time of year, 1.92kg MS per day. “Multiply that across 100 cows, and that’s an extra $7500 for the farmer. […]

In the picture -From left to  right: MP Jami-Lee Ross, Evergrande Dairy Chairman Mr Xu Wen, Economic Development Minister Hon Steven Joyce, Economic and Commercial Counsellor of the Chinese Embassy in NZ Mr Zhang Fan and Korea Trade Commission Business Manager Ms Kim Kelly. The current dairy business climate is both challenging and promising, because regulations on infant formula are still very sticky and unclear. However, Evergrande Group’s investment into GMP Dairy Limited’s business has given the company more opportunities. Evergrande Dairy chairman Mr Xu Wen has mentioned before the group, which had turnover this year of 131.5 billion Chinese Yuan and has 475 billion Chinese Yuan in assets, was attracted to invest in New Zealand because of its strong reputation for food safety. Evergrande has a large team in China to provide innovative marketing and distributing strategies, which has given GMP Dairy Limited more confidence in developing the China market further. On the 12th of June, 2015, GMP introduced their premium infant formula brand, Opobaby, at the Aotea Centre, Auckland Town Hall. Economic Development Minister Hon Steven Joyce, MP Jami-Lee Ross, Economic and Commercial Counsellor of the Chinese Embassy in NZ Mr Zhang Fan, along with Evergrande Dairy Chairman Mr Xu Wen officially launched Cowala Superpremium Opobaby Infant Formula. Evergrande Group is a massive Chinese conglomerate, which started out in real estate and has diversified into a range of other businesses including fast moving consumer goods. In October, Evergrande launched its infant formula brand Cowala in China where it made its first appearance in a Chinese Super League football match when the successful Guangzhou Evergrande team, part-owned by Alibaba boss Jack Ma, wore Cowala baby formula-branded shirts. The team officially launched the new Opobaby brand in China after a match late last month. A unique competitive point of difference […]

Synlait Milk, the Canterbury-based dairy processor, has announced a new partnership with US baby products manufacturer, Munchkin Inc, that could offer its 161 farmer suppliers a chance to earn well above the normal payout. Munchkin, a privately-held Californian company known for designing, manufacturing, and distributing innovative infant and toddler products, is planning to launch a new Grass Fed branded retail-ready infant formula into the United States and China that will be manufactured exclusively by Synlait. Synlait managing director John Penno said the partnership would help the dairy processor reduce its exposure to China. “We are cognisant of ensuring our infant formula business does not become overly reliant on the China market, and so Munchkin, with its focus on the United States market, is a potentially important addition to our growing portfolio of retail-ready infant formula customers,” he said in a statement. The raw milk used to manufacture the unique infant formula is subject to a new Grass Fed standard which requires cows to be exclusively grazed on a pasture and crop-based diet, with no grain feeding or feed not grown in New Zealand. Farmers will be independently audited to ensure they stick to the standard. Munchkin chief executive Steve Dunn said the company’s forecast gross revenue for the 2015 financial year was over US$300 million, and he expected the new Grass Fed infant formula business to contribute significantly to its bottom line over time. Synlait is looking for up to 25 suppliers, depending on size, to join the Grass Fed standard. The carrot is a premium for their milk, above the $5.50 per kilogram of milk solids the company has forecast as its farmgate milk price for next season. This season’s milk price is expected to be between $4.40/kgMS and $4.60/kgMS due to continued low global dairy prices. Synlait won’t reveal what that […]

The key risk for farmers during this year’s June 1st Gypsy Day is ensuring that stock are accurately identified and tracked, says Michael Lee, Principal with Crowe Horwath in Invercargill. One of the biggest days in the dairying calendar, Gypsy Day marks the start of the new season when farms are bought and sold, stock is transferred to new owners and new sharemilking contracts are signed. This year it will again fall on a Monday public holiday. “Stock is the second-biggest investment for farmers after the farm itself,” said Mr Lee. “Farmers need to keep meticulous records of stock movements in order to make sure there is no confusion over ownership.” Mr Lee said technology developments meant there were now a number of stock-tracking options available, utilising EID tag systems. Farmers using Protrac provided through LIC – the dairy farmer-owned services co-operative – could access the software’s herd recording and herd management functions and identify stock easily by running them through the milking race, he said. Alternatively, farmers could invest in a scanning wand or hire one together with an expert, to monitor and confirm the identity of the stock, he said. “LIC also has a new stock management app in development, which will download scanned in numbers onto your phone,” said Mr Lee. Another major risk factor for farmers to consider was that a new farm would be likely to need new employment contracts for sharemilkers and other staff. “All employees must have a signed employee agreement before they start, otherwise the 90 day trial period is null and void,” he said. “The 90 day agreement can only be used for new employees. And every agreement should ideally be tailored to each worker and capture issues such as accommodation and other allowances.” In addition, in the light of increased […]