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Our fastest ever trade deal is struck with the United Arab Emirates, crush protection device scheme proves popular with Kiwi farmers, and new survey explores dairy farm ownership.
Welcome to Proud Country's Early Bird - The top things you need to know that impact rural New Zealand delivered to you by 5am, because who doesn’t need better chat beyond the weather!
Our fastest ever trade deal is struck with the United Arab Emirates
Our agricultural sector has received a welcome boost with the announcement of a free trade agreement between New Zealand and the United Arab Emirates. The deal, confirmed after just four months of negotiations, has been hailed as the fastest-ever concluded by New Zealand.
Trade Minister Todd McClay and UAE Minister of State for Foreign Trade Dr Thani Bin Ahmed Al Zeyoudi unveiled the agreement at Parliament, marking a significant milestone in bilateral relations.
Federated Farmers president Wayne Langford is pleased with the deal, noting its timely arrival amidst a challenging year for farmers grappling with high costs and tight margins.
The UAE stands as one of New Zealand's key markets in the Middle East, with exports totaling NZ$1.1 billion in the year to June. The agreement is expected to have a particularly positive impact on the agricultural sector, with dairy exports to the UAE valued at $718 million, red meat at $46 million, and horticulture at $44 million.
The swift conclusion of this agreement has been viewed as a reassuring sign of the government's commitment to opening new markets and reducing tariffs for New Zealand exporters. Langford pointed out that the deal would redirect millions of dollars previously earmarked for tariffs directly into rural communities.
The UAE's Minister Al Zeyoudi expressed his country's high regard for New Zealand as a long-standing trade partner, anticipating that this Comprehensive Economic Partnership Agreement will further strengthen bilateral relations and create new opportunities for private-sector growth in both nations.
Tariff elimination boosts outlook for red meat exports
Meanwhile our red meat sector is welcoming the newly announced trade agreement, viewing it as a significant opportunity for growth and market expansion. The deal, which eliminates all tariffs on frozen beef and sheepmeat upon implementation, has been warmly welcomed by industry leaders.
The agreement is particularly crucial for New Zealand's halal-certified exports, which comprised 37 percent of total red meat exports and were worth approximately $3 billion in 2023/24. With over 75% of the UAE's population being Muslim, the country represents a key halal market seeking reliable sources of high-quality red meat that meets strict halal requirements.
Beef + Lamb New Zealand Chair Kate Acland sees this agreement as a welcome boost for farmers facing tough financial times. She emphasised that improving market access is critical, with approximately 60 percent of export revenues flowing through to farmers.
Both Guy and Acland highlight the alignment between New Zealand's strong environmental credentials and the UAE's interest in sustainability. This alignment positions New Zealand's red meat sector to provide UAE consumers with assurances that their food choices align with their values.
Fonterra faces future challenges despite financial gain
Fonterra has made significant strides in its financial position, but Chairman Peter McBride emphasises that there's still a long road ahead. The company's financial results announcement on Wednesday paint a picture of progress tempered with cautious optimism.
While Fonterra surprised the market with a substantial dividend of 55 cents per share, including a special dividend of 15 cents, McBride stressed that this achievement is just one milestone in an ongoing journey. The dividend announcement comes despite a slight dip in net profit and revenue, highlighting the complex landscape Fonterra navigates.
The cooperative has successfully reduced its net debt to $2.6 billion, a marked improvement from $5.2 billion in 2020. This financial restructuring has improved Fonterra's gearing ratio to 24%, down from 44% four years ago. However, McBride notes that maintaining this financial discipline remains a key challenge in the volatile global dairy market.
Fonterra's return on capital of 11.3% surpassed its target, and the company has lifted its forecast farmgate milk price. Yet, McBride cautions that sustaining this performance in the face of international market pressures and changing consumer demands will require continued effort and strategic planning.
The upcoming unveiling of Fonterra's updated long-term strategy next week will be crucial in addressing these ongoing challenges. Recent changes in the management team, including key departures and internal promotions, also highlight the dynamic nature of Fonterra's leadership as it gears up for future challenges.
Today’s Dairy Exporter Podcast Episode 37 has an indepth look into this week’s Fonterra’s results announcement as how it affects our dairy farmer. Available where you get you podcasts.
Crush protection device scheme proves popular with Kiwi farmers
Over 150 farm enterprises have now received vouchers to acquire crush protection devices (CPDs) for their quad bikes at a heavily discounted rate, as part of the Safer Rides pilot scheme which aims to enhance quad bike safety on New Zealand farms.
This initiative, with backing from Rabobank and other primary sector partners, offers a $400 voucher towards the purchase of a CPD. The scheme has gained momentum with additional support from FMG Insurance, PGG Wrightson, and Silver Fern Farms, allowing for the distribution of 43 extra vouchers beyond the initial allocation.
Lindy Nelson, Safer Farms' Farm without Harm Ambassador, says there was high demand for the vouchers, with 40% of the initial allocation already redeemed.
The focus on CPDs stems from farmer feedback about the life-saving potential of rollover bars. Between 2019 and 2023, New Zealand witnessed 22 quad bike-related fatalities, predominantly involving rollovers on steep terrain. CPDs create a protective space under an overturned quad bike, potentially saving lives by allowing the rider to survive or enabling the bike to roll off.
Nelson, a Wairarapa farmer herself, emphasized that while quad bikes are essential for many farming operations, installing a CPD can significantly enhance safety for all users. The scheme addresses the cost barrier, which has been identified as a major hurdle in adopting these safety devices.
The Safer Rides initiative is part of Safer Farms' broader Farm Without Harm strategy, which aims to reduce accidents and fatalities in New Zealand's farming sector. As the program concludes its pilot phase, organisers are working with industry partners to develop a long-term plan for making safety devices more accessible to the farming community.
New survey explores dairy farm ownership
Smaller Milk and Supply Herds, known as SMASH, is reaching out to the dairy community for help with an important industry survey. This farmer-led organisation, which hosts events nationwide on farm and animal management, is now turning its attention to understanding the various routes to farm ownership.
SMASH is inviting all dairy farmers to participate in an online survey about their career paths and future plans. The group aims to gather insights on how today's farmers are achieving their ownership dreams and what career goals look like in the current dairy farming landscape.
Whether you've already purchased a farm, are planning to buy one, or have different career aspirations in the dairy industry, SMASH wants to hear your story. The organisation emphasises that all perspectives are valuable, regardless of where farmers are on their career journey.
Once collected, SMASH plans to share the survey results widely, ensuring that the entire farming community can benefit from the accumulated knowledge and experiences.
Recognizing the value of farmers' time, SMASH is offering an incentive for participation. Survey respondents will be entered into a draw to win one of two Kapiti Cheese hampers, each valued at $200 and kindly donated by Fonterra.
The initiative is being conducted with funding and support from the Ministry for Primary Industries' Sustainable Food and Fibre Futures Fund and DairyNZ, and two Kapiti Cheese hampers worth $200 are up for grabs.
Farmers interested in taking part can find the survey on the SMASH website at www.smallerherds.co.nz.
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Record dividend as Fonterra reveals it’s full year results, the trade minister signals shift in approach to international agreements, and farms are facing a tech talent crunch.
Welcome to Proud Country's Early Bird - The top things you need to know that impact rural New Zealand delivered to you by 5am, because who doesn’t need better chat beyond the weather!
Record dividend as Fonterra reveals it’s full year results
Fonterra has announced its second-largest dividend on record, bringing welcome news to dairy farmers across the country. The dairy giant has unveiled its full-year results,revealing a robust financial performance driven by higher margins and increased volume in food and consumer channels.
The co-op reported a net profit from continuing operations of $1.168 billion, translating to 70 cents per share. While earnings dipped slightly from the previous year's elevated levels, Fonterra maintained a healthy 17% gross margin and achieved an 11.3% return on capital.
Fonterra has declared a total dividend of 55 cents per share. This includes a 15-cent interim dividend, a 25-cent final dividend, and an additional 15-cent special dividend.
Looking ahead, Fonterra has raised its forecast milk price for the current season. The new midpoint stands at $9 per kilogram of milk solids, with a range of $8.25 to $9.75. This uplift signals confidence in market conditions and should hearten farmers planning for the year ahead.
On the financial front, Fonterra's balance sheet remains sturdy. Net debt decreased by $600 million to $2.6 billion, affording the co-op flexibility and resilience against market volatility. However, farmers should note that Fonterra has exhausted its tax losses and will now be paying tax, which may affect future earnings per share.
Friday’s Dairy Exporter podcast will have an in depth look into Fonterras results, and how they affect our dairy farmers.
No update on Fonterra’s consumer product arms future
Meanwhile Fonterra remains tight-lipped about the future of its consumer products arm, valued at over $3 billion. The company announced it will wait until November to provide a meaningful update on its divestment deliberations, with any potential sale still many months away.
Fonterra's leadership team, including Chairman Peter McBride and CEO Miles Hurrell, addressed the media following the results announcement. Hurrell hinted at the company's evolving strategy, noting that Fonterra may not be the ideal owner of consumer-focused operations. However, McBride clarified that this statement doesn't guarantee a sale, emphasising that multiple pathways are under consideration.
The company plans to unveil its updated business strategy next Monday, outlining expected outcomes for both farmer-shareholders and unit holders. Fonterra's nearly 8,000 farmer-shareholders will have the final say on any sale proposal through a voting process.
Wellington welcomes UAE Trade envoy for rural growth talks
Rural communities could reap the rewards of strengthened trade ties with the United Arab Emirates as a high-level delegation arrives this week. UAE Minister of State for Foreign Trade, Dr Thani Al Zeyoudi, touched down in Wellington yesterday for a three-day visit.
The UAE currently ranks as New Zealand's 10th largest trading partner, with two-way trade amounting to $1.3 billion annually.
During his stay, Dr Al Zeyoudi will engage with Parliamentary and industry leaders, aiming to deepen connections across various sectors.
For our rural and agricultural sectors, this diplomatic engagement could open doors to new market opportunities. The UAE, with its growing demand for high-quality food products, presents a lucrative market for Kiwi farmers and producers.
The trade minister signals shift in approach to international agreements
Staying with trade, Minister Todd McClay says there will be a significant change in the country's approach to international trade negotiations. McClay has outlined a more pragmatic and politically-driven strategy to create opportunities for Kiwi exporters.
The Minister says that the era of comprehensive Free Trade Agreements is waning. Instead, New Zealand is now focusing on what McClay terms as "trade agreements," reflecting a global trend towards increased protectionism.
This shift in terminology and approach marks a departure from the trade liberalisation ideals of the past. McClay compared the current situation to the challenges faced in the 1970s and 80s when Britain joined the European Economic Community, forcing New Zealand to rapidly find new markets for its agricultural products.
The new strategy calls for a more active role from government officials in securing trade deals. As part of this hands-on approach, the Prime Minister and Deputy Prime Minister have been actively engaging on the world stage.
A key focus of the government's trade strategy is India. McClay revealed he has met with his Indian counterpart five times in the past nine months, developing a constructive relationship. The Minister stressed that any future agreement with India must include meaningful gains for New Zealand's primary food and fibre sector.
Farms are facing a tech talent crunch
Our agricultural sector is grappling with an unexpected challenge: finding farm workers who are as comfortable with computers as they are with cattle. The modern farmer's toolkit now includes smartphones and tablets alongside traditional equipment, highlighting a growing need for digital literacy in rural communities.
Southland Federated Farmers President Jason Herrick says farmers are spending more time on devices due to increased reporting requirements. This shift means that farming, once considered an ideal career for those less academically inclined, now demands a higher level of education.
The skills gap is particularly evident in rural areas. Primary ITO, which leads work-based training in the food and fibre sector, reports that 20% of their students have no previous qualifications. In some rural regions, 35% of Kiwis lack internet access at home, limiting opportunities for young people to develop crucial digital skills.
Primary ITO's Leigh-Anne Buxton highlights the range of digital tools used in today's farming operations. From dairy shed management to farm budgeting, animal health tracking to feed analysis, farmers at all career stages must navigate multiple platforms and applications.
To address this challenge, the government has committed $163 million over four years to support Digital Services in schools. This investment aims to enhance cyber security and replace outdated equipment, potentially helping bridge the digital gap in rural areas.
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Record production as farmers await critical price announcements, Dutch farmers set to outpace New Zealand in low-methane dairy tech, and King Salmon grapples with fish mortality as revenue rises.
Welcome to Proud Country's Early Bird - The top things you need to know that impact rural New Zealand delivered to you by 5am, because who doesn’t need better chat beyond the weather!
Farmers eye milk price as Fonterra is set to unveil strong earnings
Our dairy industry is experiencing a remarkable start to the season, with production hitting a four-year high just as farmers eagerly await critical price announcements from industry giants Fonterra and Synlait.
Fonterra is set to reveal its full-year results today, while Synlait will confirm its milk prices for the 2023/24 season on Monday.
The latest figures from the Dairy Companies Association of NZ show August's production soared 10% compared to last year, reaching 123.8 million kilograms of milksolids (kgMS). July also saw a healthy increase of 9.2%, hitting 27.4 million kgMS. This marks the highest August production since 2020, outpacing the five-year average by 4.2%.
Fonterra, which handles about 80% of New Zealand's milk, reports a 9% increase in July collections to 20 million kgMS. The co-op's milk director, Lisa Payne, attributes this strong start to early calving and good feed availability across most regions. She notes that warmer than usual soil temperatures and good pasture growth will continue to support milk flows, though Southland farmers have faced a challenging start to the season.
For the current season, Fonterra's forecast stands at a midpoint of $8.50/kgMS, while Synlait's current projection is slightly higher at $8.60/kgMS. However, the NZX's forecast has lifted to $9.27/kgMS, with a range between $9.08/kgMS and $9.68/kgMS, hinting at potential upside for farmers.
Recent Global Dairy Trade auction results have been encouraging. Whole milk powder, which heavily influences the payout, increased 1.5%, while skim milk powder saw a 2.2% rise.
This strong start for New Zealand comes at an opportune time, as other major dairy-producing regions grapple with challenges. The United States is contending with avian flu outbreaks and a heifer shortage, while Europe faces weather issues and animal health concerns, including bluetongue and lungworm outbreaks.
Dutch farmers set to outpace New Zealand in low-methane dairy tech
Dutch dairy will have the chance to utilise low-methane bull genetics from next year. This advancement comes after eight years of dedicated research by Wageningen University in methane reduction, with two groundbreaking tools aiming to cut cow burp by nearly a third.
The initiative, a joint effort with dairy giant FrieslandCampina and genetics company CRV, has determined breeding values for methane output.
The genetic approach alone could trim average methane by 1% yearly, totaling over 25% by 2050. Another development involves using gut bacteria from naturally low-methane cows. Calves get a five-dose treatment of this rumen fluid, which alters their gut microbiome for good. Early data indicate this could knock off another 10% from methane totals.
Combining these methods with current feeding tactics, the Dutch are looking at a potential 30% methane cut by 2050. That's double what they'd achieve with feed changes alone.
The genetics work zeroed in on Holsteins - the backbone of Dutch dairy. Researchers tracked methane from 9000 cows across 100 Dutch holdings, linking burp data to DNA. This confirmed that methane tendency runs in the family, with about a quarter of the trait being hereditary.
Meanwhile, the gut bacteria research kicked off in 2017. It revealed that even when accounting for feed, cow methane varied by up to 24%. This hinted at other influencing elements.
While Dutch dairy lead the charge, Kiwi farmers might need to wait. LIC, New Zealand's largest herd improvement company, doesn't expect to offer methane breeding values until 2026 - at least a year behind their Dutch counterpart.
New funding round opens for agricultural emissions research
The Ministry for Primary Industries has launched its annual funding round for greenhouse gas emissions research, with a keen eye on the agricultural sector. This initiative aims to enhance New Zealand's reporting on emissions from farming, forestry, and other land uses.
A total of $2.9 million is up for grabs in the 2024/25 financial year, earmarked for new projects under the Greenhouse Gas Inventory Research fund. This funding seeks to sharpen our understanding of the country's emissions landscape, providing crucial data for both emissions management and policy decisions.
This year, MPI has outlined ten key areas for research, each vital to the farming community. These range from improving how we estimate the weight of sheep and cattle to exploring cutting-edge satellite technology for measuring feed quality.
One area of interest is enhancing the modelling of dairy cattle, a topic close to the heart of many Kiwi farmers. Another focus is on gathering more accurate data about seasonal dairy supplementary feed intake, which could lead to more precise emissions calculations.
For sheep and cattle farmers, the call for better live weight estimation methods could result in more accurate reporting and potentially fairer emissions assessments. The research also aims to improve our understanding of deer farming emissions, an important niche in New Zealand's agricultural landscape.
There are also plans for a new survey on afforestation and deforestation intentions to give a clearer picture of how our land use is changing over time.
The Ministry encourages researchers and innovators to step forward with their ideas. Applications for funding close on 30 October, with successful proposals to be announced by late February 2025.
New Zealand-Nordic Jersey Collaboration Unveiled
Dairy genetics co-operative Livestock Improvement Corporation (LIC) and Nordic counterpart VikingGenetics have launched a groundbreaking initiative to enhance Jersey cattle breeding, merging genetic advantages from both regions' dairy industries. This collaboration offers new opportunities for Kiwi dairy farmers, targeting improved herd health, efficiency, and overall dairy production.
The project revolves around exchanging genetic material between the two companies, allowing each to identify top-performing bloodlines in their respective farming environments.
New Zealand Jersey cows have earned a reputation for their exceptional feed conversion efficiency and high milk solid production. These animals consistently deliver quality milk, making them a valuable asset in our pasture-based dairy system. Their Nordic counterparts bring complementary strengths to the table, recognized for their health, fertility, and impressive fat and protein content in milk production.
The breeding program will carefully select cows for insemination with genetic material from top-ranked sires. Each year, the project will involve 10 to 20 elite animals from both companies, with the ultimate goal of identifying superior sires to shape the next generation of Jersey cattle in New Zealand and Nordic countries.
King Salmon grapples with fish mortality as revenue rises
New Zealand King Salmon has released its half-year results, revealing a mixed bag of challenges and opportunities.
For the six months ending in July, King Salmon saw its revenue climb to $101.7 million, up from $91.6 million in the same period last year. This growth comes despite global cost-of-living pressures, demonstrating the resilience of demand for New Zealand's premium salmon products across all markets and channels.
However, the company's net profit took a hit, dropping to $6 million from $10.6 million a year ago. This decline stems from increased fish mortality and issues with fish size variability, which have rattled consumer confidence.
In response to these challenges, King Salmon is revising its full-year harvest forecast downwards to 6,800 metric tonnes. The company's aquaculture team is working closely with experts to address the issue, with initial trials of mitigating measures showing promise.
A bright spot on the horizon is the Blue Endeavour project - New Zealand's first open-ocean salmon farm. Planning for this groundbreaking initiative is well underway, with the first fish expected to be released in late 2025. This move into open-ocean farming could be a game-changer, potentially boosting production while addressing some of the environmental challenges faced in coastal waters.
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Farmers eye milk price as Fonterra is set to unveil strong earnings, scientists turn greenhouse gases into livestock nutrition, and golden year for Kiwifruit as exports break records.
Welcome to Proud Country's Early Bird - The top things you need to know that impact rural New Zealand delivered to you by 5am, because who doesn’t need better chat beyond the weather!
Farmers eye milk price as Fonterra is set to unveil strong earnings
Fonterra is poised to reveal its financial results for the 2024 year tomorrow, with industry watchers anticipating robust earnings. However, for the co-operative's nearly 8,000 farmer-owners, the announcement of the milk price will take centre stage.
John Stevenson, chairman of the Fonterra Co-operative Council, emphasised that the milk price is always the primary concern for farmers, as it constitutes the largest portion of their returns from dairy farming. While the 2023-2024 dairy season concluded on May 31, farmers are still awaiting full payment, making this announcement particularly significant.
There's also keen interest in any potential increase to the farmgate milk price forecast for the current 2024-2025 season, which currently stands at a midpoint of $8.50 per kilogram of milksolids. Stevenson noted this forecast exceeds the latest national break-even price of $8.09, as calculated by DairyNZ. However, he cautioned against over-optimism, reminding that the season is still young and many challenges lie ahead.
Another key area of interest is Fonterra's progress on evaluating the potential sale of its global consumer business, valued at over $3 billion. This strategic decision could have far-reaching implications for the co-operative's future direction.
On a positive note, the Fonterra Co-operative Council's annual survey revealed improving farmer sentiment. Satisfaction with Fonterra's overall performance has risen from 58% in 2023 to 65% this year. Confidence in both Fonterra's long-term future and the New Zealand dairy industry has also increased, reversing a downward trend from previous years.
However, farmers remain pragmatic in their outlook. Stevenson highlighted that even with potentially good results, farmers are unlikely to make large-scale investments or purchases. Interest rates are still consuming a significant portion of any free cash flow, and many farms have delayed capital investments that may need addressing.
Looking ahead, Fonterra farmers have identified key areas for the co-operative to focus on. These include improving margins, advocating to central and local government, investing in innovation, and retaining milk supply.
Scientists turn greenhouse gases into livestock nutrition
A groundbreaking project in the central North Island is set to transform geothermal gases into valuable livestock feed. Māori organisation Tauhara North No. 2 Trust is collaborating with geothermal experts and New Zealand scientists on this world-first initiative.
At the heart of this innovative process are two microorganisms - a bacterium and an algae. These tiny powerhouses convert carbon dioxide and methane, captured from geothermal power stations, into a protein-rich biomass. This biomass holds potential not only as animal feed but also for human nutrition and high-value nutraceuticals.
Mana Newton, the Trust's Group Chief Executive, envisions this project as a catalyst for new industries and job creation in the region. The Trust, which has significant investments in geothermal assets, sees this as an opportunity to leverage their resources for the benefit of mana whenua and regional communities.
The four-year research initiative marks a global first in developing biomass feedstock from geothermal gases. It utilises robust microorganisms that thrive in the extreme conditions found at geothermal sites, potentially kickstarting a new biomass feedstock manufacturing industry for New Zealand.
Steve Penno from the Ministry for Primary Industries highlighted the project's potential to reduce reliance on imported livestock feed while decarbonizing industries. Estimates suggest this new industry could be worth $500 million annually by 2045, creating new skilled jobs in the process.
The next phase of the project will involve scaling up production from laboratory to pilot scale, generating yields of up to 1,000 litres. Researchers will also explore potential markets for the biomass, including agriculture, aquaculture, and human nutrition.
The project has secured nearly $5 million in funding, with contributions from the Trust and the Ministry for Primary Industries. Rotorua-based Upflow will lead the research, working alongside experts from Scion, the University of Canterbury, and the Cawthron Institute.
Golden year for Kiwifruit as exports break records
New Zealand's kiwifruit industry is celebrating a remarkable achievement this year, with exports reaching unprecedented values. According to Stats NZ, kiwifruit exports were valued at $3.1 billion in the year ending August 2024, marking a substantial increase of $524 million or 20% compared to the previous year.
This record-breaking performance is largely attributed to the growing popularity of gold kiwifruit varieties. Gold kiwifruit exports alone accounted for $2.4 billion, showing a significant rise of $457 million or 24% from the previous year. This increase was primarily driven by a 23% boost in export quantity.
Green kiwifruit also contributed to the overall success, with exports valued at $737 million, up by $67 million or 9.9%. Unlike the gold variety, the green kiwifruit's value increase was mainly due to a 9% rise in price rather than quantity.
The kiwifruit export season, which typically runs from March to November, has seen a shift in grower preferences. New Zealand growers are increasingly turning to gold and red kiwifruit varieties to capture greater export value, particularly in lucrative markets like China and Japan. Gold kiwifruit, known for fetching higher prices than green varieties, has China as its top destination, while the European Union remains the primary market for green kiwifruit.
Alliance group opens nominations for key board positions
Alliance Group has initiated its search for new board talent as nominations open to fill two director vacancies, creating an opportunity for fresh perspectives to guide the company's future. The election comes in the wake of longstanding director Jason Miller's decision not to seek re-election after his current term, coupled with the earlier departure of Murray Taggart, setting the stage for a significant boardroom reshuffle.
Environmental sustainability ranks high on Alliance's priority list for potential directors, reflecting the growing importance of eco-friendly practices in the agriculture sector. Equally crucial is the ability to connect meaningfully with a diverse range of stakeholders, including customers, regulatory bodies, and iwi, as the co-op seeks to strengthen its relationships across the industry and wider community.
This board reshuffle presents an exciting opportunity for individuals passionate about shaping the future of New Zealand's meat industry, with Alliance Group's democratic process allowing farmer-shareholders to have a direct say in who will guide the co-operative's strategic direction in the years to come.
McBride and Nicholls secure top spots in Fonterra's director race
And Fonterra has announced that incumbent directors Peter McBride and John Nicholls have earned the designation of Independently Assessed Candidates for the upcoming 2024 Farmer Directors' election. This year's election will determine two crucial Board positions, shaping the future direction of the co-operative.
Both McBride and Nicholls underwent a rigorous Independent Assessment Process, with their evaluations set to be included in the voting materials distributed to Fonterra shareholders. As current directors seeking re-election, they automatically advance to the final ballot.
Fonterra shareholders now have the opportunity to nominate additional Non-Assessed Candidates until noon on Thursday, October 3rd. Aspiring candidates need the backing of 35 different shareholders to enter the race.
The complete list of candidates, including both Independently Assessed and any Non-Assessed nominees, will be revealed on Friday, October 4th.
Voting packs containing detailed candidate profiles will be mailed out from Monday, October 21, and the voting period will run until 10:30 AM on Tuesday, November 12th.
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Property rights at centre of new resource management laws, innovative crops tackle dairy farm nitrogen leaching, and B+LNZ call for farmers to join facial eczema study.
Welcome to Proud Country's Early Bird - The top things you need to know that impact rural New Zealand delivered to you by 5am, because who doesn’t need better chat beyond the weather!
Property rights at centre of new resource management laws
The government has announced two new laws are set to replace the Resource Management Act (RMA). This change, spearheaded by RMA Reform Minister Chris Bishop and Parliamentary Under-Secretary Simon Court, aims to address longstanding issues with the current system.
The new approach places property rights at its core, potentially easing restrictions on land use and development. This shift could have significant implications for rural landowners and farmers across the country.
The new laws aim to streamline processes, with ten core design features announced. Key points for rural stakeholders include, a narrower focus on managing actual environmental effects of activities, greater use of national standards to reduce the need for resource consents, a shift from pre-activity consenting to compliance monitoring and enforcement, simplified planning processes, with one regulatory plan per region, and faster, cheaper processes with less reliance on litigation.
An Expert Advisory Group has been established to develop the details of the new system. The group includes members with experience in primary industries, environmental law, and Māori rights and interests, ensuring a broad range of perspectives are considered.
The government aims to have key aspects of the new system agreed upon by Cabinet before the end of 2024, with legislation to be introduced and passed before the next election.
Innovative crops tackle dairy farm nitrogen leaching
A groundbreaking farm trial in North Canterbury is yielding remarkable results in the battle against nitrogen leaching from dairy farms. Early-sown oats and Italian ryegrass are proving highly effective at absorbing excess urine from winter grazing cows, potentially offering a new tool to clean up New Zealand's waterways.
Tom Turner’s Waimakariri Gorge farm is the site of this trial conducted by Plant & Food Research, and reports significant reductions in nitrogen leaching. The catch crops are not only capturing soil nitrogen but also contributing to carbon sequestration, marking a win-win for environmental management and farm productivity.
Shane Maley, field operations science team leader at Plant & Food Research, has been closely involved with the trial. The team initially experimented with small strips of oats, and to their surprise, the crops thrived even in mid-winter conditions, effectively taking up nitrogen.
The problem these trials address is substantial. Dairy cows can urinate up to twelve times daily, each time depositing an average of two litres. This results in an estimated nitrogen application rate of around 600 kilograms per hectare. Autumn and winter pose the highest risk for nitrate leaching due to low temperatures, slow plant uptake, and increased rainfall and drainage.
The results have been eye-opening. Maley reports a 40 percent reduction in sediment movement on the farm. Moreover, the catch crops are capturing between 40 and 60 percent of potential nitrogen losses.
The success of these trials has led to expanded research. Plant & Food Research is now working with farmers in high country areas, Central Otago, and cooler inland regions around Wānaka and Middlemarch. Local catchment groups are also actively involved, demonstrating a community-wide commitment to sustainable farming practices.
For farmers interested in learning more about catch crops, Maley recommends visiting the Plant & Food Research website, as well as their Facebook and Instagram pages for detailed information and updates.
Medical industry drives growth in meat sector
While red meat exports have faced challenges recently, a niche area of the industry is thriving. Demand for blood and gland products, used in vaccines, pharmaceuticals, and medical devices, has surged, offering a ray of hope for Kiwi farmers.
The meat industry has long aimed to maximise value from every animal, utilising what's known as the "fifth quarter" - everything that's not meat, including tallow, bone meal, offal, and blood. Despite an overall decline in fifth-quarter exports last year, blood and gland products have emerged as a standout success story.
Exports of these vital medical ingredients soared by an impressive 118% to reach $270 million in the last financial year. This growth comes at a crucial time, as the industry grapples with softer demand from China for traditional red meat products.
The United Kingdom, Denmark, and India have emerged as key markets for these high-value animal by-products. Exports to the UK jumped by 88% to $22 million, while Denmark saw a 34% increase to $18 million. India, with its ambitious plans to become a global pharmaceutical hub, recorded a significant 53% rise to $7 million.
India's growing interest in New Zealand's blood and gland products stems from the country's disease-free status. This makes our animal-derived materials highly sought after for producing top-quality serums and other medical products.
The Meat Industry Association sees this as a golden opportunity for growth. They're actively working to expand sales in this lucrative market, recognizing the potential to offset challenges in other areas of the meat sector.
The success in blood and gland products also underscores the reputation of New Zealand's agricultural sector for producing high-quality, safe products. Our nation's disease-free status and stringent quality controls are paying dividends in this specialised market.
Southland farmers urged to monitor effluent ponds as rain persists
Relentless rain and challenging ground conditions in the South have triggered a call for farmers to closely monitor their effluent pond levels. Environment Southland is urging dairy farmers with nearly full effluent ponds to contact the council immediately to prevent overflows.
Dean Rabbidge, Federated Farmers Southland meat and wool chairman, describes the situation as "relentless," with wet weather persisting since March. Farmers have faced daily rainfall of about 10mm, resulting in waterlogged paddocks and muddy gateways, significantly limiting dry areas for livestock.
Despite these trying conditions, Rabbidge notes that stock survival has been remarkably good. He encourages farmers who are struggling to seek advice and support to navigate these challenging times.
The Southland Rural Support Trust has received numerous calls from concerned farmers. Sheep farmers are grappling with cold, wet conditions and the loss of older lambs, while dairy farmers face issues with earlier calving and limited feed availability.
Fiona Comer, the Trust's co-ordinator, reveals that feedback from primary sector professionals indicates significantly higher stress levels among farmers compared to the usual for this time of year. The Trust recently met with industry stakeholders to address these concerns.
In Otago, the situation is equally challenging. Tom Pinckney, chairman of the Otago Rural Support Trust, reports calls about wet and cold weather, with recent snowfall contributing to lambing losses.
Both Pinckney and Comer strongly encourage any farmers struggling with these conditions to reach out to their respective Rural Support Trusts for assistance. The trusts can be contacted at 0800 787-254.
B+LNZ call for farmers to join facial eczema study
Gisborne/Tairāwhiti farmers have a unique opportunity to contribute to groundbreaking research aimed at eliminating facial eczema in sheep. Beef + Lamb New Zealand (B+LNZ) is calling for more participants in their nationwide sheep poo study, with the deadline fast approaching.
The study, a key component of the Eliminating Facial Eczema Impacts programme, kicks off next month. While 200 farmers across New Zealand have already joined, B+LNZ needs to reach a target of 350 participants, with 22 farmers required from each of the 16 regions, including Gisborne/Tairāwhiti.
Participation in the study is straightforward, requiring farmers to collect sheep poo samples every two weeks from October to May. B+LNZ covers all costs associated with sampling kits and return packaging. The time commitment is minimal - less than 45 minutes per fortnight - but the potential benefits for the entire sector are significant.
Researchers will analyse the samples for fungal spores associated with facial eczema, providing crucial data on the disease risk across different regions. Participating farmers will receive free facial eczema spore counts throughout the season, access to an online map showing results, and networking opportunities with other farmers.
Tairāwhiti farmers interested in joining this important research initiative must register their interest on the B+LNZ website by October 4.
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Input sought on crucial Biosecurity Act changes, methane vaccine research gets multi-million dollar boost, and three candidates vie for two DairyNZ board seats.
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Input sought on crucial Biosecurity Act changes
New Zealand's vital biosecurity defences are up for a major update, with the government inviting rural communities to have their say on proposed changes to the 30-year-old Biosecurity Act. The move aims to bolster the country's ability to protect its world-leading food and fibre export industry, valued at $53 billion annually.
Biosecurity Minister Andrew Hoggard recently unveiled a range of potential amendments designed to modernise and strengthen the nation's biosecurity framework. These include tougher penalties for travellers bringing in undeclared high-risk items, more adaptable importing rules, and a revised approach to sharing costs for biosecurity responses.
The Minister underlined the importance of New Zealand's relative freedom from harmful organisms, which gives the country a competitive edge globally. This advantage is something the government is looking to reinforce by updating biosecurity laws to meet current and future challenges.
The proposed changes come at a critical time for New Zealand's agricultural sector. With the country's economy heavily reliant on primary industries, maintaining robust biosecurity measures is paramount. The revised Act aims to enhance New Zealand's capacity to manage biosecurity threats and defend against potentially damaging incursions.
Key to the success of these reforms is input from those most affected – farmers, growers, and rural communities. The government is actively seeking feedback from primary industry leaders, indigenous groups, local authorities, and the wider public to ensure the updated Act meets the needs of all stakeholders.
Minister Hoggard emphasised the need to hear from those on the ground, stating that insights from the agricultural community are crucial in shaping a biosecurity system that works for everyone.
The consultation period runs until November 29th, giving ample time for thorough discussion and debate. Detailed information on the proposed changes can be accessed through the Ministry for Primary Industries website, where seven comprehensive discussion documents outline the various policy proposals under consideration.
Methane vaccine research gets multi-million dollar boost
New Zealand's quest for a groundbreaking methane vaccine has received a significant boost, with AgriZeroNZ and the New Zealand Agricultural Greenhouse Gas Research Centre (NZAGRC) injecting $13.5 million into newly formed company Lucidome Bio. This investment marks a crucial step forward in the country's pioneering efforts to reduce agricultural emissions.
Wayne McNee, AgriZeroNZ's chief executive, describes a successful methane vaccine as potentially transformational for New Zealand's agricultural sector and farmers worldwide. He emphasises its potential as a low-cost, high-impact solution that could be adopted across all farming systems, calling it the "holy grail" of emissions reduction.
The science behind the vaccine is both innovative and complex. It aims to trigger an animal's immune system to produce antibodies in saliva that suppress methane-producing microbes in the rumen, significantly reducing the amount of this potent greenhouse gas released through burping.
David Aitken, Lucidome Bio's interim chief executive, welcomes the funding and outlines the company's vision to help farmers feed the world while protecting the planet. He states that the investment will enable team building, field trials in animals, and further development of the vaccine.
This domestic investment follows recent international recognition, with the Bezos Earth Fund providing USD $9.4 million to an international consortium, including AgResearch scientists now seconded to Lucidome Bio, to build scientific evidence for a methane vaccine.
The Country-Wide Podcast Episode 38 takes a deeper look into this groundbreaking vaccine, find the link in the description.
https://country-wide.co.nz/episode-38-do-we-have-the-right-tools-to-effectively-tackle-emissions/
LIC delivers profit despite industry headwinds
Livestock Improvement Corporation (LIC), has held its annual meeting, where the dairy improvement co-operative's leadership team addressed a challenging year marked by financial and operational hurdles.
Despite the difficult economic climate, LIC Chair Corrigan Sowman highlighted the co-operative's achievement in delivering a sustainable profit. The company closed the year with a $7.7 million profit and paid out a total dividend of 18.84 cents per share, maintaining a strong balance sheet without debt.
Sowman acknowledged the potential headwinds facing the sector but expressed confidence in LIC's resilience. He emphasized the co-operative's commitment to its core purpose of delivering value for farmer shareholders, noting that current decisions will influence the future of New Zealand's national dairy herd.
Looking ahead, LIC forecasts underlying earnings of $16-22 million for 2024/25, barring any major external factors. Chief Financial Officer Brent Mealings noted a decrease in total revenue, down 3.3% from the previous year, largely due to reduced demand across key product and service lines. This decline was partly attributed to farmer reactions following Fonterra's significant decrease in forecast milk prices last August and September.
Mealings also addressed the impact of a semen quality issue, which had an after-tax effect of $1.5 million. Despite these challenges, he noted positive signs in the sector, with confidence slowly rebuilding. However, he cautioned that results might take time to materialize as farmers continue to face short-term cash constraints.
The annual meeting also saw new appointments, with Mike O'Connor elected as director for the North Island region, Tony Coltman for the South Island region, and Kirsten Watson as the Upper North Island territory shareholder reference group representative.
B+LNZ reminds farmers of crucial lamb welfare regulations
As the docking or tailing season begins, Beef + Lamb New Zealand is urging farmers to review the tail length regulations that came into effect last year. These rules aim to enhance animal welfare while ensuring farmers adhere to best practices.
Will Halliday, Senior Advisor for Animal Welfare and Biosecurity at B+LNZ, highlights a key requirement: the docked tail must not be shorter than the distal end of the caudal fold. In layman's terms, this refers to the end of the skin flaps attaching the tail's underside to the lamb's body. Halliday emphasises that this length is the absolute minimum allowed, cautioning that shorter docking could result in a $500 infringement fee.
The regulations also limit the methods farmers can use for docking. Only hot irons and rubber rings are authorised, with any alternative method potentially incurring a $500 fine. Halliday advises farmers to thoroughly brief their tailing teams about these requirements before starting work each day. Clear communication about correct placement of hot irons or rubber rings is crucial to avoid inadvertent breaches.
Age restrictions also apply to the docking procedure. Farmers and their staff are permitted to dock lambs under six months old. However, for older lambs, the task must be carried out by a veterinarian.
As the docking season continues, farmers are encouraged to review their procedures, ensure all team members are well-informed, and reach out to B+LNZ or local veterinary services if they have any questions about compliance.
Three candidates vie for two DairyNZ board seats
Dairy farmers across New Zealand have a crucial decision to make in the coming weeks as voting for this year's DairyNZ director elections is now underway. Three candidates are competing for two vacant positions on the DairyNZ board, shaping the future leadership of the organization.
Voter packs were dispatched yesterday, and farmers can now cast their votes either online or by post. The voting deadline is set for 12 noon on Thursday, October 17, giving farmers four weeks to make their choices.
This year's board of directors candidates are Jacqueline Rowarth, Richard McIntyre, and Kylie Leonard. Farmers interested in learning more about the candidates have an opportunity to do so tonight. DairyNZ is hosting a 'Meet the Candidates' webinar this evening at 7pm, offering a chance to hear directly from the nominees.
The election comes at a time of change for the DairyNZ board. Chair Jim van der Poel is retiring, while Jacqueline Rowarth is retiring by rotation but has chosen to re-stand for her position. The board structure consists of five farmer-elected directors and three board-appointed directors, highlighting the importance of farmer representation in the organization's governance.
In addition to the candidate vote, farmers are being asked to consider four resolutions in their vote packs. These include the appointment of independent director David Hunt and changes to the Rules of DairyNZ. These amendments reflect new regulatory requirements and incorporate recent feedback from the farming community.
Farmers seeking more information about the resolutions and proposed changes can refer to the Notice of Meeting booklet included in their voting packs. This information is also available online for easy access.
DairyNZ encourages all eligible farmers to participate in this important process. Detailed information on the candidates and the voting procedure can be found on the DairyNZ website at dairynz.co.nz/elections.
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Whole and skim milk powder lead the charge at the latest Global Dairy Trade auction, Synlait shareholders approve crucial capital raise, and Federated Farmers celebrate 125 years of championing rural New Zealand.
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Whole and skim milk powder lead the charge at the latest Global Dairy Trade auction
Dairy farmers have received a welcome boost as whole milk and skim milk powder prices increased in the latest Global Dairy Trade (GDT) auction. The GDT price index saw a 0.8% uptick, with whole milk powder prices rising 1.5%. Skim milk powder experienced an even more significant jump, climbing 2.2%, marking its highest average price on the platform in the past year.
All products, except milk fats, saw price increases at the auction. Anhydrous milk fat and butter prices softened slightly, bucking the overall positive trend. The auction results largely aligned with pre-event expectations, with 89% of the total 43,497 tonnes available finding buyers.
In the milk fat category, AMF prices eased 1.2%, marking its first decline after four consecutive increases since July. Butter also saw a slight dip of 1.7%, settling at an average price of US$6,546 per tonne.
Cheddar prices rose 2.9%, reaching its second-highest price in the last 12 months. Mozzarella continued its upward trajectory with a 4.5% increase, lactose rebounded from a previous decline, rising 3.5%.
North Asia maintained its position as the top purchaser for both milk powders and butter, accounting for 51% of the total product volumes. Southeast Asia and Oceania led in Anhydrous Milk Fat purchases, while Africa dominated the cheddar market.
Synlait shareholders approve crucial capital raise
Synlait Milk has avoided a potential collapse as shareholders overwhelmingly approved a critical capital raise in a high-stakes vote. The decision marks a turning point for the NZX-listed company, which faced possible insolvency without this financial lifeline.
At Synlait's Dunsandel site near Ashburton yesterday, more than 90% of votes cast favoured the rescue package. This decisive action allows Chinese dairy giant Bright Dairy to increase its stake to over 65% with a substantial investment, while a2 Milk Company maintains its 19.8% holding. The move, however, significantly dilutes minority shareholders' stakes from 41.2% to just 14.9%.
Synlait's chair, Simon Robertson, emphasised the gravity of the situation, stating that without shareholder approval, the company would likely have needed to cease trading and initiate formal insolvency processes. The dire circumstances stemmed from Synlait's unsustainable debt levels, exceeding $550 million, a result of an ill-fated expansion strategy.
The approved capital injection aims to deleverage Synlait's strained balance sheet, providing a critical buffer for the company to implement its turnaround strategy. This financial restructuring follows a $130 million emergency loan from Bright Dairy in July, which kept the company afloat in the short term.
Despite the dilution of their stakes, minority shareholders seemingly recognized the lack of viable alternatives. The New Zealand Shareholders Association, while describing the raise as a "dead rat" for smaller investors, acknowledged the company's precarious position.
In the wake of the vote, Synlait's shares saw an immediate positive response, opening up 7.7% on the NZX. This market reaction reflects cautious optimism about the company's future prospects now that its immediate financial crisis has been averted.
The successful vote not only secures Synlait's immediate future but also unlocks a new $450 million banking facility, crucial for the company's ongoing operations. However, this facility's 12-month term underscores the challenges that still lie ahead for Synlait.
Fonterra invests $150 million in Whareroa cool store expansion
Fonterra is set to invest $150 million in a new cool store at its Whareroa site in Taranaki, marking another significant step in its strategic expansion plans. This latest announcement follows recent commitments of $75 million for a protein plant at Studholme and $150 million for a UHT cream plant at Edendale in the South Island.
Chief Executive Miles Hurrell attributes these substantial investments to Fonterra's robust financial position, emphasising the company's ability to fund future growth while executing its strategic vision.
The planned cool store at Whareroa will span approximately 19,000 square metres and boost the site's cheese storage capacity by 5,000 tonnes, bringing the total to 26,000 tonnes. This expansion is crucial for Fonterra's supply chain resilience, according to Chief Operating Officer Anna Palairet.
The cool store project will commence next month, implemented in two phases to maintain current operations.
Federated Farmers celebrate 125 years of championing rural New Zealand.
New Zealand's cornerstone of rural advocacy, Federated Farmers, is commemorating its 125th birthday, a milestone that underscores its longstanding commitment to the country's agricultural sector. The organisation's roots trace back to 1899, when Thomas Portland Smith established the first properly constituted Farmers' Union branch in Kaitaia, recognizing the need for a single unified voice to strengthen farmers' position and create leverage when engaging with the government.
The late 19th century posed significant challenges for New Zealand agriculture, including market fluctuations, land management issues, and the complexities of navigating government policies. The NZFU quickly gained traction, particularly in the North Island, holding its first national conference in 1902.
A parallel movement emerged in Canterbury in 1910 when Henry Acland of Mt Peel Station formed the Sheep Owners' Federation, addressing issues like fluctuating wool prices, disease outbreaks, and the need for improved farming practices. The agricultural advocacy landscape further evolved in 1925 with the establishment of the Women's Division of the NZ Farmers Union by Florence Polson, which later became Rural Women New Zealand.
The post-war era saw these diverse groups merge in 1945 to form Federated Farmers, creating a more comprehensive and unified voice for the agricultural sector. Current president Wayne Langford expresses pride in the organisation's consistent advocacy over 125 years, stating they've been standing up for farmers and rural communities, giving them a strong voice, and advocating for what's fair through booms and busts, significant land use change, market downturns, and the removal of subsidies.
Langford emphasises the organisation's strength lies in its ability to navigate differences between various sectors and provinces. He describes Federated Farmers as an incredibly democratic and diverse grassroots organisation, fostering robust debate on major farming issues. This approach sets them apart, as they can't just take a position that works for one sector but must confront tough discussions as a collective group to find a pan-sector position benefiting all farmers.
Southland farmers battle 'relentless' weather as spring struggles continue
Staying with Federated Farmers, they say Southland farmers are facing a grueling start to the season as relentless wet weather and snow blanket the region during its busiest time of year. Jason Herrick, Southland Federated Farmers president, describes the situation as dire, noting that all of Southland is absolutely drenched, with soil capacity well over 100% and completely waterlogged.
The timing couldn't be worse for farmers. Dairy farmers rely on this time for peak milk production, while sheep and beef farmers count on good survivability rates for newborn animals. The current conditions are threatening both sectors, with Herrick warning that if farmers don't get peak milk or good survivability now, it will impact income at the end of the season.
Invercargill MP Penny Simmonds corroborates the severity of the situation, citing Environment Southland data showing rainfall in some areas has reached over 200% above the long-term average for September, with half the month still to go. She emphasizes that farmers are facing the dual challenge of managing calving and lambing while contending with these relentless wet conditions and weather events.
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Agri sector optimism rises for first time since 2021, crucial day for Synlait as shareholders decide on major restructuring, and rural expertise bolsters Environmental Protection Authority.
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Agri sector optimism rises for first time since 2021
For the first time since late 2021, farmer confidence in the broader agri economy has returned to net positive levels in the latest Rabobank Rural Confidence Survey.
The survey, completed earlier this month, shows a significant turnaround in sentiment. Farmer confidence in the agri economy jumped to a net reading of positive three percent, a substantial improvement from the negative 25 percent recorded in the previous quarter.
Rabobank CEO Todd Charteris attributes this upswing to the arrival of spring and improving conditions across all farming sectors. He notes that 30 percent of farmers now expect the performance of the broader agri economy to improve in the coming year, double the figure from last quarter.
Key factors driving this optimism include higher commodity prices, cited by 40 percent of positive respondents, and expectations of falling interest rates, mentioned by 31 percent. However, rising input costs remain a concern for 48 percent of those with a less favourable outlook.
The survey also reveals improved expectations for individual farm business performance. All major sector groupings - dairy, sheep and beef, and horticulture - recorded net positive readings on this measure. Dairy farmers lead in optimism, with 42 percent expecting their business performance to improve in the next 12 months.
On the investment front, there's a modest uptick in intentions. Nineteen percent of farmers expect to increase investment in the coming year, up from 14 percent last quarter. This marks the first time in over two years that investment intentions have been in net positive territory.
While the percentage of farmers assessing their operations as 'unviable' remains relatively steady at eight percent, there's been an increase in those viewing their businesses as 'viable' or 'easily viable', rising to 55 percent from 48 percent previously.
DairyNZ report reveals unexpected upturn in dairy farm finances
Meanwhile The dairy farming outlook for New Zealand has taken an unexpected positive turn, according to the latest DairyNZ Econ Tracker update. Despite earlier predictions of a challenging season, recent economic shifts have created a more optimistic landscape for dairy producers.
Mark Storey, head of economics at DairyNZ, says two key factors are driving this improved outlook: declining interest rates and higher farmgate milk prices. These changes are expected to provide dairy farmers with greater financial flexibility in the 2024/25 season than initially forecast.
This positive trend aligns with farmer sentiment captured in DairyNZ's recent Farmer Perceptions survey. Even before the latest economic indicators, a majority of farmers expressed high confidence in their financial sustainability, with only a small fraction feeling less assured.
The latest farm financial forecast paints an encouraging picture, with the national breakeven point now standing at $8.09 per kg of milk solids, while the projected average payout has risen to $8.84 per kg. This widening gap between costs and income signals improved profitability for many operations.
Despite minor increases in farm working expenses, including electricity, irrigation, wages, and maintenance costs, the reduction in interest rates and higher milk prices more than offset these rises. The result is a notably stronger financial position for most dairy farmers.
The Econ Tracker's September 2024 quarterly update delves deeper into the potential impacts of interest rate changes. Storey's analysis shows how the timing of interest rate cuts could affect farmers' discretionary cash positions, with earlier reductions potentially leading to greater cost savings compared to later-season cuts.
While the outlook has improved, challenges remain. A slight cash deficit persists on average across dairy farms, indicating that interest costs continue to exert pressure on farm finances.
Crucial day for Synlait as shareholders decide on major restructuring
Today marks a critical juncture for Synlait Milk as shareholders gather to vote on a $217.8 million recapitalization plan.
The proposed plan aims to bolster Synlait's balance sheet and address its debt concerns. If approved, it will see China's Bright Dairy increase its stake to 65% through a $185 million share issue at 60 cents per share. Meanwhile, a2 Milk will maintain its 19.8% holding by investing $32.8 million at 43 cents per share.
While the deal appears likely to proceed, it's not without controversy. Minority shareholders face significant dilution, with their collective stake potentially dropping from 41.2% to just 14.9%. The New Zealand Shareholders' Association, despite initial reservations, has decided to vote in favor of the deal.
Synlait's chair, George Adams, emphasizes the interconnected nature of the recapitalization elements. These include the share placements, constitutional changes, refinancing, and settling a supply contract dispute with a2 Milk. Adams warns that if any component fails, the entire plan collapses.
In a positive development on Tuesday, Synlait secured a new $450 million facility agreement with eight banks, contingent on today's vote outcome.
The company's struggles stem largely from its underperforming Pōkeno plant. However, a recent strategic review has led to a decision to focus this facility solely on advanced nutrition products, moving away from raw milk processing.
Rural expertise bolsters Environmental Protection Authority
Environment Minister Penny Simmonds has announced a major renewal of the Environmental Protection Authority (EPA) board, injecting fresh rural and agricultural expertise into New Zealand's national environmental regulator.
Four new members will join the EPA board for three-year terms ending in August 2027. They are Barry O'Neil, Jennifer Scoular, Alison Stewart, and Nancy Tuaine. Each brings valuable experience in horticulture, agricultural science, and governance to the table.
Paul Connell, a current board member, will continue his role and take on the additional duty of acting interim chair. His reappointment ensures continuity of leadership and maintains the board's commercial insight.
The EPA plays a crucial role across New Zealand's economy, overseeing the Emissions Trading Scheme and regulating chemical use in various industries. This refresh aims to balance timely decision-making for the agriculture and horticulture sectors with achieving positive environmental outcomes.
The new board members bring diverse expertise to their roles.
Barry O'Neil, a trained veterinarian, has led Kiwifruit Vine Health and held key positions in Biosecurity NZ. He currently chairs Horticulture NZ and Tomatoes NZ.
Jennifer Scoular, a chartered accountant, recently concluded her tenure as CEO of NZ Avocado. She now serves as deputy mayor of Tauranga and directs the International Fresh Produce Association.
Dr. Alison Stewart, CEO of the Foundation for Arable Research, brings extensive knowledge in plant pathology and forestry science. She chairs the Forest Growers Research Tissue Culture Partnership.
Nancy Tuaine, CEO of Ngā Tāngata Tiaki o Whanganui, contributes valuable iwi governance experience and insight into environmental legislation implementation.
Their collective expertise promises to enhance the EPA's ability to make informed decisions that balance agricultural productivity with environmental stewardship.
Fonterra Calls for Council Candidates
Fonterra has launched nomination rounds for its Co-operative Council and Directors' Remuneration Committee.
The Co-operative Council comprises 27 elected dairy farmers, and acts as a vital link between Fonterra and its member community. It interprets farmer needs, monitors company performance, and collaborates with the Board on key decisions affecting the co-operative's future.
This year, ten Council wards are up for election. Three current Councillors are stepping down, while seven aim to continue their roles. The Directors' Remuneration Committee also has two vacant positions. This independent body, made up of half a dozen farmer owners, evaluates and recommends pay levels for Elected Directors and Councillors.
Warwick Lampp from electionz.com, the appointed Returning Officer, is overseeing the nomination process. Interested dairy farmers can obtain nomination papers and candidate handbooks directly from Lampp.
For Fonterra farmers considering throwing their hat in the ring, all nominations must reach the Returning Officer by noon on Thursday, October 3rd.
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Kiwi exporters benefit as government clears trade hurdles, AgResearch gets government boost of $3 million for research projects, and farm conservation efforts lead to rare mudfish discovery.
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Kiwi exporters benefit as government clears trade hurdles
New Zealand's agricultural sector is set to reap the rewards of the government's recent efforts to clear international trade hurdles. Trade and Agriculture Minister Todd McClay has announced the removal of barriers affecting nearly $190 million worth of our exports, a move aimed at boosting our economy and supporting rural communities.
Over the past year, the government has tackled 14 Non-Tariff Barriers, or NTBs, which have been holding back Kiwi exporters. These obstacles, ranging from complex certification processes to import restrictions, have been particularly challenging for our primary sector.
Minister McClay highlighted the significance of these wins, noting that one in four jobs in New Zealand is tied to trade. By clearing these hurdles, the government aims to put more money into the pockets of hard-working New Zealanders, especially those in our rural and agricultural communities.
Some key victories for our exporters include resolving labelling issues for New Zealand cheese in South Korea, streamlining certification for onion exports to Indonesia, and restoring log exports to India. These changes have immediate benefits for our farmers, growers, and rural businesses.
The wine industry also stands to gain, with expanded labelling flexibility now agreed upon with the European Union. This change should make it easier for our wine producers to market their products in this crucial market.
Looking ahead, the government has its sights set on even more improvements. Plans are in place to address EU deforestation regulations, which could impact our agricultural exports, and to tackle Canadian dairy import restrictions. There's also a focus on expanding opportunities for our cosmetics exports to China and easing restrictions on structural timber exports to Australia.
Synlait Milk secures $450 million refinancing deal
Synlait Milk has successfully refinanced its banking facilities for another year. This move, totaling $450 million, marks a crucial step in the company's business recovery strategy.
The new funding arrangement includes a working capital facility with a peak of $160 million, a $10 million on-demand bilateral facility, a revolving credit facility of $205 million, and a term loan facility of $75 million. These facilities are set to mature 12 months from the closing date, expected to be October 1 this year.
Synlait's new banking syndicate comprises a mix of domestic and international institutions, including ANZ, Bank of China, Bank of Communications, China Construction Bank, HSBC, Industrial and Commercial Bank of China, Kiwibank, and Rabobank. This diverse syndicate underscores the global interest in New Zealand's dairy sector.
Chief Executive Grant Watson emphasised the significance of this refinancing, stating it represents another positive step forward in Synlait's business recovery plan and efforts to deleverage the company's balance sheet.
The refinancing is contingent on several conditions, including an upcoming capital raise. Shareholders are set to vote on a proposed $218 million capital injection from Synlait's two largest shareholders, Bright Dairy and The a2 Milk Company. This vote, scheduled for Wednesday at Synlait's Dunsandel site, is crucial for the company's plans to reduce its debt burden.
Proceeds from the equity raise and certain tranches of the new facilities will be utilised to repay outstanding bank debt and Synlait's $180 million listed bond.
AgResearch gets government boost of $3 million for research projects
In a move to address key challenges in New Zealand's agricultural sector, the government has allocated approximately $3 million to AgResearch. This funding aims to drive innovation in tackling industry issues such as plant diseases and environmental impacts.
The investment comes through three Smart Idea grants, awarded as part of the 2024 Endeavour Fund. This initiative, announced by Science Minister Judith Collins, seeks to support research that pushes boundaries and delivers results to enhance our nation's economy, environment, and society.
AgResearch Chief Scientist Axel Heiser has welcomed the funding, stating that exploring new approaches to long-standing issues is crucial given the current challenges our agricultural industries are dealing with. He says that while the impact may not be immediate, the long-term gains could be significant.
The grants will support three innovative projects at AgResearch. The first initiative aims to develop new biomaterials using protein, creating environmentally sound alternatives to plastics. These materials could eventually be used in products ranging from cycle helmets to mobile devices.
A second project targets fungal diseases, a major threat to both crops and livestock. Using RNA interference technology, researchers hope to create an eco-friendly method to control these diseases. This could have wide-ranging impacts, including addressing issues like facial eczema in sheep, which costs our economy hundreds of millions annually.
The third study looks at increasing nitrogen use efficiency through nanofertilizers. This research could lead to more sustainable dairy grazing systems, reducing environmental impacts while maintaining productivity.
Each project received around $1 million in funding, demonstrating a substantial commitment to agricultural innovation.
New report reveals pathways to boost our sheepmeat industry
A new Rabobank report provides a comprehensive analysis of New Zealand's sheepmeat industry, offering strategic insights for sector recovery and growth. The report, titled "Watering the green shoots in New Zealand sheepmeat," addresses recent market challenges while outlining potential avenues for industry advancement.
Jen Corkran, Rabobank's senior animal proteins analyst, reports that sheepmeat export values experienced a significant decline, dropping from $12.63 per kilogram in October 2022 to $8.08 in December 2023. This downturn, combined with elevated on-farm costs, has created financial pressure for both producers and exporters.
Despite these challenges, the report suggests that the industry may have reached its cyclical low point, with projections indicating potential upside from 2025 onwards. Corkran emphasises the importance of leveraging this downturn as a catalyst for strategic change to enhance future returns.
The report delineates three key pathways for industry improvement:
Firstly, it recommends a focus on increasing domestic consumption. Current per capita consumption in New Zealand stands at 1.95 kilograms, significantly lower than Australia's 6.4 kilograms. Expanding the domestic market could provide a more stable demand base for the industry.
Secondly, the report advocates for a reassessment of export strategies. While China remains a dominant market, accounting for nearly half of New Zealand's lamb exports, the report suggests exploring diversification opportunities. Markets such as the UK, EU, and US present potential growth areas, particularly in light of recent trade agreements. The challenge lies in optimizing product allocation to maximize returns across these markets.
Lastly, the report underscores the critical role of ongoing investment in research and development. This encompasses a range of initiatives, from enhancing genetic improvements for superior liveweight gains to exploring value-added products derived from various sheep carcass components.
Farm conservation efforts lead to rare mudfish discovery
A significant discovery has been made on a dairy farm near Timaru, highlighting how conservation and agriculture can work hand in hand. The critically threatened Kōwaro, or Canterbury Mudfish, has been found living in an irrigation spring at Craigmore Sustainables' Somerset farm.
Department of Conservation (DOC) staff confirmed the presence of this endemic freshwater fish during visits in April and May. The team netted 72 mudfish, ranging from 77 to 149 millimeters in length, in what they describe as an ideal habitat with clean, clear water and dense aquatic plant growth.
This discovery follows a comprehensive waterway restoration project undertaken by the farm over the past two years. The project included replacing an old diesel irrigation pump with an electric one to reduce the risk of chemical contamination, and fencing the site to keep livestock out.
In addition, the farm has planted over 2,760 native plants around the water's edge, including dry woodland shrubs, trees, flax, and reed plants. This restoration effort aims to create a regenerating native bush block that will provide shade, shelter, and food for various native and endangered species.
A DOC report praised the extensive riparian planting, noting the diverse range of species used. The report also highlighted the excellent water clarity and diverse aquatic plant life, both indicators of good water quality and stable hydrology.
Craigmore Sustainables, which manages the Somerset farm, views this discovery as both a privilege and a serious responsibility. The company emphasises its commitment to balancing environmental respect with sustainable and profitable rural operations.
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Farmers urge DOC to step up their pest control efforts, pleas for more support for rural mental health crisis, and 100 schools get ‘George the Farmer’ books to boost agri education.
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Farmers urge DOC to step up their pest control efforts
Farmers up and down the country are grappling with a growing pest problem, citing continuous reinvasion from neighbouring Department of Conservation (DOC) land. Federated Farmers is calling for intervention following a recent survey that revealed feral animal control is costing farmers at least $213 million annually.
DOC manages about a third of the country's land area, operating on a budget similar to that of Christchurch City Council. However, this budget is set to decrease further, with DOC cutting 130 roles earlier this year to meet government-mandated spending reductions. Overall, DOC's funding is expected to drop 21 percent to $728 million by 2026/27.
Many farmers across the country report significant challenges with pest control, particularly those whose properties border DOC reserves. These farmers often invest considerable time and money into pest management on their own land, including installing traps, bait stations, and even using night vision equipment for nocturnal pest control.
Some farmers have taken conservation efforts into their own hands, covenanting portions of their land and replanting native species. However, they note that the constant influx of pests from nearby DOC land undermines these efforts. Wild deer, pigs, and possums are cited as particularly problematic, causing damage to native plants, forests, and waterways.
While acknowledging that individual DOC rangers are hardworking, many farmers believe the department's focus on paperwork and consultation hampers effective pest control. Some have offered to assist with pest management on DOC land but report that their offers have been declined.
DOC, for its part, acknowledges farmers' frustrations but emphasises the need for a collective effort to find solutions. The department states that its approach to feral animal control focuses on areas where pests pose threats to protected species or act as vectors for diseases like kauri dieback.
Recent monitoring has found that hoofed animals now occupy 82% of sites on public conservation land, up from 64% in 2013, highlighting the growing scale of the problem.
Pleas for more support for rural mental health crisis
Rural Women New Zealand (RWNZ) is sounding the alarm on the urgent need for increased mental health support in rural communities. This call to action comes in the wake of ACT MP Mark Cameron's moving address in Parliament, where he shared his family's recent loss to suicide.
Sandra Matthews, RWNZ Board Chair, commends Cameron's courage in bringing attention to this critical issue. She emphasises the importance of open dialogue about mental health challenges in rural areas, noting that country communities are currently facing numerous hardships.
The rural sector is grappling with a perfect storm of challenges. These include significant job losses due to the closure or downsizing of major local employers, ongoing recovery efforts from Cyclone Gabrielle and other extreme weather events, and persistent drought conditions in various regions. Additionally, farmers are struggling with low market prices while input and living costs continue to rise.
RWNZ welcomes recent government initiatives, such as the rollout of mental health support for primary and intermediate students in Hawke's Bay and Tairāwhiti. They also commend increased funding for drought-affected communities and Rural Support Trusts. However, Matthews stresses that more needs to be done.
The organisation highlights the risk of volunteer burnout in rural communities, where locals often shoulder the burden of addressing multiple crises simultaneously. With Mental Health Awareness Week approaching, RWNZ is urging the government to significantly increase resources and access to rural mental health services, including counselling and medical assessments.
Dairy farmers face higher TB levy as rates shift
Next month will see changes in TB differential slaughter levy rates, with dairy and beef cattle affected differently. Ospri, the organisation managing the TBfree programme, has announced these adjustments as part of its annual review process.
From next month, dairy animals will face an increased levy of $12.25 per head, up 75 cents from the current rate. In contrast, the levy for beef animals will decrease by 25 cents, dropping to $4.50 per head.
Ospri explains that these adjustments are made to align with the latest industry farm gate values and slaughter volumes for dairy and beef stock. The organisation emphasises that these changes don't increase the overall annual funding of the TBfree programme but ensure consistent funding to support programme delivery.
The TB differential slaughter levy is collected to fund the TBfree programme on behalf of the beef and dairy industries. Funding shares change annually based on shifts in the relative size and value of each industry.
In light of these changes, Beef + Lamb New Zealand is urging farmers to keep their NAIT (National Animal Identification and Tracing) accounts up to date. They stress the importance of recording the correct animal type to ensure farmers are paying the appropriate TB slaughter levy.
South Canterbury airstrip restrictions could have nationwide implications
A battle brewing in South Canterbury over rural airstrip regulations could have far-reaching consequences for farmers and recreational pilots across New Zealand. Aircraft owners in the Timaru and Mackenzie districts are contesting proposed district plan changes that would restrict operations at numerous rural airstrips, and there are concerns this trend could spread to other regions.
The proposed changes include extending noise setback areas around rural airstrips to a 500-metre radius and limiting the number of flights. This could affect an area of about 500 hectares around each airstrip, potentially impacting land use and property rights for many rural landowners.
Farmers and aviation enthusiasts argue these restrictions are disproportionate to the actual use of rural airstrips, which are often utilized only weekly or monthly. They point out that the proposed setbacks for these intermittently used airstrips are more extensive than those for some international airports.
The Aircraft Owners and Pilots Association of New Zealand (AOPA NZ) is at the forefront of this fight, highlighting the potential national implications. They warn that if these regulations are adopted in South Canterbury, other councils across the country might follow suit, leading to a domino effect of restrictions on rural aviation.
Critics of the proposed changes argue that they create unnecessary regulation where no problem previously existed. In the Timaru District, for example, there has reportedly been only one fixed-wing aircraft noise complaint in the past decade.
There are also concerns about the impact on emergency responses in isolated areas. Fewer rural airstrips could hinder rapid access for emergency services, potentially affecting rural communities nationwide.
The situation raises questions about the balance between local council regulations and rural activities. Farmers are expressing frustration at having to spend time and money fighting issues they believe are created by councils and consultants rather than addressing existing problems.
100 schools get ‘George the Farmer’ books to boost agri education
A hundred primary schools across New Zealand now have new resources to teach students about farming and food production, thanks to a recent competition by Rabobank. The agri lending specialist has donated sets of 'George the Farmer' books to schools nationwide, more than doubling last year's giveaway.
Rabobank New Zealand Head of Client Councils Jeffrey Morrison highlights the initiative's aim to improve knowledge about farming and food production among young Kiwis. The huge volume of entries received demonstrates strong demand from schools for this type of agri-focused teaching resource.
The competition, which ran in late July and early August, attracted entries from all over the country. Winning schools received six 'George the Farmer' books earlier this month.
'George the Farmer' is a fictional character created in 2014 by South Australian farmer Simone Kain. The series aims to connect children to the earth, food, and farm through engaging stories. With help from the New Zealand Agribusiness in Schools programme, the learning resources have been adapted for Kiwi students.
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