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”
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”
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”
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”
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”
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”
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”
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”
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”
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”