Our dairy provinces are reverberating to the news that prices soared at the latest Fonterra GDT auction. The prosperity this brings to the regions will provide a significant counterbalance to the loss of earning power in the tourism sector because of the pandemic.
The average price at the auction climbed 15% to $US4,231 a tonne but, more importantly, the price for wholemilk powder, which is the key to the payout to farmers,rose an astonishing 21% to $US4,364 a tonne. Butter was up sharply to $US5,826 a tonne, or 13.7%.
Overall, the increase compares with a 3% rise at the previous auction two weeks ago.
The main dairy companies have recently narrowed their forecast payouts to farmers for the current season to above $7 per kilo of milk solids. Continue reading “Dairy price lift will give fillip to regional economies and fortify Fonterra’s confidence in pressing on with capital restructuring”
Covid-19 has delivered a body blow to NZ’s international tourism industry and bruised university incomes from foreign students — but NZ’s primary industries are rising to the challenge and yielding impressive returns week by week. As a consequence, NZ’s economy is not sustaining the kind of Covid damage which – for example – lowered the United Kingdom’s GDP by 9% last year.
Defying predictions, the dairy sector has started the year strongly. Moreover, lamb markets did not move down as expected but have marginally improved while demand for beef from China has been strong. Log returns are trending up.
On the other hand, in horticulture, the results so far have been variable: for example cherry orchardists’ crops were devastated by the weather.
For primary exporters the problems have come from different quarters, first in logistical challenges and second from the currency which has moved up to 72USc. Nevertheless, the basic message is that the rural economy has helped to fill the gaps left by the destruction caused by the Covid-19 pandemic. Continue reading “Rising world market prices for our dairy products give all of NZ cause to cheer”
Is the Climate Change Commission’s draft proposals to meet NZ’s emissions targets as radical as right-wing commentator Matthew Hooton contends, or entirely “doable” as leftie Simon Wilson suggests?
The draft budgets call on the government to ensure the country emits on average 5.6% less than it did in 2018 every year between 2022 and 2025, 14.7% less for every year between 2026 and 2030 and 20.9% less for every year between 2031 and 2035. This is designed to get NZ to zero net carbon emissions by 2050 to avoid catastrophic climate change.
Prime Minister Jacinda Ardern, who has said dealing with climate change is her government’s “nuclear free moment”, says she will introduce new policies and a new international climate target to meet the shrinking carbon budgets set out by the CCC.
For the dairy industry the challenge looks daunting: herd numbers will have to be cut by 15% by 2030, assuming selective breeding reduces biogenic methane emissions by 1.5% by the same year. From 2025, 2000 hectares of dairy land would be converted to horticulture annually. Continue reading “Why our dairy farmers should take their own climate-change initiatives rather than wait for govt regulations”
In its Thursday editorial the NZ Herald speaks an important truth: “Investment important to stay on track”. This won’t have startled its more literate readers but in its text it notes the strong result in the latest Global Dairy Trade auction, which prompted Westpac to raise its forecast for dairy giant Fonterra’s payout to its farmers to $7.50kg/MS this season.
“If this turns out to be correct, it will represent the highest payout in seven years for a sector of the economy that is arguably still NZ’s most important, even before international tourism was effectively suspended by Covid-19”.
The Herald editorial goes on to make the case that despite the buoyant mood, the only realistic way for NZ to remain in such solid shape in the post-Covid era is through stronger business investment.
This is the theme which Point of Order set out earlier this week when it contended Fonterra should go hard with this seasons’s payout to encourage investment by its farmer-shareholders in expanding production. Continue reading “Stronger business investment – by farmers, too – is essential for NZ’s post-Covid recovery”
Dairy prices increased by 3.9% across the board at the latest Fonterra global auction. The lift followed rises of 1.3% and 4.3% in the December auctions which took dairy prices to their highest level in 11 months, defying those analysts who believed Covid-19 had disrupted dairy markets.
In the latest auction WMP rose 3.1% to $US3,300 a tonne, its highest level in 12 months. Other significant movements included a 7.2% lift in the price for butter to $US4,452 a tonne.
ANZ agricultural economist Susan Kilsby said the auction results came as a great surprise and as a very positive start to the new year. She contends it strengthens the likelihood Fonterra’s milk price payout this season will be closer to the higher end of the range Fonterra is currently forecasting.
The big co-op in December narrowed the range to $6.70/7.30kg/MS.
So what are the chances, if the trend evident in recent GDT auctions continues, of the payout going even higher? Continue reading “Here’s the chance for Fonterra to play a leadership role and spur the others with its milk price”
A benefit of Brexit is that Britain will have more scope to make better policy choices. That doesn’t necessarily mean they are going to be made.
Continue reading “Big problem if Britain’s climate change numbers don’t add up. Bigger if they do”
The dairy industry has recovered some of its confidence, as its role as the backbone of NZ’s export structure has moved into sharper relief in the Covid-19 pandemic.
Rabobank’s latest quarterly survey of farmer confidence says it has improved from minus 32% to minus 23%, with demand for NZ dairy products holding up well since the previous survey in September.
The dairy industry over past seasons has been the target of urban critics for so-called “dirty dairying”, climate change warriors who want a reduction in methane emissions, and the government, which is implementing new freshwater regulations. Internally the industry was stricken with the financial woes of Fonterra.
Even now as the industry absorbs the evidence for greater confidence, it is not without strategic concerns. Most of these are focused on its Chinese markets following the problems being encountered by Australian exporters in the wake of retaliatory action by the Chinese government. Continue reading “Dairy farmer confidence is improving but there are challenges in export markets”
Matt Ridley – former science editor of The Economist and prolific popular science writer – has tackled a slippery subject in his book ‘How Innovation Works’. He succeeds in painting a vibrant and at times counter intuitive picture of this process. One that policy makers and public alike can usefully ponder.
A major contribution is demystification. He trashes the model of a tortured genius locked in the lab. Innovation comes from lots of people, competing or in concert, working by trial and error, sharing or stealing knowledge. It occurs when the conditions are right, because it bubbles out of the accumulation and testing of knowledge (hence the prevalence of simultaneous invention from calculus to light bulbs). ‘Ideas having sex’ is his metaphor of choice. And this tends to happen where innovators can gather and experiment free of restrictions.
Continue reading “Innovation works very well indeed”
Two encouraging signals from the dairy industry this week underlined its strength as the backbone of the NZ export economy, all the more vital since the Covid-driven collapse of the international tourist industry.
First came news that prices strengthened at the latest Fonterra global dairy trade auction, with the average price reaching $US3157 a tonne. Prices for other products sold were mixed, with gains for butter and skim milk powder, but falls for cheese and other products.
Analysts said it was positive to see good, strong demand from China. The price of wholemilk powder which strongly influences the level of payout to Fonterra’s suppliers moved up 1.8% to $US3037 a tonne.
ANZ agri-economist Susan Kilsby said there had been some concerns that stocks may be building in China, so it was really positive to see good, strong demand from that market for the dairy industry. Continue reading “A2 Milk has lost some of its sharemarket gloss but has become a formidable dairy player with a bright outlook”
Kiwi cheese-makers will be wondering which advice they should take from chef Simon Gault.
This week he was saying they should stop trying to imitate brie and gouda and focus on producing uniquely New Zealand styles.
His advice was given to people watching a webinar arranged by the European Union Delegation to New Zealand, an outfit committed to promoting the EU’s increasing use of geographical indications to protect European products.
In June last year, however, Gault was singing the praises of NZ French-style cheeses.
In particular, he was enthusing about a French-style camembert made in the Nelson region.
So you don’t have to go to France to buy a cheese, he advised.
“ Bastille day is coming up – let’s buy NZ French cheese” Continue reading “It isn’t hard cheese if the EU gets its way with GIs, chef insists – but dairy exporters are likely to disagree”