Dairy industry emissions depend on who does the measuring but Greenpeace presses for a culling of the herd regardless

Greenhouse  gas  emissions  from dairy farming  have  reached  an all-time  high – but emissions from the dairy cows themselves have dropped year-on-year.

Confused?

Well  you  might be.  And  to  many  it  might not matter  much, but  for  NZ’s  most important  export  industry, it looms  as  a  vital issue.

The  calculation depends – apparently – on who collects the  statistics. The first  is from Statistics NZ, the  second  from the Ministry  for the Environment.

Inevitably, the industry says the  second is the better measure because statistics which show dairy farming emissions have increased capture too many irrelevant categories.

Radio  NZ  reports  Stats NZ figures show dairy cattle farming emissions rose 3.18% (up 546.2 kt CO2-e to 17,719.4 kt CO2-e) between 2018 and 2019, the most recently reported year. This is the highest figure on record, dating back to at least 2007.

The Stats NZ figures count all emissions produced on dairy farms, regardless of what the emissions stem from. Continue reading “Dairy industry emissions depend on who does the measuring but Greenpeace presses for a culling of the herd regardless”

The world is keen on our dairy products, which is great for our economy – but what happens when we start culling the cows?

Although  global  trading patterns  are still recovering from the  Covid  pandemic, the  positive  outcome   for  New Zealand   is  that  it  has  strengthened  demand for  the  kind of foodstuffs we produce.

In particular  the   dairy  trade is booming  and  though  the current  production season is beginning to tail off, Fonterra’s latest global dairy auction showed  demand, far  from  falling off, is  still  very  strong,  with  prices  for  whole  milk  powder   51%  higher  than at the  level they were at  this time  last  season.

Dairy products are the country’s largest commodity export and Fonterra estimates milk payments to its 10,000 farmer suppliers for this season would contribute about $11.5 billion to the economy.

The  encouraging  factor   for those  producers  is  that  there  is  every sign  the   high prices  being  earned  at  present  will  be  sustained  into  the  next  season.

Last month, Fonterra raised its forecast milk price for this season to between $7.30 and $7.90 kg/MS, with a mid-point of $7.60.  Some  analysts  are   forecasting $7.70 for this season, ahead of Fonterra’s mid-point.For next season, the  forecasts  range between $7.30   and  $7.50.

While the global dairy trade price index slipped 0.1% from the previous auction a fortnight ago, prices for whole milk powder, which has the most impact on what farmers are paid, gained 0.4% to an average US$4097 (NZ$5713) a tonne.

What  may  be  an irritant  for  the  industry, currency  movements  are  taking  some  of the  gloss  off the  prices  being earned.

With the rising Kiwi currency, the latest auction brought overall prices -2.0% lower in NZ dollars. The key WMP and SMP prices were virtually unchanged in US dollars. The best performer was cheddar cheese, up +1.2% in US dollars but even that was not enough to record a gain in NZD.

The   strong  market  is largely driven by China where a wealthier population and an increased focus on health and wellbeing after the Covid-19 pandemic is stoking demand for better nutrition.

North Asian buyers were back in force, taking up their usual positions as the major buyer.

At the latest auction, 99% of the whole milk powder on offer was sold. There were slight  downward movements  with both of the cream group products. That was  attributed  in part to  the extra volume of butter on offer.

Fonterra  indicated previously it is producing more butter to take  advantage of the  high return for it. That was  sensible,  with butter topping $US5,100  a  tonne.

Given the  outstanding  work  of  the  dairy  industry,  how    will  the  government  react  when  it   comes to   deal  with  the  Climate Change Commission’s  proposal  to  cut  dairy cow  numbers  by  15%?

Rising world market prices for our dairy products give all of NZ cause to cheer

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”

Why our dairy farmers should take their own climate-change initiatives rather than wait for govt regulations

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”

Dairy farmer confidence is improving but there are challenges in export markets

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”

Dairy data should delight Covid recovery monitors while discouraging industry detractors

Farmers  are   back in the  frame  as  the  backbone  of  NZ’s  export economy,  after the  Covid-induced collapse of  the foreign  exchange earning capacity  of the  tourist  and international education industries.  But  it  is not  only  the  rural  industries themselves which  are  scrutinising bulletins  on  the  prices  being  earned  abroad  for  commodities.  Those data have  become a  vital  item  for  New Zealanders eager  to  monitor the recovery of an economy  battered  by a  one-in -100  year  event.

This  week  the  ANZ  reported  its  world commodity  price  index   had  eased  0.2%  in September as lower dairy and meat prices were largely offset by stronger prices for logs and fruit.

In local currency terms the index fell 1.3% as the NZ$ strengthened by 0.6% on a trade weighted index  basis during  the  month.

Hard on the heels  of those figures came   the  results   of  the latest  Fonterra  global  dairy   trade auction  where  the   average  price   strengthened  to  $US3143  a  tonne  and  wholemilk  powder (which  plays a  significant  role  on  Fonterra’s payout to  suppliers)  rose  1.7%  to  $3041  a  tonne.

Volumes sold were about the highest offered in 2020 and the most bidders of the year showed up for the  auction. Butter, up 8.4% to  $US3561,  rebounded  from  the previous  auction. Continue reading “Dairy data should delight Covid recovery monitors while discouraging industry detractors”

Decarbonisation is one option for Fonterra bosses to consider as they strive to make the co-op a national champion

Rabobank’s  latest   survey    of farmer   confidence found dairy farmers more upbeat about the fortunes of the agricultural economy  than meat and wool  producers.  Dairy farmer net confidence rose to -29% (-33% previously).

Improving demand is the key reason for optimism among  dairy farmers. That’s  largely  because global demand for dairy has held up well during the course of Covid-19 with many consumers opting for simple, familiar, stable food products such as dairy during the pandemic.  And   since the last survey,  Fonterra has  lifted  the lower bound of its farmgate milk price pay-out range for the 20/21 season.

Then there is  Fonterra’s  performance  under   the  stewardship of  Fonterra chief executive Miles  Hurrell,    who  has succeeded  in  turning  the  co-op’s fortunes  around   after  two   grim  years.

Now,  as  the  global  economy  stumbles  into  a  pandemic-induced  recession,  the  dairy  industry  more than  ever   has   become   the  main prop  in sustaining  NZ’s  export capacity.

The  question  is   whether   Fonterra  – as  the  major  player  in  the  industry  – can accelerate   the  progress  it  has  recorded  under  Hurrell’s  leadership. Continue reading “Decarbonisation is one option for Fonterra bosses to consider as they strive to make the co-op a national champion”

It’s been a great year for the dairy industry – now let’s see what it has done for Fonterra’s books

Despite  the  turmoil  inflicted  on  global markets,  NZ’s  dairy  industry  turned  in  a  phenomenal performance   for  the  2019-20 season,   with  export  earnings   $709m  ahead of  the  previous  year.  

And  though  the  global  market  is  finely  balanced  at  present,  the  prospect  is  that  the  industry  could  again  be  ahead  of the  pack  in  the  current  season.

Dairy farmers    deserve  the  plaudits  of  the   rest  of  the  country,  even   though  the  present   government    has  gone  out  of its  way  to   clobber  the industry  with  tough  freshwater regulations  designed to  satisfy  “dirty dairying”   critics,  despite the most polluted water  often being  found in  city and town waterways  and harbours. 

With the  loss of  foreign  exchange  from  the collapse  of  the international tourism and education, the NZ  economy is  more than ever  dependent  on the primary sector  to  increase output  for  sales  abroad.

Now,  as  dairy farmers   settle  into  the  new  season, those    who  supply  Fonterra  will be  looking   to the big  co-op  reporting  its  annual  result  on  September  18,    with  confirmation    of  its  final farmgate  milk price  for  the  2019-20  season.  This is  expected to be  $7.15kg/MS. Continue reading “It’s been a great year for the dairy industry – now let’s see what it has done for Fonterra’s books”

Dairy prices lift the gloom for farmers but their future meanwhile is being plotted by Beehive planners with a vision

Fonterra’s  boss  might have been  ultra-cautious   but  out on  the country’s dairy farms there  was a  subdued  cheer  at the  news  that the wholemilk powder price had leapt  14%  at  the  latest  GDT  auction..

The  GDT  index  rose  8.3%,  the biggest  rise   since  November  2016,  and the fourth   successive gain.   Fonterra’s  CEO   Miles  Hurrell  says  it’s  “really  surprising—no-one  saw a number of  this  magnitude”.

It dispels  some of the   gloom generated  by the  Covid-19 pandemic.  And it generates  the  hope  that  Fonterra pitched  its  forecast  for  the season too  low,  in  the  broad range  from $5.40kg/MS  to $US6.90.

Hurrell  suggested   suppliers    should not  get “too excited” by the WMP  result. Fonterra had put out excess product for immediate shipment, which resulted in “a bit of a flurry in that first event” ..

“[This] suggests to me that some of our customers out there had caught themselves short – had seen Covid having an impact on their business – but things had bounced back faster than what they’d realised I think”. Continue reading “Dairy prices lift the gloom for farmers but their future meanwhile is being plotted by Beehive planners with a vision”

Dairy farmers will be in the vanguard of NZ’s economic recovery – but it looks like they shouldn’t count on much govt help

NZ’s  dairy  industry  has  a   clear  role  to  play  as  one  of  the   country’s saviours in the  battle to recover  from the global impact of the  Covid-19 pandemic — even if there is  little evidence  that ministers  in the coalition government recognise  its  importance.

The industry, as  it has  done so  often  before,  will  just have to  do  it on  its own.

Luckily, the giant co-op,  Fonterra,   has  stabilised,  after racking up a  massive  $600m  loss  last year and there’s  a refreshed sense  of  where the  dairy industry  stands  in the  economy’s  hierarchy,  as  other pillars (tourism, international  education, air transport, construction)  tumble  over the  pandemic precipice.  Morale  at  the   grassroots  level  is  rising  again.

So  what’s  the  message    for  dairy  farmers as  the  2019-20 season  ends  and  they look ahead to  the next?   Batten  down  the  hatches  or  seek to  expand  production?

It’s  not  an  easy  one  for  many  Fonterra  suppliers, as  they move out  of a debilitating drought. But they have the  encouragement from  the  co-op  – the  payout  for the  season  just ending, though  at  the lower  end  of the range  earlier  signalled,  will  still be between  $7.10 and $7.30kg/MS.  That’s  above the  break-even point,  said  to be  around  $5.90.   Continue reading “Dairy farmers will be in the vanguard of NZ’s economic recovery – but it looks like they shouldn’t count on much govt help”