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”
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”
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?”
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”
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”
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”
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”