NZ dairy industry’s biggest challenge is meeting methane gas emission targets

New Zealand dairy farmers are some of the most efficient producers of dairy milk in the world, and while the past year has been tough for many industries, the overall picture for dairy has been overwhelmingly positive.  Returns to farmers have been at record levels,. along with the economic contribution to NZ.

Dairy  export receipts are  nudging $20bn  a  year, up  from $4.58m  in 2000.

But  now  the  industry  is  facing  its biggest  challenge.

Dairy  cattle are  responsible  for  22% of  NZ’s emissions. Can  NZ  meets  its methane  emission  targets  without  slashing  the   size of the  national  dairy  herd?

The  threat of  global warming  has  become all too plain  to  New Zealanders  in recent weeks and the pressure  on   the  government to  act  is  mounting.

It  can’t   dodge  making  decisions  on  the  Climate  Change Commission  report  it  received   earlier this  year. But  its  proposals  could  have  a  severe  impact  on   the  dairy industry. Continue reading “NZ dairy industry’s biggest challenge is meeting methane gas emission targets”

How the govt’s ban on oil and gas exploration has tightened supplies – and resulted in NZ importing 2m tonnes of coal

New Zealand  has   been   facing some of the most challenging energy market conditions in over a decade, with simultaneous shortages in natural gas and hydro-electric generation. The  consequence  has  been  sustained  high  wholesale electricity  prices,   creating issues for  electricity retailers without their  own  generating  capacity, to the point  where Electric  Kiwi – for  example – says it  is turning to  focus on  the Australian market.

Some  market-watchers  contend the  problems  trace  back  to  the  decision  of  the  Ardern  government to  ban  any  further  offshore exploration for oil  and gas.  That  drove  away   not  only  oil exploration companies   but also  the offshore  rigs   needed   to  complete  planned drilling  programmes.

Whether  that  is the  case  or  not, some  of  the  big generators  like  Contact  Energy  and  Genesis  are  said by  critics to  be  creaming  it – but  from  their  point of  view,  they  are   doing  their  utmost  to meet  the  high  demand  for  electricity.  Their  shareholders certainly  should be  happy   with the  healthy  margins  they are  reporting  while  wholesale  prices remain very  high. Continue reading “How the govt’s ban on oil and gas exploration has tightened supplies – and resulted in NZ importing 2m tonnes of coal”

Grimes’ grouches with the effects of govt policies on Kiwis’ wellbeing may sting more than the Groundswell protest

The  Ardern  government may  have been  stirred,  but  it  wasn’t  shaken,    by  the  nationwide protest  by  farmers  last  Friday.  And no matter how  far  the protest may have  turned   heads   in  the  rest  of  the  population,   it  leaves  farmers  no  further   advanced  in  persuading  ministers  to  modify  or  revise  the  policies  which  their  action targeted.

So  if  ministers  won’t  back  down  on their  environmental reforms or their climate change  policies,  where   can  the  farmers  go?  Parade  through  Wellington  to  Parliament?   Mount a 24-hour  vigil  in  Parliament  Grounds?

So  far  there has  been   silence  from the  originators   of  the   Groundswell  and if  there  is  a  new  sense of  unity  in  the  rural regions,   it   has yet  to  be  channelled into the  kind  of  pressure that   automatically  achieves  change.

Farmers may be disenchanted with being  told  how to farm, but the  evidence of climate  change  has  been  rammed   home in  the  provinces  in  recent  days hard  enough  to  convince  churlish  sceptics  of  the  need  for urgent  climate  action. Continue reading “Grimes’ grouches with the effects of govt policies on Kiwis’ wellbeing may sting more than the Groundswell protest”

McBride puts his stamp on Fonterra’s capital restructuring proposals

The big  dairy  co-op  Fonterra  has  moved to make  its  capital  restructuring  proposals  more  palatable  to  its  10,000  farmer-shareholders as  it  seeks to  slash  the  drastic entry  cost  to  become a  new  supplier.

Faced  with  a  future where  total milk production  is  flattening, Fonterra  needs    more  flexibility in    its  capital rules, the  most  burdensome of which has been the compulsory requirement to invest huge sums of capital just to supply.

The  revisions now   being  put  forward bear   the  stamp   of  chairman Peter  McBride, who  in an earlier role  successfully carried  the  kiwifruit  growers in   Zespri through   a  similar  capital  restructure.

McBride, after  taking  the chair at  Fonterra,  soon realised  the need for  change in the one-size-fits-all compulsory capital structure  requiring all shareholders to hold shares on a 1:1 basis. It  has become a  key factor in farmers deciding to leave.

Working  over   feedback  since  the first reform proposals were  outlined in  May,  Fonterra’s  board found several  themes emerging,  and   now sees  the need to  re-shape  several of  them. One of  the  main  worries revealed  in  the  initial  consultation related  to  the farmer-only market and its impact on the share price.

Changes being considered to the preferred option initially put forward  include adjusting the proposed minimum shareholding requirement for farmers and enabling share milkers and contract milkers to own shares.

A minimum shareholding requirement of 33% of milk supply, or one share per 3kg/MS, could be required. The preferred option had previously been 25%.

The entry timeframe for farmers to join the co-op could be extended from five to six years, while current shareholders would be given more time to exit – up to between 10 and 15 years from five years. Continue reading “McBride puts his stamp on Fonterra’s capital restructuring proposals”

Rising prices raise the prospect of householders bringing Ardern down from the clouds of adoration

The Labour  government has  floated  skyward on  a  cloud of public  adoration  for  many months  now and,  given the  conviction of  those  who  believe Jacinda Ardern  can  do  no wrong,  may  do so   for  as  long again.

On  the other  hand, harsh  realities  may  be  hitting  home,  at least  in  some  households.

This  week  Statistics  NZ  reported consumer prices rose a massive 1.3% (quarter on quarter) in the June quarter.  This was stronger than the  expectation of a 0.9% lift (3.0% year on year).

Annual CPI inflation rose to 3.3%, breaking through the top of the Reserve  Banks target band, and a post-2008 high.

ANZ  Bank  economists  had  one  word  for that:  “Monstrous”. Continue reading “Rising prices raise the prospect of householders bringing Ardern down from the clouds of adoration”

Eroad is on the right track – but NZ needs many more such companies to make up for the regulatory drag on dairying

According  to   Fonterra  executive  Marc  Rivers, NZ  has  reached  “peak milk”  and  is entering the  era  of “flat milk”.

It’s  a  warning  particularly  apposite  as  farmers  throughout  the  country  mount  a  protest against a  government  that  has  saddled them with unnecessary regulation  and other burdens as  they work  at producing  the exports  which  are NZ’s  mainstay.

The  broader  question  is   where NZ can turn to  lift or  even maintain  current living standards.

Some  would see   a  salvation  in  the  hi-tech  sector.  Companies  like  Xero, founded  in 2006   by Rod  Drury,  have shown  the  way. It  surpassed  more  than  1m global  customers  in 2017, employs  more than  3000  people,  and  is  a  leading  company  on the  Australian  stock exchange.

Remarkable  tech  companies listed on  the NZX include  Pushpay,  Serko, Gentrack, Enprise, Vista, Smartpay. Continue reading “Eroad is on the right track – but NZ needs many more such companies to make up for the regulatory drag on dairying”

Over $1bn is invested in renewable energy but meanwhile NZ must import coal to generate electricity

Two   of  the  Labour  government’s  major  policies are  to reduce  carbon  emissions  in the  battle against  climate change, and  to   produce 100% of  NZ’s  energy from renewable sources.

So   are those  policies   going?

Reports  this week make  it  clear:  poorly.

So  badly,  indeed, that  Energy  Minister Megan  Woods  could be  living  in  la-la  land.

This  was  her  response  to RNZ’s finding  that in the same year  the government declared a climate emergency, imports of an especially dirty type of coal from Indonesia topped a million tonnes for the first time since 2006:

“This government is not been [sic] satisfied with this reliance on fossil fuels and last year we backed up our goal to have a fully renewable electricity grid with a $30m investigation into solving the dry year problem.

“The NZ Battery project is investigating the country’s potential for pumped hydro, as well as comparator technologies, and is progressing well but will take time.” Continue reading “Over $1bn is invested in renewable energy but meanwhile NZ must import coal to generate electricity”

Money is tight for some things on Ardern’s watch – her Defence Minister has signalled a fiscal assault on military spending

Labour  Defence  Minister  Peeni Henare  has  signalled the  government  is  planning  to  trim   the defence  budget.  He says Covid-19 means the Budget is now much tighter and defence will look different under Labour than it did under its coalition with NZ First.   

This  comes as  Australia, New Zealand’s primary ally,  is pursuing a defence strategy aimed at countering the rise of China, while warning that Australia faces regional challenges on a scale not seen since World War II.  

Australia is  re-equipping  its  armed  forces  with a  10-year  budget  of  $A270m. But  for NZ, the  planned $20bn outlay on  new defence equipment  is the latest Covid-19 casualty, with a range of options to scale it down now before the finance minister.

The major investment in a range of new military hardware and upgrade was announced by former Defence Minister and NZ First MP Ron Mark in 2019 .

Henare says that when he got the job last year, Prime Minister Jacinda Ardern “was quite clear that she wanted Labour, us, to put our fingerprint on defence”, but what that looks like would be influenced by Covid-19. Continue reading “Money is tight for some things on Ardern’s watch – her Defence Minister has signalled a fiscal assault on military spending”

Farmers contribute much to NZ’s balance of payments and our standard of living – but some ministers don’t grasp this reality

Global  prices for New Zealand products  from the  agricultural sector, as measured on the ANZ Commodity Price Index,  have risen for eight consecutive months to hit a  new  record in May.  Prices on the world index  are  up 18% this  year, or 17% in  local currency terms.

Some  economists are predicting more  rises  are  in  store  this  year.

The  gains  have  gone  some way in the  balance of  payments to offset big losses on  the  foreign  currency  front  from the overseas tourism and   international education sectors.

Westpac senior agri-economist Nathan Penny says being a food producer has been positive during Covid-19 as people still need to eat in times of crisis.

NZ   has  also  benefited because its key Asian markets handled Covid-19 well and got their economies back up and running quickly, ensuring resilient demand for our products that is pushing up prices. Continue reading “Farmers contribute much to NZ’s balance of payments and our standard of living – but some ministers don’t grasp this reality”

Yes, we could try to be world-beaters in tackling climate change, but the reason for wanting to set the pace is unclear

Ministers in the Ardern  government  are getting to grips  with  the  Climate Change  Commission report  which,  if  adopted  in  full, will  reshape the  NZ way of life. Some say if all the  recommendations  the  commission  has  framed  are  applied, it will put NZ in the  vanguard  of the  battle  against global warming.

Just  why this country should want to be  among  the  front-runners,  and  possibly  the first,  to  meet  its  commitment  under  the  Paris  agreement to reach zero carbon emissions   by 2050  is  not  exactly  clear.

Nor may  there  be any  deep  conviction  that  the  Ardern government has  the  capacity to deliver  the   most  appropriate  measures  to  meet  its  climate  targets, given  its  long  list  of  policy  failures  including  Kiwi  Build, wiping out homelessness, eliminating child  poverty, and improving mental health, not to  mention the  Covid  vaccination  rollout.

NZ’s CO2 emissions are considerably less than those in the US and Australia (which is among the highest in the world). Transport makes up 33% of NZ’s “long lived” gases. Continue reading “Yes, we could try to be world-beaters in tackling climate change, but the reason for wanting to set the pace is unclear”