A report on the NZ Farmer segment of Stuff caught the eye of Point of Order. It led off with a quote from respected economist Cameron Bagrie.
“Thank God for farmers….They’ve felt beaten up over the past couple of years, well, thank God agriculture is still the backbone of NZ.The story of the farming sector at the moment is looking relatively good compared to what we are seeing across a lot of the other sectors.Yes, we are seeing pressure on commodity prices, but the bottom line is the world has got to eat.“
It’s a theme which Point of Order has canvassed in several posts over the past fortnight as the coronavirus pandemic has devastated other key sectors of the economy, including tourism and hospitality.
On March 26 the contention was:
“After the lock-down the economy’s recovery will be dependent on dairy farmers and their milk”.
And on March 29:
“What New Zealanders will have to absorb in the period the country is locked down is that their standard of living will be permanently depressed unless those vital export industries — dairy, meat, horticulture, fishing — are given every encouragement and stimulus to expand production in the years to come. Dairy farmers are not the enemy, as climate change warriors make out. They could be our saviour in the years to come”.
It may be, as some pundits argue, that NZ will have to find new ways of working. It may have to re-establish local industries, rather than rely on low-cost overseas suppliers— yet that all takes time, not to mention capital.
In the immediate year or two ahead, NZ’s export income will be heavily dependent on the country’s primary industries.
For patriotic New Zealanders, it’s a relief to know the giant co-op Fonterra will inject $11bn into the economy this year through the milk price it pays to its farmer-suppliers.
The co-op, by some yardsticks, is NZ’s biggest company, with 20,000 employees. Alongside it are several other major companies processing NZ milk (Westland, Open Country, Tatua, Oceana) as well as a long list of specialist producers.
And though Fonterra had a difficult year in 2019, posting its biggest loss ever, it reported a more positive interim result last month (total ebit $806m, up from $312m, net profit $501m up from $72m).
Yet if Fonterra’s performance leaves one cold in the current crisis, how about this insight into how the co-op has found a way to provide its own specialist assistance?
It has an ethanol business Lactonol through which it is helping to keep people safe during Covid-19 by making more of its high-grade ethanol available to companies who use it in the production of sanitiser products, including hand sanitiser.
This comes as the need for sanitiser grows exponentially throughout the country.
Fonterra is now manufacturing an additional 220,000 litres, on top of the 375,000 litres it has already made available to sanitiser manufacturers in recent weeks, and it is now looking at all viable options to increase ethanol production to help with supply of sanitiser in the weeks and months ahead.
On top of that, Fonterra has been working with its customers who use ethanol but don’t make sanitiser, to see if stock can be redirected to create more supply. Working closely with long-time customer, fuel company Gull, the co‑op has been independently testing Gull’s ethanol stock originally destined for fuel to determine where it’s suitable for use in sanitiser.
With the support of Gull, 250,00 litres has been independently tested, and is now approved for sale to sanitiser producers via Fonterra’s distribution network.
To date, an additional 403,000 litres of ethanol stock has been redirected towards sanitiser production, all thanks to the support of Fonterra’s customers. In total, 1 million litres of ethanol has been redirected for sanitiser, which is the equivalent of 5.7 million 250ml bottles of hand sanitiser.
Ongoing work to achieve this has been made possible by the efforts of teams across the co‑op and with the help of Fonterra’s national distributor Axieo.
The head of Lactanol, Peter Motion, says it’s the socially responsible thing to do and really needed right now, especially those people and businesses on the front line of the country’s Covid‑19 response efforts.
“We will continue to work with our distributor and transport providers to improve supply chain efficiencies and increase the weekly volume available to producers from less than 85,000 litres a week to more than 250,000 litres a week.
“Fonterra is also continuing to work with the government to identify and prioritise industries that need sanitising products as they will be a necessity for all essential services.
“We are currently in the final stage of the process to make our own quality sanitiser product to ensure our people have what they need while at work.”
Production is scheduled to start this weekend.