DECEMBER 17, 2013: ISSUE 552 www.ruralnews.co.nz

RURALNEWS

REVIEWWe take a look at 2013 the good, the bad and the ugly. PAGE 6-7

MANAGEMENTInnovative American couple lead the way at Castlepoint Station. PAGE 23 BEEF

Opportunities arise for more farmer

suppliers to join Wagyu producer group.PAGE 11

TO ALL FARMERS, FOR ALL FARMERS

LESS LAMBBeef + Lamb New Zealand economists Rob Davison and Andrew Burtt pictured with the annual lamb crop report, which says the total number of lambs tailed this spring was 25.5 million making it the second-smallest lamb crop since 1960. While the numbers are down, Davison and Burtt say they are pleasantly surprised its not a lot worse. The lower lamb kill means there will be 19.5 million lambs available for slaughter in the 2013/14 season, the third-lowest number of lambs available for export since 1960-61. Full report page 10

Sheep and beef vitalA RAMPANT dairy sector is in danger of affecting the self-esteem of the sheep and beef sector, says Beef + Lamb New Zealand chairman Mike Petersen.

He told guests at BLNZs Christ-mas function last week that New Zea-land is not just one big dairy farm and in fact 80% of the pastoral land is under sheep and beef farming. Petersen says the meat industry often cops a lot of flak from the media and it needs to build self confidence.

We need to think about the impor-tance of the sheep and beef sector. Part of BLNZs role is to make sure we do build confidence in the sector because the red meat sector is a crucial part of the landscape in New Zealand.

PETER BURKE

peterb@ruralnews.co.nz

So while you drive down the length of the country and only see dairy cows, just remember the vast proportion of farmland out there is sheep and beef.

Petersen also says the sheep and beef sector is a good business and there is money in sheep and beef farming.

In fact, the sector is alive and well very vibrant, 88-90% of the [farming] industry. The dairy industry is not the dominant player.

The sheep and beef sector is investing in individual companies in differentiated products and singularly trying to move value to consumers and also back to farmers. In many cases they

are doing that very well. According to Petersen, the red meat

sector has made a lot of progress and investment and has done a lot of think-ing about how it might perform better.

With the universities, CRIs and companies playing a role, we have a sector that is here for the future and is fighting hard to do better.

Petersen says while he applauds the success of the dairy industry and its achievements, other sectors need to reflect on this.

The rest of us not just the red meat sector run the risk of pulling ourselves apart at the expense of dairy

because we are frustrated we arent earning the same as dairy. Its not just in the sheep and beef sector, but also the deer sector that farmers are also getting frustrated over land use change.

The dairy industry is a runaway train at the moment, going phenom-enally well, but we all need to remind ourselves that large parts of New Zea-land will be in other land uses. We must continue to build those industries over time.

Petersen says he doesnt want New Zealand to become one big dairy farm, but equally he applauds what that dairy industry does.

FONTERRA HAS denied build-ing a multi million-dollar warchest for a court battle with French dairy giant Danone over the false botulism scare-related product recall.

Chief executive Theo Spierings says a commercial proposition is on the table and it is waiting to hear back from Danone. The ball is in Danones court, Spierings last week told Rural News.

Danone is the parent company of Nutricia Australia New Zealand which produces Karicare infant for-mula, one of the affected and recalled products. Media reports suggest Danone is seeking millions in dam-ages from Fonterra.

Asked if Fonterras decision not to increase the 2013-14 forecast payout was tied to a possible looming legal battle with Danone, Spierings said that is pure speculation. We have a commercial proposition on the table and were waiting to hear back from Danone.

Spierings still hopes for a com-mercial deal rather than a legal deal. The co-op has sealed commercial deals with seven of the eight com-panies caught up in the false botu-lism scare.

The contamination was confined to 38 tonnes of WPC80 made at Fon-terras Hautapu plant near Cam-bridge and first picked up at a plant in Australia. It was used to make infant formula, juice and dairy beverages, yoghurt, body building powder and animal food.

SUDESH KISSUN

sudeshk@ruralnews.co.nz

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RURAL NEWS // DECEMBER 17, 2013

NEWS 3

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TAF stumbles at first hurdle?THE FONTERRA boards decision to interfere with the milk payout shows TAF has stumbled at its first hurdle, says agribusiness expert Keith Wood-ford, Lincoln University.

The boards decision to keep the farmgate payout at $8.30/kgMS despite a $9 recommendation by the co-ops milk price panel strikes at the funda-mentals of its capital structure, he says.

In stating that they are now pro-posing to retain 70c from what the pro-jected milk price would otherwise be, if calculated as per the milk price manual, Fonterra is demonstrating that TAF has stumbled at the first major hurdle, Woodford told Rural News.

What this decision means is that retentions are in effect going to come from the milk price, despite earlier statements from Fonterra that this would not occur. Even more important is this means that the rules for allocating income between milk price and return to investors have been cast aside.

Woodford questioned the milk

pricing rules underpinning the integrity of TAF.

We are now seeing the board rather than a set of rules determine how money will be allocated between farmers and investors, he notes. And that opens the door to ongoing tension between farmers and investors, includ-ing intensive lobbying of the board by investors.

However, a Fonterra spokesman says the suggestion that the boards decision to maintain the forecast milk price at the record level of $8.30 has something to do with TAF is incorrect. Stream returns have nothing to do with TAF, he says.

It is important to understand that retentions are a vital part of Fonterras ability to invest in future growth, stay on strategy and ensure the cooperative maintains its global position.

Fonterras [transparency] about its decision to maintain the forecast at $8.30 demonstrates the integrity of the process for setting the milk price.

He points out that about 95% of those who have a financial interest in the cooperative are in fact farmer share-

holders. Obviously they benefit from the payment of dividends, he says.

Twelve months on, TAF is meeting its two goals of providing permanent stable capital for the cooperative and more flexibility for our farmers.

The drought in the second half of the year was the worst in 70 years. It hit the cooperative and our farmers hard. But it would have been a lot tougher without our current capital structure.

Potentially the cooperative would have been facing the prospects of paying out about $130 million to redeem shares. Instead, our permanent stable capital structure meant we could sup-port farmers with a lift in the advance rate. Our new capital structure has also enabled us to drive transactions to sup-port our volume and value strategy.

While keeping the forecast payout at $8.30/kgMS the board also lowered the dividend forecast for the 2014 financial year to 10c/share.

The co-op says it is in an extraordi-nary situation, with the gap between prices for milk powders compared to cheese and casein being greater than ever.

Woodford did not crit-icise the boards deci-sion to take 70c off the milk price. Clearly something had to be done to maintain the integrity of the balance sheet in an extraordinary situation, he says.

However, as long as Fonterra cannot pay out the full milk price as calculated by the agreed formula then there should be zero dividend, he says.

The decision to keep it at 10c rather than zero can only be interpreted as an attempt to appease the investors, who will already be more than a little bit cross.

My key point is that the necessary decision to lop 70c of the projected milk price shows that TAF was not adequately tested under wide-rang-ing scenarios. And it has now come up short. The long term implications of this are profound.

SUDESH KISSUN

sudeshk@ruralnews.co.nz

Deer PGP not there yet!DEER INDUSTRY New Zealands application for a Primary Growth Partnership scheme has not been approved for funding, as reported in Rural News (December 3) and other publica-tions merely approved to proceed to busi-ness case development, Deer Industry New Zealand points out.

The PGPs independent advisory panel considered the deer industry application and has recommended that the industry start working with MPI to develop a detailed busi-ness case for the investment, which will then go to the director-general for final approval.

Only after that stage has been success-fully completed would a contract be entered into which would allow a PGP programme to start and any funds from the government to be directed to that deer industry pro-gramme, DINZ says.

Wool remains volatileA VERY volatile wool market is lead-ing to a seesawing of prices for dif-ferent types of wools, says Malcolm Ching, from Wool Services Interna-tional (WSI).

Crossbred wool prices spiked at $5.85/kg about a month ago and have now dropped to $5.15. But they are still 30% ahead of last year when the average price was $3.80/kg.

Long term we think there will be better levels overall than the previ-ous season but I doubt prices will go back up to the peak prices weve had in the last three months, says Ching, WSIs Purelana manager.

You are likely to see short spikes, and things drop back quickly for cer-tain types. So rather than a steady lift or a steady drop there is likely

to be seesawing for individual types depending on market demand.

It is getting very, very diffi-cult for us to predict what is going to happen now because there are no buffers nothing to smooth out what normally happens in the mar-ketplace, so we are in the winds of fashion, currency, supply, demand and client sentiment. It makes life very difficult.

Long term few stocks are held by anybody farmers, exporters, bro-kers, merchants and the manufac-turing pipeline. But customers are holding off because prices got over-heated.

There was not enough wool around, and weve had a drought affected supply this year. Everyone

was telling us the stock numbers were about the same as last year or very close. That wasnt the case. It got slightly oversold, pressuring prices dramatically locally. It made clients offshore sit back and say this is too dear for us and if it keeps on at these levels, were out.

Markets like China did stop buying for a while. They could afford to do so because they bought a lot of wool and it had gone through first stage processing in China.

Thats slow to go out at the con-suming end. The manufacturers are now using other textiles or wools from other origins that are cheaper.

The Asian buyers will have to come back to our market.

Pam Tipa

Keith Woodford

@rural_news facebook.com/ruralnews

RURAL NEWS // DECEMBER 17, 2013

4 NEWS

Record powder prices cause discomfortFONTERRA IS reviewing its business plans and asset base in view of a widening gap between the prices of milk pow-ders and other dairy products.

Fonterra chief executive Theo Spierings says high milk powder prices is the new reality for the dairy industry.

Spierings told Rural News that Fonterra will look at overseas milk pools to produce more milk powders to meet a growing appetite in China and emerging econo-mies in Asia and North Africa.

Over the next two months the co-op will review its asset base and draw up a business plan.

Economic factors in Europe, the US and Japan had meant cheese prices had not kept pace with milk. While the record high prices for milk powders is good and has pushed the milk payout to a record level, it also pushes up the cost of production of value added products. Over the past few months the price difference between milk pow-ders and cheese and casein has had an $800 million effect on the co-ops balance sheet.

Last week the co-op was forced to take the unprec-edented step of holding the milk payout at $8.30/kgMS despite a milk price panels recommendation of $9/kgMS.

Fonterra also said its earnings before interest and tax would fall to $500 m to $600 m in the year to July 31, 2014 down from $1 billion a year earlier mostly because of higher costs imposed by strong dairy prices, which are an added cost to its manufacturing activities.

Spierings says until recently the biggest difference between powder and cheese prices was $150m. The $800m gap is not sustainable.

About 70% of Fonterra plants in New Zealand make milk powders while 30% produce cheese and casein.

We have to act now; doing nothing in this is case is not an option, he told Rural News. We have to ask ourselves whether this huge price gap will be around just for a few weeks or are we looking at the new reality? I suspect we are and the key strategic question we have to address over the next two months is how do we deal with it?

Spierings says its too early to say whether Fonterra could shut down some cheese and casein plants in New Zealand. But he warns volatility has become the new norm, and Fonterra must have the flexibility to respond quickly to shifting global demands for dairy nutrition.

We need to continue investing in greater flexibility in our manufacturing assets so we can meet changes in global demand and commodity cycles. The new market realities mean new opportunities, and we must go after them now as we have in the past by driving forward with our volume and value strategy.

Since Fonterra was formed it has not built any new cheese or casein plants, but it has built more milk powder plant. A new dryer has been approved for Pahiatua, work is underway on a UHT plant at Waitoa and a new dryer was officially opened at Darfield this month.

Sudesh Kissun

New factory secures suppliersOCEANIA DAIRY, the wholly owned subsidiary of Chinas largest dairy company Yili, has secured half its target first year supply for the $214m fac-tory it is building in South Canterbury.

A group of suppliers

with 20 farms between them has signed for three years of Oceania paying Fonterras milk price plus 10 cents.

We are proud to be the inaugural suppliers to Oceania Dairy Ltd, Aad van Leeuwen says. With a world-class processing plant and strong owner-ship structure [it] offers

local farmers choice and opportunity. This is a real shot in the arm for the local economy.

Van Leeuwen told Rural News there are seven or eight individual farmers in the group. Basically its the group that was sup-plying NZDL and has been supplying Synlait for the past three years.

Between them theyll supply at least six million kgMS, 80% of the payout made upfront, says van Leeuwen.

Oceanias factory is at Glenavy, about 20km south of the former New Zealand Dairies (now Fon-terra) plant at Studholme. Van Leeuwen was instru-mental in that develop-ment in 2006/07 and has sold the land to Oceania for its factory. His farms will supply about half that 6mkgMS.

Oceania chief exec-utive Aidan Johnstone says the firm is delighted to have contracted Aad and Wilma van Leeuwen among its first suppliers. They are industry lead-ers and excellent farm-ers. They typify the sort of suppliers that we are look-ing to work with.

Oceania says it will contract up to 40 local

farmers for the 2014-15 season to procure 130 million litres of milk. At capacity, targeted for the 2016-17 season, it will pro-cess 300 million litres/year, making 47,000t/year of milk powder for export to China where Yili will make it into infant for-mula.

The factory will employ about 70 perma-nent staff when complete, most recruited locally.

Johnstone says milk suppliers will have the security of knowing they are contributing to a first-class product for a sub-stantial and progressive single end-user client. That provides suppli-ers with security and con-fidence to invest in their businesses.

Construction of the factory is on schedule and it will take its first milk next July.

ANDREW SWALLOW

andrews@ruralnews.co.nz

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RURAL NEWS // DECEMBER 17, 2013

NEWS 5

Food safety boost from WPC inquiry

SOME OF the greatest risks to our food safety reputation lie ahead, says a report to Government on the Fonterra whey protein concentrate (WPC) con-tamination scare.

Food Minister Nikki Kaye told Rural News the Government agrees with that and so is adopting all recommendations of the independent inquiry, allo-cating $8-12 million a year

to strengthen systems.Our food safety sys-

tems are world leading and it is a huge relief for the Government to have this report saying that, Kaye told Rural News. But we recognise some of the greatest risks lie ahead.

A notable proposal given the go-ahead is a $5 m per annum food safety science and research centre possibly a vir-tual centre, says Kaye. Fonterra chief executive Theo Spierings says the

PAM TIPA

pamelat@ruralnews.co.nz

THE GOVERNMENT will post four more senior people to China and six to other developing markets as a result of the WPC report.

This is will cost $4.4 million initially, rising to $8.2 m in three to four years.

It had already increased the market access team from eight to 16 immediately after the botulism scare.

The new appointees will be seniors with diverse skills including technical and trade, says Food Safety Minister Nikki Kaye. You need people with wide understanding of issues from food safety to changing market access rules.

The other key expenditure is $1 million to improve dairy capability and a working group will be set up to develop a strategic plan, says Kaye. And we have committed $250,000 to establish a food safety and assurance advisory council. Thats likely to have industry and academic representation. The purpose is to scan for emerging risk this council will have a mechanism to scan for those risks.

The Government has also announced $250,000 to fast-track work underway to simplify food laws. That includes a working group on traceability looking at the food safety supply chain.

Kaye says the report also highlight the Food Bill, legislation thats been in train over successive govern-ments for 10 years. I have committed today to that bill passing within the first few months of next year, says Kaye.

More for China

proposal is exciting and wants to be part of it.

Kaye says $7 m is spent annually on food safety research, but the report is clear this funding needs to increase. We agree with them. At least $5 m will be spent on the centre and it could be more. There will be contributions from industry and govern-ment.

The report suggests several models. They have suggested it could be

a virtual centre to make sure as much as possible is spent on the research rather than the actual buildings, says Kaye. We have to work through those issues. She will work with the Minister of Science and Innovation, Steven Joyce, to develop the best model.

Spierings says Fon-terra would welcome the opportunity to commit its expertise to the proj-ect. Fonterra must play

a lead role in creating a new global benchmark for food safety and quality, he says. We have learned critical lessons from a dif-ficult experience, and the findings of this forward-looking review are an important step in our own reputation rebuild.

Kaye told Rural News it was very positive that Fonterra has signalled it wants to contribute to the centre. She will discuss the offer with Joyce.

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6 NEWS

2013 a year in review: the good, the bad, the uglyAnother year has passed, yet another busy one for the agribusiness sector. In this last paper for 2013 Rural News editorial team reviews the year and its highs and lows.

THE BADKICK EM in the guts Trev award:

AgResearch for the way it handled its relocation strategy. Another crop of good scientists gets dumped on and New Zealand loses again. While the CRI may have a point with its relocation strategy, it seems to many that the com-pany is more interested in paying divi-dends to the Government than serving farmers needs.

Missing in action award:

John Wilson, Fon-terra chair-man. Happy to front new milk in schools pro-grammes, but he went into hiding when the proverbial hit the

fan at Fonterra during the botulism botch-up.

Biggest loser of the year:

Gary Romano, after he walked (vol-untarily or not) the plank follow-ing Fonter-ras botulism saga. Second biggest: New Zealand or was it the biggest?

Biggest botch-up of the year and the peoples choice:

Fonterra for botulism botch-up or was it notulism? Inept in every way, from the first sign of trouble to the appalling communication of the crisis at all levels of the organisation. Second biggest botch-up:

MPI for not changing the old MAF paperwork for meat exports to China. Meat sat on wharves for weeks and exporters lost money while authorities haggled over an acronym. A high per-forming department? Yeah right! Not high and not performing. Oh, and whats in our PKE? A sheeps foot, a deers hoof or a fish?

Worst PR effort in the rural sector:MPI by a country mile. They never

failed to underperform. The struggling government department even spent $250,000 on buying-in spin doctors from outside, to no avail! Can anything be Dunne about this?

Fonterra is at least trying to change its ways, but still has a fair way to go.

THE GOODBiggest turnaround:

The kiwifruit industry, from survival to revival in the face of Psa destruction.

Most to prove award:Ravensdown having finally pulled

the pin in Australia and shuffled some key people the refocused fert coop could finally start to give Ballance a run for its money.

Best score: Dairy Womens Network again for

attracting DeLaval NZs managing director Zelda de Villiers as its new chief executive.

Grace under fire: Nutricia ANZ managing director

Corine Tap, facing hysterical mums and massive product recall; but none of it was her fault.

Leading the way: Miraka for notching up a deal with

the Chinese this year, while Fonterra was busy apologising to them for its numerous cock-ups.

Top lobbyist: HortNZ who got more dogs, more X

ray machines, better biosecurity.Also ran a great conference and

vastly improved its relationships with

central government.

Runner-up: MIE for trying hard to get reforms in

the meat industry. Harder than herding cats.

Politician of the year: Amy Adams for driv-

ing the RMA and water reforms and putting regional gov-ernment on notice for some sub-optimal perfor-mance. A very smart politician.

Trying hard award: Nathan Guy for doing his best

despite taking advice from a depart-ment (MPI) that has been restructured so many times that too many good people have gone.

Runner-up: Damien OConnor who did his best

despite belonging to a party more inter-

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RURAL NEWS // DECEMBER 17, 2013

NEWS 7

2013 a year in review: the good, the bad, the uglyested in the rights of unions and teach-ers than the primary export sector. Right guy, wrong party.

Farming leader: Hard to go past Bruce

Wills who has turned Feds from a feral, grumpy lobby group to one respected nationwide espe-cially on environ-mental issues.

Hard act to follow:Mike Petersen,

chairman of Beef + Lamb NZ. After six years at the head of the levy-body table hell do New Zea-land proud in his new trade ambassador role.

Agribusiness person of the year:Kingi Smiler continues to impress

by his leadership in Maori agribusi-ness. Others to watch are Gerard Hickey of First-light Foods and Dion Tuuta of PKW.

Ag event of the year:

Hard to beat the Ahuwhenua Awards for the top Maori farmer. Attracting 850 people to an amazing gala dinner is pretty impressive.

Young person: Lincoln University undergradu-

ate Brigitte Ravera for her brilliant endorsement of the opportuni-ties agriculture offers young people, spoken during a bus tour organised for teachers and careers advisors. The other young people on

the bus were equally impressive.

Best PR in rural sector: Feds, if you base it on the number of

media releases and their willingness to front people. DairyNZ, Rural Women NZ and Massey University are also very much up there.

Best communication of science:Massey and Lincoln universities

and DairyNZ. Always willing to help the media and farmers and innovative in the way they communicate. MPI take note!

THE UGLYKnockers of the year:

Fish and Game and Massey Univer-sitys Mike Joy who seem to forget that moaning in the media doesnt earn export dollars, nor does it help our export sector.

Greatest hysteria: Anti-PKE groups using some media

to foulmouth the key supplement feed in the dairy sector. MPI reacts by agree-ing on greater screening of PKE.

Idiots of the year:

The small minority of dairy farmers who continued to pollute waterways and failed to respect the environment, so tainting New Zealands image. Its time Fonterra and other dairy compa-nies made them walk the plank (a la Gary Romano).

Greatest challenges for 2014: Getting unity in the meat industry,

making MPI a high performing govern-ment department, stopping Mike Joy and his green mob from badmouthing farming, encouraging young people to make a career in agribusiness, and get-ting Fonterras John Wilson to front the bad as well as the good news .

A bouquet: To the big majority of farmers who

have met their environmental obliga-tions.

IF ONLY...Dr Mike Joy would say one good

thing about dairying farming.Nathan Guy would stop referring to

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RURAL NEWS // DECEMBER 17, 2013

8 NEWS

Australian farmers happy with decision to keep grain giant localAUSTRALIAN GRAIN farmers are backing the Federal Governments decision to keep the coun-trys largest agribusiness in local hands.

NSW Farmers Grains chairman Daniel Cooper says the Federal Treasurer Joe Hockeys decision to block US giant Archer-Daniels-Midlands (ADM) A$2.2 billion takeover of GrainCorp was the right decision.

GrainCorp handles 75% of the grain grown on the east coast of Australia, Cooper points out.

Had the sale to ADM been allowed, the inabil-ity of grain traders to com-pete would have increased concerns about compe-

tition for farmers grain. While we appreciate our agriculture industry needs investment, ADM was not a good match for Grain-Corp and growers margins could have been further eroded.

ADM is the worlds largest corn processor and holds a 19.9% stake in GrainCorp, which is listed on the Australian Stock Exchange. ADM says it is disappointed with Hock-eys decision.

We are confident our acquisition of GrainCorp would have created value for shareholders of ADM and GrainCorp, as well as grain growers and the Aus-tralian economy, says ADM chairman and chief executive Patricia Woertz.

But farmers think otherwise. NSW Farm-

ers first flagged its con-cern about the takeover as early as October 2012. The National Party, a part-ner in the ruling Coalition, also opposed the sale.

NSW Farmers presi-dent Fiona Simson says the association had told the current and former governments of farmers concerns about ADMs takeover bid. The associ-ation and other industry bodies including Victo-rian Farmers Federation, Agforce Queensland and Grain Producers Australia had met with the Foreign Investment Review Board, the Government and other stakeholders to ensure farmers concerns were understood.

The decision is not the end of line for all the issues in our grain indus-

try; we still have a lot of work to do. But it is great that the Government has listened to us because our

SUDESH KISSUN

sudeshk@ruralnews.co.nz

farmers would be affected the most by entrenching a low level of competition in the grain market.

Agriculture Minis-ter Barnaby Joyce, deputy leader of National, also welcomed Hockeys deci-sion, saying that keeping GrainCorp Australian-owned does not mean foreign investment in agri-culture is not welcomed.

I recognise foreign investment is important for growth and innovation, and contributes to the prosperity of local busi-nesses, rural communities and the broader econ-omy. However, it is critical the Government ensures these investments are not contrary to our national interest and provide flow-on benefits for farmers and rural communities.

Handles 75% of eastern Australias grain crop Handles 90% of eastern Australias bulk grain exports

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Produces 35% of Australias flour Produces 35% of Australias malt.

GrainCorps chairman Don Taylor says Hockeys decision will have endur-ing implications that will be felt not only by our shareholders but by the entire industry. Austra-lian agriculture has been prevented from realising the potential benefits from the significant capital

ADM would have invested in the long term future of the industry.

Australias shadow treasurer Chris Bowen says the foreign invest-ment process should be independent and free from political interference.

GrainCorp is Australias largest agribusiness

@rural_news

facebook.com/ruralnews

Australian Federal Treasurer Joe Hockey has rejected ADMs A$2.2 billion takeover offer for GrainCorp.

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RURAL NEWS // DECEMBER 17, 2013

NEWS 9

NORTH OTAGO company Milligans Feeds recently won a Farmlands rural supply award for nutrition the second successive win.

Milligans Feeds, Oamaru, is a subsidiary of Milligans Food Group. It makes food ingredients, consumer food products and animal nutrition products.

Managing director Bruce Paton said the award, mostly for the companys calf milk and lamb milk replacers, was recognition for the production, sales and administration staff.

It capped off a busy year for Milligans Feeds, which also did the blending and packing for Fonterras subsid-iary NZAgbiz, products such as Ancalf, SupaCalf, Den-kavit and Anlamb milk replacers for the South Island.

Another win

Burn-off breakout could be arson

ARE YOU an arsonist? You may be any time soon.

Changes to the Crimes Act mean if you lose con-trol of a burn-off you could be convicted of just that, says Ashburton Dis-trict principal rural fire officer Don Geddes. He sounded this warning to growers at a Foundation for Arable Research field day earlier this month.

If you light a fire reck-lessly and it damages other peoples property that can now be considered arson, Geddes warned.

While farmers would doubtless argue they didnt light the burn-off recklessly, his experience is that plenty do, failing to meet district coun-cil requirements for fire-

break width and quality, wind limits and prepared-ness to deal with escapes.

Knowledge of those requirements, which vary district to district, is often found wanting, so check whats required with your local council, Geddes stressed. You proba-bly think you know all the requirements, but Id chal-lenge that.

In Ashburton district, council policy is automatic prosecution, regardless of circumstances, if a 111 call results from a breach of burn-off requirements, he points out.

And prosecution isnt the only thing to worry about: the fire service can recover all costs incurred fighting an escaped burn-off, and those can be con-siderable. One norwest day saw $130,000 racked

ANDREW SWALLOW

andrews@ruralnews.co.nz

up in Ashburton district alone.

And most of those fires were avoidable. So when it comes to dropping the match, have a think about the consequences if it gets out.

That could be up to 14 years in jail if its deemed arson and life is endan-gered, or up to seven years if just property is dam-aged. More from the FAR field day: p21

Cropping farmers could soon be liable for any damage done from crop burn offs.

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RURAL NEWS // DECEMBER 17, 2013

10 NEWS

Lamb numbers take a hitLAMB NUMBERS are down this season by 1.3 million 4.7% fewer than last spring.

The total number of lambs tailed this spring was 25.5 million, making it the second-smallest

lamb crop since 1960; only 2010/11 was lower.

While the numbers are down, Beef + Lamb New Zealand economists Rob Davison and Andrew Burtt say they are pleasantly surprised its not a lot worse.

The lower lamb kill means there will be 19.5

million lambs available for slaughter in the 2013/14 season, the third-lowest number of lambs available for export since 1960-61.

The overall lambing percentage for the season is down to 120.8%, which is 3.8% lower than 2012 but the spread between the islands is marked.

In the North Island, the lambing percentage was 117.6%, in the South Island 123.6%.

Davison also notes the number of lambs from hoggets was down 17%, though lambs from hoggets make up only 5% of the lambs born.

The kind winter and

PETER BURKE

peterb@ruralnews.co.nz

spring delivered more lambs than we expected. The earlier comments we tended to hear, perhaps about the disastrous scan-ning percentages because of the drought, didnt really materialise, he says.

What saved the sit-uation was the drought ended in late autumn then we had a warm winter. So that resulted in a very high survival of lambs and the ewes were also in quite good condition.

While the drought impacted lamb numbers this season, interestingly the weights of lambs last season were the third-highest on record at 18kg.

So weights were quite low during that drought period when light lambs were being drafted out of some of the badly affected drought regions. But come late autumn, that started to catch up again, says Burtt.

The areas that took a hammering, in lambing percentages, were cen-tral North Island east of Taihape and Hawkes Bay. However, despite some

areas being badly hit, over-all the country did better than expected especially with a high survival rate of lambs due to the good weather.

Davison is predicting farmers will average $100 for a lamb this season, up $15 on last season. With weights also up, the impact on most farmers will not be as great as anticipated despite the strong exchange rate.

Also shown by the survey is that the sheep flock in New Zealand is getting younger. Burtt says this is due to a high mutton kill some years ago and that the hoggets not mated this past season will go into the flock next season.

Davison says farmers managed better through the recent drought than through past droughts. BLNZ held information meetings on the drought around the country and a lot of information was provided on-line.

Lamb numbers this year are forecast to be down by 1.3 million from 2011-12.

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RURAL NEWS // DECEMBER 17, 2013

NEWS 11

Firstlight beefs up interest in grass-fed quality product

FIRSTLIGHT FOODS, which markets high-value, grass-fed Wagyu beef to the world, says it has opportunities for more farmer suppliers to join its ven-ture the Firstlight Wagyu Producer Group.

The Hawkes Bay company started its Wagyu beef operation in 2011 and now has farmers raising 13,000 cattle nation-wide. And 20,000 deer have been sup-plied to its Firstlight Venison Producer Group, operating for eight years.

Managing director Gerard Hickey has been talking to farmers about join-ing the group.

For farmers wanting to retain involvement with their product through to the market and get rewarded for quality the Firstlight Wagyu concept is an opportunity. We also provide for farmers who want the benefits of price certainty, which to some may be a bit frightening.

We can give farmers a price 12-18

months out right now. We hedge for-eign exchange and have forward orders for product.

Firstlight operates a model unique to the New Zealand meat industry, in which farmer shareholders own 50% of their respective producer group and have direct transparent linkages to their customers in 20 countries. Firstlight grass-fed Wagyu beef and venison is sold directly to end customers.

Hickey says that while many beef fin-ishers are natural traders, some finish-ers also want a degree of stability in their system and sometimes an opportunity to reduce the number of bulls being farmed. The producer group structure also offers opportunity for breeders and store cattle farmers to retain an interest in their cattle after they have sold them to a finisher. It offers an opportunity for both groups of producers.

We are looking for smart farmers who proudly wish to retain an attach-ment to their product after it has left their property, Hickey explains. For example, we took half a dozen of our

farmers to the US this year to cook in the stores and meet their consumers. They were farmers interested in where their product was going, who was eating it and they wanted to tell consumers how this special Wagyu beef is pro-duced. The feedback from the consum-ers gave the farmers a real buzz.

While Wagyu beef in itself is not new the Japanese have been produc-ing it for generations the concept of having Wagyu cattle grass-fed is special to New Zealand and one that Firstlight Foods have sought to capitalise on. The company says there is a growing move-ment in the US against intensive grain-fed production and the widespread use of antibiotics and hormones in beef pro-duction.

We own the space as the go-to country for pasture-raised protein and with grass-fed Wagyu beef we are pro-ducing a product which delivers on the promise of consistently tender, juicy and tasty beef, says Hickey.

Firstlight has Wagyu farmer supplier hubs in Northland and the East Coast

and others are being developed in King Country/Waikato, central North Island and Manawatu/Hawkes Bay/Wairarapa. A new hub is planned for Canterbury in 2014.

Hickey says average farmer returns for Wagyu beef for 2014 are expected to exceed $5/kg and some in the winter months to fetch $5.50/kg.

Premiums for higher qual-ity are also available, some reach-ing as high as $7/kg. The higher the quality, the higher the price.

Firstlight Foods earlier this year entered into a $23 million Primary Growth Partner-ship scheme with MPI. Its aim is to move New Zea-land away from producing manufacturing beef products to high quality, high-value cuts and develop-ing the value chain.

It is also looking at improving genet-ics, on-farm growth and international market development.

It

aims to build the producer group to 180 farmers by the end of the scheme in 2019 and deliver $200 million eco-nomic benefits by 2029, principally to rural areas.

At least 40 farmers are involved.

PETER BURKE

peterb@ruralnews.co.nz

Firstlight Foods Gerard Hickey is seeking farmer suppliers to join its Waygu venture.

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RURAL NEWS // DECEMBER 17, 2013

12 NEWS

It wont happen again!

THE PROBLEM of a non food-grade tanker contaminating milk tankers via the cleaning process cannot happen again, says Scott Walls, Fonterra general manager operations, Lower North Island.

Fonterra has completed an inquiry into an October incident in which 14 tankers was contaminated with mud and dirt at its Eltham, Taranaki plant, requiring 150,000L of milk to be dumped.

The root cause of the find was that we had a contractor who accidentally connected a non food-grade trailer to a food-grade truck and tanker, Walls told Rural News.

That was the beginning of the problem. The second finding we discovered is when that non food-grade tanker came on the site it was able to be connected to our

cleaning system, which put 1-4kg of dirt and gravel into our system.

Those were the two main findings. We have now worked with that contractor and all the other contractors we use across

the country and implemented corrective action so they now record truck-and-trailer units when they are assigning vehicles to their drivers. So the driver

checks the truck and trailer not just the truck.

[Further], we have welded shut all the cleaning pipes on non-foodgrade tanker so we cannot connect a non-foodgrade tanker

to our cleaning system.Walls says the incident

showed the systems worked well. We detected it quickly which is great. Obviously we dont want it to happen in the first place so were trying to eliminate it at the cause. The same problem cannot happen again.

The automated system gave an initial indication of a problem then a visual check picked up the dirt and gravel.

About 14 milk tankers had gone through the cycle with the affected water six

of them had collected milk. The mistake was picked up within about 44 minutes.

PAM TIPA

pamelat@ruralnews.co.nz

We detected it quickly which is great. Obviously we dont want it to happen in the first place so were trying to eliminate it at the cause. The same problem cannot happen again.

@rural_news

facebook.com/ruralnews

Irish eyes our dairying!BEWARE, THE Irish are eyeing our dairy markets in Asia and theyll be in our patch soon according to the head of agribusiness at KPMG.

Ian Proudfoot has just returned from Ireland where hes been meeting with farming leaders and politicians as well as KPMG staff. He says with a just over a year to go before the restrictions on milk production are lifted in the EU, the Irish are gearing up to take advantage of this. He says New Zealand needs to move quickly to counter any marketing push by the Irish and other milk producers in Europe.

The milk quotas were put in place in 1984 in response to excess production in Europe which led to the so called milk lakes. But Ian Proudfoot says the Irish in particular are looking to increase stocking rates and are generally growing production. A lot of investment is going into new milk processing plants and the Irish are casting their eyes around for new markets for their increased production.

I am told there is a feeling of optimism that the Irish dairy industry is about to be unleashed. When you look at the product they are going to produce, its a high quality high premium product very similar to the product we produce and theyre going to look at the same growth markets we sell in. That means New Zealand is going to face more competition in the key markets.

Proudfoot says New Zealand must be very aware that the Irish are already well into articulating a sustainability story about their products and we need to ensure we are just as good as them in that respect. They are doing this though a scheme called Origen Green. He says its something New Zealand needs to look at.

Its a scheme which most of their producers have signed up to. It extends back onto the farm and each farm then effectively gets its own carbon footprint done as well as how it can reduce its

carbon footprint by improving productivity and profitability.

Its very much tied to improving commercial outcomes, but it is a market driven scheme designed to meet the needs of the consumers. Whichever way you look at it we dont have anything we can articulate in the same way and to my mind we need

to work out how do that and fairly quickly.

Proudfoot is critical of New Zealands 100 % Pure brand, saying while it might be fine for tourism it doesnt present a good picture of New Zealands unique food production.

It fails to tell the story about what is most important in our food production safety and efficacy.

New Zealand has not had to work too hard to get customers, Proudfoot says, because we have had a unique product to offer. But he predicts well have to work harder to win the confidence of consumers once the Irish and others start marketing their products in Asia.

PETER BURKE

peterb@ruralnews.co.nz

KPMG head of agribusiness Ian Proudfoot.

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RURAL NEWS // DECEMBER 17, 2013

NEWS 13

Korean FTA to beef up Aus exports

AUSTRALIAN BEEF exporters are the big win-ners in a free trade deal negotiated this month with South Korea.

Federal Agriculture Minister Barnaby Joyce says the Korea-Australia Free Trade Deal (KAFTA) will give producers and exporters a more level playing field on which to build market share.

Modelling by the Centre for International Economics forecasts that by 2030 Australian agri-cultural exporters could expect to sell 73% more product to Korea than if the agreement was not in place

The modelling also showed that KAFTA would double its current levels of beef exports to Korea by 2030, expected to be worth an extra A$846 mil-lion a year.

Joyce says Korea is its largest market for sugar (A$495 million in 2012), the third-largest market for beef (A$646 million in 2012), and an important market for dairy, grain and horticultural products.

The Australian Govern-ment will now work with Korea on the formal rati-fication process during which details of the agreement will be made available a process antic-ipated to be underway in the first half of 2014.

Australia is the largest supplier of beef to Korea but its major competitor,

the US, is already benefit-ing from beef tariff cuts from its 2012 FTA with Korea. In beef, it has a 5.4% advantage over Australia.

The KAFTA will help Australian exports compete on a more level playing field and will enable Australian beef producers to capitalise further on Koreans growing taste for Australian beef, Joyce says.

Australian cheese pro-ducers will also gain duty-free access to Koreas growing middle class market. Australian cheese exports face Korean tariffs up to 36%.

The FTA is also good news for Australian wine producers. Sparkling, red and white wines are sub-ject to a tariff of 15% but wine from the US, EU and Chile enter duty free. The FTA will give a boost to the wine industry, whose exports to Korea have been decreasing since 2007.

Australian farmers have welcomed the deal. NFF president Brent Finlay says the deal recognises agriculture as one of the nations export strengths and will open opportuni-ties for the sector in Korea.

While the deal doesnt deliver everything the Aus-tralian agricultural sector had advocated for, it is a step towards securing Australias trading future with Korea and in improv-ing international market access for Australian agri-cultural goods, says Finlay.

SUDESH KISSUN

sudeshk@ruralnews.co.nz

Given protectionist sentiment over agricultural goods is rife in many countries, it is pleasing that Australia has managed to forge an agreement with Korea that has dealt with some sensitive agricultural issues. [But] the deal does not deliver for all agricultural industries,

most notably rice.We have long advo-

cated for trade agreements to be all-inclusive, factor-ing in all of our important agricultural commodities and this deal goes a long way towards this. That said, we urge the Govern-ment to continue their work by building on gains made on the Korean deal

in other negotiations.Australian Trade Minis-

ter Andrew Robb says the benefits of the FTA start flowing immediately and will be long-lasting.

@rural_news

facebook.com/ruralnews

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RURAL NEWS // DECEMBER 17, 2013

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Beef & venison prices are reported as gross (before normal levies & charges are deducted). Lamb & mutton prices are reported nett (after levies & charges are deducted).

BEEF PRICES

c/kgCWT ChangeLast Week

2 Wks Ago

Last Year

NI P2 Steer - 300kg -2 4.58 4.60 4.25M2 Bull - 300kg -2 4.50 4.52 4.35P2 Cow - 230kg -2 3.53 3.55 3.50M Cow - 200kg -2 3.48 3.50 3.40

Local Trade - 230kg -2 4.43 4.45 4.15SI P2 Steer - 300kg -5 4.25 4.30 4.05

M2 Bull - 300kg -5 4.10 4.15 4.08P2 Cow - 230kg -5 3.10 3.15 3.20M Cow - 200kg -5 2.90 2.95 3.00

Local Trade - 230kg n/c 4.30 4.30 4.10

NZ Slaughter Total Monthly Kill1000s Change Oct Sep Last Year 5yr Ave

Cattle NI +33% 86,303 64,667 90,122 92,200 Cattle SI +55% 32,389 20,905 37,197 34,964 Cattle NZ +39% 118,692 85,572 127,319 127,164 Bull NI +136% 13,611 5,766 14,385 14,960 Bull SI +149% 2,191 879 2,267 3,749 Str NI +17% 22,689 19,428 22,563 23,947 Str SI +15% 9,711 8,438 14,689 13,188 Cows NI +30% 24,114 18,561 28,882 26,787 Cows SI +113% 10,608 4,987 9,158 7,814

Export Market DemandChange Last Week 2 Wks Ago Last Year 5yr Ave

95CL US$/lb -1 2.08 2.09 2.25 1.75NZ$/kg -11 5.58 5.69 5.96 5.33

Procurement IndicatorChange 2Wks Ago 3 Wks Ago Last Year 5yr Ave

% Returned NI +2% 81.0% 79.4% 73.03% 73.1%% Returned SI +1% 74.4% 73.5% 68.5% 68.1%

LAMB PRICES

c/kgCWT ChangeLast Week

2 Wks Ago

Last Year

NI Lamb YM - 13.5kg -10 5.68 5.78 4.94PM - 16.0kg -10 5.70 5.80 4.96PX - 19.0kg -10 5.72 5.82 4.98PH - 22.0kg -10 5.73 5.83 4.99

Mutton MX1 - 21kg -2 3.60 3.62 2.95SI Lamb YM - 13.5kg -10 5.63 5.73 4.89

PM - 16.0kg -10 5.63 5.73 4.91PX - 19.0kg -10 5.63 5.73 4.93PH - 22.0kg -10 5.63 5.73 4.94

Mutton MX1 - 21kg n/c 3.38 3.38 2.75

NZ Slaughter Total Monthly Kill1000s Change Oct Sep Last Year 5yr Ave

Lamb NI +24% 751 604 761 755Lamb SI +102% 659 326 622 562Lamb NZ +52% 1410 930 1384 1316Mutton NZ +145% 108 44 128 143

Export Market DemandChange LastWeek

2 Wks Ago Last Year 5yr Ave

UK Leg /lb +3 1.98 1.95 1.33 1.76NZ$/kg -1 8.68 8.69 5.65 8.43

Procurement IndicatorChange 2Wks Ago

3 Wks Ago Last Year 5yr Ave

% Returned NI -1% 68.2% 69.3% 91.7% 68.7%% Returned SI -2% 66.2% 67.9% 91.1% 67.8%

Venison PricesChange LastWeek

2 Wks Ago Last Year 5yr Ave

NI Stag - 60kg -10 6.60 6.70 6.90 7.62SI Stag - 60kg -10 6.80 6.90 7.15 8.00

Last SeasonThis Season

NEWS PRICE WATCH

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BEEF

Patchy supply underpins export prices

A patchy supply of cattle to slaughter has underpinned export prices in both islands in recent weeks. Recent rainfall has seen cancellations as feed availability leads to farmers holding on to stock for longer. Procurement pressure is all that is underpinning the market with processor margins slim. In the NI export steer prices ranged between $4.50-$4.65/kg and bull ranged between $4.40-$4.65/kg. In the SI export steer ranged between $4.20-$4.35/kg and bull between $3.80-$4.20/kg. US imported beef outlook positive

The outlook for US imported beef prices looks positive in the coming weeks with the US domestic cow kill really starting to tighten up now. Steiner has predicted prices will rally 10cents in the next 3months with 90CL seeing gains of up to 13cents in the same period in 2011. However, Australia could be a real fly in the ointment. Since the start of Nov, the Aussie dollar has fallen 4.6% vs the US$ while the NZ currency has declined less than 1%. This has made Aussie beef much for competitive in the US market which in turn could see more Aussie beef head their way. But if US supplies tighten as quickly as expected there should still be room for NZ beef.

LAMB

Lamb prices on a steady decline

Export lamb prices continued their downwards fall last week. In the NI a 17kg cwt lamb was earning between 5.80-6.10/kg gross, with the SI ranging between $5.55-$5.90/kg gross. In the NI many farmers are choosing to hold lambs longer than normal due to the feed and this may create bottlenecks further on in the season, particularly if it gets dry quickly. Mutton continues to earn good money with a range of $3.50-$3.70/kg in the NI and $3.30-$3.50/kg in the SI. Once orders for the Chinese New Year are filled, mutton prices are likely to come back.

Good demand for store lambs in North Island

Demand for store lambs in the North Island has maintained its strength in recent weeks. Paddock prices for 27-28kg mix sex lines ranged from $2.70-2.90/kg but it has been reasonably hard to source numbers on the back of the recent rain. Some farmers who normally sell store pre-christmas are holding on to kill themselves come Jan/Feb given the lower numbers on farm. This is further pressuring

store supplies at present Prices at both Stortford and Feilding ranged between $2.70-$3.00/kg last week.

Waning demand for store lambs in South Island

Store lamb prices eased in the South Island last week. On-farm sales bore the brunt of some softer demand with some potential buyers preferring the smaller yardings in the sale yards rather than being lumbered with large numbers when feed and rain are at the fore front of everyones minds. At the on-farm sales medium to heavier lambs at 27-32kg ranged from $2.30-$2.45/kg, however at the yards a range of $2.50-$2.70/kg was apparent. The store market is clearly suffering by a lack of demand with traders moving over to support the dairy industry. The next spike in demand for store lambs will come from the cropping farmers, but thats still 2-3months away.

DAIRY

Dairy prices move upwards at latest GDT

Prices of dairy products had their biggest gain in five months at the latest Global Dairy Trade (GDT) auction, pushing the average price to a two month high. The GDT index rose 3.9% from the last sale. The price of rennet casein, an ingredient used in processed products, rose 18.9% to $11,000/tonne. Whole milk powder rose 3.4% and skim milk powder rose 5.6%. Fonterra have reported that their recent increase in forecast payout is a reflection of the huge demand for whole milk powder and other products used to calculate its milk price.

WOOL PRICE WATCH DAIRY PRICE WATCH

Indicators in NZ$ Change 05-Dec 28-Nov Last Year Indicators in NZ$/T ChangeLast 2 Wks

Prev. 2 Wks

Last Year

Coarse Xbred Indic. -9 5.15 5.24 3.91 Butter +252 5113 4861 3933Fine Xbred Indicator -9 5.28 5.37 4.66 Skim Milk Powder +132 5722 5590 4083Lamb Indicator - - - - Whole Milk Powder +72 6087 6015 4053Mid Micron Indic. -27 7.47 7.74 8.77 Cheddar +314 5783 5468 4803

Overseas Price Indicators Overseas Price IndicatorsIndicators in US$/kg Change 05-Dec 28-Nov Last Year Indicators in US$/T Change

Last 2 Wks

Prev. 2 Wks

Last Year

Coarse Xbred Indicator -4 4.22 4.26 3.27 Butter +200 4200 4000 3275Fine Xbred Indicator -4 4.33 4.37 3.90 Skim Milk Powder +100 4700 4600 3400Lamb Indicator - - - - Whole Milk Powder +50 5000 4950 3375Mid Micron Indicator -17 6.13 6.30 7.35 Cheddar +250 4750 4500 4000

CURRENCY WATCH

vs. NZ Dollar Last Week 2 Wks Ago 4 Wks Ago Last Year

US dollar 0.821 0.809 0.833 0.833Euro 0.601 0.594 0.621 0.642UK pound 0.503 0.495 0.518 0.519Aus dollar 0.907 0.893 0.880 0.794Japan yen 83.64 82.97 81.82 68.63

Euro

Sep Oct Nov Dec Jan Feb

UK Pound

US Dollar

RURAL NEWS // DECEMBER 17, 2013

16 AGRIBUSINESS

WHOLESALE PRICING trends in our major export food commodity groups over 2013 have mostly been strongly lead by dairy prices now ending the year on a solid note, despite the projected pullback.

The dairy market remains intriguing: the supply response from the major exporters is not yet strong enough to tip the balance and see a sus-tained adjustment lower in prices. China, unsur-prisingly, remains the focal point as import demand looks to be moderating as record domestic farmgate prices stabilise their own domestic production.

The beef markets in the last few months have shown schedule prices tracking 4% to 8% ahead of last year, but US manu-facturing prices (in NZD) have been back by 6%. Part of the support seems

to be better prices for primal cuts and co-prod-ucts, but that doesnt seem to explain the whole situ-ation.

Throughput for the likes of bull beef and steers has been slow, and it seems with lower stocking rates and good pasture covers farmers are adding weight before selling. Hence pro-cessors have to pay higher premiums to attract stock, and this is likely to con-tinue causing a stand-off developing between farm-ers and meat processors.

In-market prices for the main lamb cuts have continued to improve in recent months, capping a

solid year for sheepmeat prices. Good prices were achieved for the Euro-pean Christmas chilled trade; focus is now turn-

ing to the frozen market. Traditionally the decline in the schedule price from the Christmas shoulder to the March/April period is 15%-20%. The lift in retail demand for leg and other cuts will help importer confidence when it comes to paying higher asking prices. Heading into 2014 it seems on balance schedule prices could be about the mid $5/kg mark until April.

Strong wool prices corrected lower in late November after push-

ing up to $5.80/kg during October, driven mostly by constant disruption to shearing and reduced supply. Over the first 17 weeks of the season, supply in NZ auctions was estimated to be back by 15% year on year (y/y). Despite the lower supply, total auction sales over the same period were up 8% year y/y, with high clear-ance rates above 90% as buyers competed for prod-uct.

Venison exports have not fared so well during 2013. Farmgate prices have disappointed this season, peaking about the $7.20/kg mark in September/Octo-ber, well down on the aver-age of the last five years ($8.30/kg). Sales of chilled product picked up volume-wise during August/Octo-ber, but historically chilled volumes were still 3% behind year-to-date and

prices were flat. Bulk wholesale wine

prices are also lagging this year. There is potential for a very big 2014 vintage; vines especially in Marl-borough typically have been pruned for a large crop and shoots are loaded with large bunches. This will cause some nervous-ness over pricing, with

global wine production forecast to reach its high-est level since 2006. The main indicator to watch will be bulk wine prices: this is where pricing pres-sure is likely to first show.

Zespri raised its fore-cast 2013/14 orchard returns in October and since most of the fruit is sold little will change.

For all categories fore-cast returns increased as a result of strong market prices, improved market mix, reduced post-harvest costs and low fruit losses.

It will be interesting to see which path mar-kets take in 2014, but with the recent buoyancy in the rural sector there is reason for optimism.

Commodity & Units Current Month3mth Trend Last Year

Yearly Change

Milk Price (USD per Kg MS) 8.2 8.25 5.35 34.76%

NZ Bull Beef (NZD per Kg) 4.02 4.01 3.88 3.48%

NZ Lamb (NZD per Kg) 5.93 5.52 5.51 7.08%

NZ Coarse Wool (NZD per Kg) 5.74 5.06 3.93 31.53%

Venison (NZD 60kg Stag Grade) 6.72 6.97 7.21 -7.29%

Average Wine Price (USD per Litre) 5.5 5.7 5.7 -3.64%

Kiwifruit (USD per kg) 3.5 3.6 3.1 11.43%

Apples (Weighted Index) 265 267 247 6.79%

FRANCIS WOLFGRAMFINANCE MATTERS

2013 Agricultural Review

It will be interesting to see which path markets take in 2014, but with the recent buoyancy in the rural sector there is reason for optimism.

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RURAL NEWS // DECEMBER 17, 2013

AGRIBUSINESS 17NOT A HEAVY METAL FAN

ITS NOT only investors in exploration company Chatham Rock Phosphate (CRP) who should be concerned about high trace levels of uranium in the phosphate nodules they plan to extract from the ocean floor (Jacqueline Rowarth, Do you want Uranium with that?, Rural News Nov 29).

Ultimately, the issue of toxic trace elements extends throughout the supply chain, from the farmer to the consumer.

At least in the case of CRP theyve done extensive analysis and, by all accounts, are comfortable enough to refer to their mined product as ultra-low cadmium direct-application fertiliser. This is more than can be said for chemical fertilisers now spread on most New Zealand farms.

There is overwhelming evidence that cadmium levels in soil are directly aligned to the use (and overuse) of superphosphate, yet the chemical fertiliser industry has historically done little to educate or inform farmers on how to manage this.

In 2008 the Cadmium Working Group concluded that while cadmium in foods didnt pose a risk to human health in New Zealand, there was risk of exceeding food standards in some offal types and some vegetables. In subsequent reports it also highlighted the risks of New Zealand falling behind the cadmium standards of our trading partners a warning shot over the bow of our clean and green image.

The National Cadmium Strategy (NCS), published in 2011, made a clear recommendation that farmers and growers should be implementing a tiered fertiliser management system to manage potential soil cadmium build-up over a 100 year timeframe, while also regularly testing for cadmium as part of a regular nutrient management programme.

Farmers were encouraged to work with their fertiliser company representative to progress this.

Two years on not much has changed. Most farmers we deal with havent heard of this strategy and we contend that if large fertiliser companies were serious about helping the future of farming they would be informing their sales forces, their farming clients and growers about the worst areas of heavy metal build-up.

Regional councils are now stepping into the breach, primarily to protect waterways because of nitrate leaching.

Rather than being forced to change their ways, farmers could look at some of the advantages of alternative farming methods. Biological methods of soil management are yielding some fantastic results, with improved soil health, plant production and stock health translating directly to the bottom line. Keith JacksonViafos guano phosphate

Worlds biggest drier opensAN OFFICIAL OPENING of Fonterras Darfield site in Canterbury on Decem-ber 7 marked the com-pletion of a $500 million development over three years.

The worlds largest milk powder drier has already produced at least 50,000 metric tonnes of whole milk powder since start-up in September. It was officially opened by Selwyn MP and Minister for the Environment, Amy Adams as part of a public open day.

Fonterra can now make the most of the coopera-tives milk produced in the South Island, says direc-

tor of New Zealand opera-tions, Robert Spurway.

Canterbury is New Zealands fastest-growing dairying region. The com-pletion of Darfield stage two means Fonterra can

continue to process the increasing milk volumes and meet the growing demand from customers around the world.

Spurway says Darfield stage two supports the co-

ops strategy of optimising its milk, while stream-lining its operations and supply chain. Drier two will help us to process more milk and optimise production to ensure that we are getting the best value for every drop of our farmers milk, even during times of peak milk flow.

At the peak of the

season, the drier runs 24 hours a day, seven days a week. It produces at least 700 metric tonnes the equivalent of 45 shipping containers each day. With drier two now on line, milk can be collected up to 65km from the site. Drier one, already com-pleted, ran successfully last year.

PAM TIPA

pamelat@ruralnews.co.nz

Darfields drier two is the worlds largest milk powder drier

The drier has the capacity to produce up to 30 metric tonnes of whole milk powder per hour, and 700 metric tonnes per day

Drier two produced 100 metric tonnes of whole milk powder during its first production run

At least 1500 staff and contractors worked 700,000 man-hours to build the plant.

Milk is collected from Fonterras farmer share-holders, within a 65km radius, delivered by tanker to Darfield, then processed into whole milk powder and packed into 25kg bags.

Darfield key facts Minister for the Environment Amy Adams cuts the ribbon at Fonterras Darfield site with Fonterra director John Monaghan and Fonterras director of New Zealand operations Robert Spurway.

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18 OPINION

EDITORIAL

THE HOUNDWant to share your opinion or

gossip with the Hound? Send your emails to:

hound@ruralnews.co.nz

EDNA

Out of touch A MATE of the Hound reckons the recent Fonterra director candi-dates roadshow was a perfect example of how out of touch the big cheeses at the co-op are with the shareholder base. One would have assumed prospective candidates would have wanted the opportu-nity of meeting with their hard working milk harvesting share-holders, your canine crusaders informant explained. However, with a meeting time set at 4pm (the November 15 meeting at Pukekohe), one wonders who on earth they want to meet?

GE rethink

THE HOUND notes that about a year ago the anti-GE movement made much of a paper in Food and Chemical Toxicology claiming a link between cancer in rats and a diet of glyphosate-tolerant (ie GE) maize. Now the journal has recalled the paper, saying no defini-tive conclusion should have been reached due to small sample size, and the breed of rats being tumour-prone. No doubt some pro-GE folk will say told you so, but your old mate suggests the scien-tists favourite refrain more work needed would be more appro-priate.

Powerful latte sippersTHIS OLD mutt reckons farmers blood will boil after hearing their favou-rite taxpayer-owned company and national power grid operator (not) Transpower has been caught out spending $1.2 million on a staff caf in a building where the lease expires in the next year. This was discovered by lobby group the Taxpayers Union; it found that in 2012 Transpower spent $1.2 million refurbishing its reception and building The Wire, a place where personnel can engage and collaborate with each other, and with our guests.

Mixed messages

YOUR OLD mate would like to suggest a new nickname for Fonter-ras chief executive: Theo The Tailor Spier-ings. Why? Because he seems to be tailoring his messages: one message for the stock market, another for farmer share-holders. At Fonterras annual meeting farmers were told negotiation with Danone continues. Three days later, unit fund holders heard that talks had failed. Fonterras smoothing of dividends also smacks of ou