Farm leader is worried by her sector’s mood – but maybe Peters is perked by the prospect of milking things politically

Farmers’ confidence  has sunk  to  its lowest level in  three years, according to the latest  Rabobank  survey.  Farmers’ outlook for the rural economy for the next year has dropped to a net minus 33%, from minus 2% three months ago.

“The drop of this magnitude is significant,” says Rabobank agricultural analyst Blake Holgate. “It follows three quarters where confidence was gradually increasing.

And it’s likely to fall further by the end of the year, as the next survey will ask farmers how they feel about new freshwater reforms.

Confidence  in the  dairy  sector  won’t be  boosted   by  Fonterra reporting  a  whopping  loss  of  $605M, on  top of the previous year’s  loss of  $190m.

Fonterra’s poor  performance  is  said to be one of the factors  driving down  confidence. Continue reading “Farm leader is worried by her sector’s mood – but maybe Peters is perked by the prospect of milking things politically”

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”

Forget about following the floundering fortunes of Fonterra – a2 Milk is the NZX’s fast-rising star

New Zealand  eyes  have been so  focussed  this  week  on  an event  20,000kms distant   that they  might  not have  noticed here  at  home another  extraordinary  event, taking  place  on the  NZX.

The market capitalisation of a company  which listed   as recently  as  2012  on the local sharemarket soared  past the  $12bn  mark and is hard on the heels of  Meridian Energy,  which has the  highest   valuation  of  NZ-based companies on the NZX  at $12.3bn.

The  challenger is a2 Milk,  which sells a  specialised  type of  milk  with what  it claims are health benefits.

A2 has had  a  chequered  history  but  its  market  valuation  keeps  climbing,  racing  ahead   of  blue chips  like  Auckland International  Airport  and  Fisher  & Paykel  Healthcare  and  leaving  in its dust some one-time  market  darlings  like Fletcher  Buildings  (market cap  $4.3bn)  and   Spark  ($7.2bn). Continue reading “Forget about following the floundering fortunes of Fonterra – a2 Milk is the NZX’s fast-rising star”