DairyNZ attacks economic report – but has no problem with the NZIER’s work which dairy people commission

DairyNZ chief executive Ian Mackle should have done a bit more thinking about the implications before he dismissed an economic report as an inaccurate, trivial attack on farmers.

He was assailing the credibility of a recent NZIER report which (he said) trivialises the significant role the dairy sector plays in New Zealand’s economy – and fails to look at the specifics of the Government’s freshwater package.

He made special mention of the report having been commissioned by Fish & Game, Forest & Bird and Greenpeace.

And he huffed that it was less an economic report and more a high-level commentary on the dairy sector’s role in the economy – and painted an inaccurate picture. Continue reading “DairyNZ attacks economic report – but has no problem with the NZIER’s work which dairy people commission”

Commodity export prices provide some cheer, even for those downcast Fonterra farmer-suppliers

NZ lamb export prices have hit their highest level since 1982. That mightn’t be good news if you are contemplating a roast leg of lamb for the barbecue this weekend.

But for NZ meat producers that, and the high prices being earned in markets like Japan for beef, suggest it’ll be a good season for NZ’s meat producers.

This is despite the global uncertainty stemming from trade wars particularly between China and the US, two of NZ’s main markets. The outbreak of swine fever in China is likely to sustain demand for other meat such as beef.

Continue reading “Commodity export prices provide some cheer, even for those downcast Fonterra farmer-suppliers”

Testing times for NZ’s dairy industry: Can its leaders find the right formula?

Dairy giant Fonterra has taken a hammering in the media in the wake of its disclosure it expects to report a full-year loss of as much as $675m and won’t pay a dividend as it slashes the value of global assets. It will be the second annual loss in a row.

Investment guru Brian Gaynor in the NZ Herald argued Fonterra’s farmers have drained the co-op almost dry in terms of milk prices and dividends and have left it in an extremely vulnerable position. Earlier another Herald columnist, Matthew Hooton, contended NZ has put all its milk in one pail – in a company with inadequate governance and capital to match its aspirations.

Continue reading “Testing times for NZ’s dairy industry: Can its leaders find the right formula?”

Farmers are getting more milk from each cow – they deserve a much better performance from Fonterra

This   is the second  chapter  in the  woes  of  Fonterra, and  behind  it   the  dairy industry,  on  which the  New Zealand  economy is  so  dependent.

Point of Order   listed  some of those  woes    last  week.  Now, in the  wake  of  the latest  revelation,  Fonterra  will  have to absorb a loss of between $590m and $675m for the current financial year.

Critics   of the industry have  sprung  to the attack:  Minister of Regional Economic Development Shane Jones is calling Fonterra’s management “corporate eunuchs” and labels Fonterra’s board as “grossly inept”.

Greenpeace    has  a  simple solution:  halve  the   dairy herd, a move that would cost the country $8.3bn in lost exports, and lower the standard of living  of every  New Zealander.

Jones’ ideas  to resolve  Fonterra’s financial  difficulties  are hardly  more  realistic.

Sacking the board  won’t   solve anything:  nor  trying to  recruit  a new  executive team  (though it might be worth  asking Chris Luxon  if he’d take a look). Continue reading “Farmers are getting more milk from each cow – they deserve a much better performance from Fonterra”

PM states the obvious about flagging Fonterra but RNZ fails to press her on the “what if” matter of a foreign takeover

The most important bit of government policy we gleaned from a Morning Report interview with the PM today is that  the government will not intervene to ensure the financial wellbeing of Fonterra and its 10,000 or so farmer suppliers because there’s no suggestion of it failing.

But if it does fail – what then?

A big dollop from the Provincial Growth Fund, perhaps.

After all, the PGF became the prospective source of financial help for the crippled Westland Milk before China’s Yili dairy company came to the rescue by taking it over.

Except that Shane Jones, the Minister in Charge of PGF Handouts, makes no secret of his unkind thoughts about Fonterra’s managers.

But Radio New Zealand’s Susie Ferguson did not press Jacinda Ardern on the question of what the Government would do if the country’s biggest company DID teeter on the brink of collapse – or was about to be sold to a foreign company. Continue reading “PM states the obvious about flagging Fonterra but RNZ fails to press her on the “what if” matter of a foreign takeover”

Fonterra’s financial wellbeing and global auction prices are among the dairy sector’s challenges

It’s shaping   up as a  tough  season  for  New Zealand’s  dairy farmers,  who  once  proudly  wore  the  label  of  the  “backbone of the  NZ  economy” , earning  by far the  largest  share of the country’s  export income.

So  what  are  the  problems  confronting  the industry?

Uncertainty in markets, for starters.   Prices  at the latest  Global Dairy  Trade  auction this  week slid  downward for  the fifth  time in  six  auctions.

The  Chinese  economy is under pressure   as  Trump steps up  his tariff  war.  Brexit  is a  threat which  could disrupt  NZ’s  dairy trade to  both the UK and EU markets.

At  home the big  question is whether  Fonterra,  after  racking up  a  $196m  loss last season,  can claw its  way back to profit. Continue reading “Fonterra’s financial wellbeing and global auction prices are among the dairy sector’s challenges”

O’Connor travels to the US – and avoids (for now) the turbulence from climate change policies

Agriculture  Minister  Damien  O’Connor   is in  Washington  for   what he calls “timely”  talks with  his    counterpart,  US  Secretary of Agriculture  Sonny Perdue.

He is probably relieved to be  out of the country  while the rural backlash against  the  government’s  scheme to  impose charges  on agricultural   methane emissions  gains  momentum.

The Fonterra  Shareholders  Council,  calling the government’s proposed 2050 methane reduction target  “catastrophic” for NZ,  contends

“… a target which potentially requires almost half of the livestock farming sector to disappear within 30 years would necessitate a rate of change which does not represent a fair and just transition for rural NZ.”

The council  points out  NZ livestock numbers form only a tiny fraction of the 1.6 billion cattle, 1.4 billion sheep and 1.2 billion goats farmed globally.

Point of  Order  will  be surprised  if  O’Connor  has  the nerve to  ask   when   the  US  Agriculture  Secretary   is planning to  impose  any  target  on the reduction of  agricultural emissions in  his   bailiwick.

Yet  the  NZ  cattle  herd  at  just  over  10m  is  just  a fraction of the  95m  in  the  US  herd.

O’Connor    made it  clear  before  he left  NZ    his   goal  in  Washington  is

“ … maintaining good relations as a key component of keeping two-way trade flowing, which in the year ending  March 31 was around $18bn”.

Whether he  will  raise   the issue of  a free trade agreement with the  US is  also  not  clear  but  we would think   if it is, it will only be in  passing.

O’Connor  himself  said  his meetings   (in  Washington)

“ … will provide a timely opportunity to talk about NZ’s expertise in agriculture, our priorities, and the work of the Primary Sector Council and its development of a vision for NZ’s primary sectors“.

Maybe   he will be  able to persuade Perdue  to   come to  NZ   to  find out  why  this country  is  trying to be  world  leader in   reducing   methane  emissions.

Point of  Order  thinks  O’Connor   might have better  luck   when he  joins other primary industry leaders at Stanford University for the annual Te Hono Stanford Bootcamp.

The  Bootcamp is an intensive programme, bringing together a diverse group of around 70 chief executives and leaders who are committed to the innovation and transformation of NZ’s primary sectors.

“We will be immersed in discussion about strategic change, alongside a range of experts from Stanford University.  Moving the vision to action will require stronger government and industry partnership than ever before.

“It’s an ideal opportunity to work through the Primary Sector Council’s vision, its implications and its delivery with the most senior and influential voices from across NZ’s industry”.