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The Weekly Livestock Report: Early sire stag sales show deer farmers investing for the future.

Posted in Rural News

DEER

The feeling is we are getting close to the summer bottom of venison schedules but cautious sales conditions in Europe makes nervous times. At these levels hind kills are still ahead of stabilising numbers and this is needed if this small industry is to survive.

Results from North Island  and early southern sire stag sales have produced good clearances where top prices are generally down but average prices mostly stable.  Based on lower venison prices received, this is seen as a good result and shows confidence by buyers to invest for the future in improving genetics within their herds. Another positive trend from these sales is the demand by breeders for animals with industry proven venison breeding values, which shows support for the sectors goals to produce harvestable animals heavier and sooner to meet chilled market demand.

DAIRY

The start of the new year has been mixed with thunder showers and fine weather, after a drier than normal December, but NIWA’s seasonal outlook predicts near normal summer conditions. Farmers need only to look across the Tasman to appreciate our temperate climate and our ability to grow summer grass often with the help of plentiful water for irrigation.

Production in the powerhouse areas of dairying Waikato, Canterbury and Southland are all enjoying harvesting volumes of milk ahead of last years season, and early national totals suggest increases ahead by 6%. In many areas the bulls have now been removed and pregnancy testing will soon reveal the success of mating and set the scene for the next milking season.

Dairy commodity prices  are predicted for the first half of 2013 to increase on the back of the after affects of the US drought and increased grain prices affecting supply.  The Fonterra Shareholders units continue to be traded at a premium and My Farms executives predict increased investment interest in farming syndications for the new year.

A trend in dairy farm labour is the increasing use of skilled migrant personel which has now grown to 20% of the work force and the rural community is adjusting to this multicultural change.

LAMB

The year has started like it left with more schedule falls and now levels are back to the lows of 2010 and this will do little to discourage the flight from sheep especially if the weather limits production potentials.

Contracts offered for ewes by one processor in the February March period set a bottom to the market and will help give some stability for that product. Early processing figures show north island farmers reacted quickly to the dry, and lamb and ewe harvests are well ahead of last year.

The prices at January south island onfarm sales of store lambs will be heavily influenced by feed and summer rains, as little optimism can be gleaned from the overseas market conditions. The first of the two tooth ewe fairs was held in the Hawkes Bay and at $119 per head average would have returned nothing for these growers for their years endeavours.

Proposals to combine the two producer merchandising co-operatives of Farmlands and CRT are seen positively by farmers as they battle the ever increasing rises in farm costs.

WOOL

The first sale for the new year saw the market maintained even with the large volumes offered which was pleasing for vendors. China led the buying interest that was pressured by urgent shipments due, and a realisation that industry volumes have lightened.

The price indicators moved little however and still remain at levels that fail to impress on sheep farmers budgets, although the sale did clear 90% of what was offered.

BEEF

Small lifts in prime schedules but easing in bull prices greeted the new year. Big bullocks and 15 month sales in the central north island attracted good prices and fueled beliefs of lifts in schedule pricing in the future. However with schedule pricing between $75-125 per head back on last year for finished steers this is just another income drop for the embattled sheep and beef farmer.
Analysts still predict a good future for beef sales but it needs to happen sooner rather than later to help profits in this sector.

China is now becoming a growth market for NZ, and is creating more competition in the traditional markets for our beef product, mainly at the expense of the Korean market which is flat.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

64 Comments

Meanwhile ,the trees i

Meanwhile ,the trees i invested in keep growing.

Tony, "Dairy NZ calculations

Tony,

"Dairy NZ calculations that costs to produce milk have risen to $5.90/kg ms are alarming for any operators with debt."

Alarming? Try terrifying, that is the whole payout!

Reference please.

 

Regards,

 

Bruce

That is a jaw dropper. I'd

That is a jaw dropper.

I'd like to see how that calculation is arrived at.  For instance does it have a debt component.  What % is energy costs.

So to keep at the volumes we are irrigating, that costs a lot as well....

regards

DairyNZ Economic Survey

DairyNZ Economic Survey 2011-12 is yet published.

$5.9/kgMS for break-even is too high. This figure may well be for the 10% heavily indebted farmers. 

Median break-even price should be around $5 to $5.2 /kgMS.

Regards.

Mist - it's not that

Mist - it's not that different for the nation as a whole - collectively we are broke going broke.

Mist - Clusterfuck Nation -

Mist - Clusterfuck Nation - presents a realistic macro prognosis.

energy is everything....or

energy is everything....or specifically transport energy......just how a shortage or excessive cost of that will effect the economy is deep and profound....most are however ignoring it.

In terms of the past we were a lot less energy intensive in the 1970s compared to today....so a shortage or high price has a lot more effect/impact.

regards

Overheads, apparantly 35% of

Overheads, apparantly 35% of the cost of everything is interest....in some cases more.  So its like a Govn tax, repeated.

regards

 

This was a core objection to

This was a core objection to TAF, that the 'shareholder' price would out price the 'producer'. Fluffed over by Theo et al. Chairman of shareholders board Mr Cooper mysteriously 'resigns' shortly before TAF deal struck.

Mist, you might be able to shed a little light on this, if Fonterra, Government mandated monoploy that they are, supplys c.1/3 GDT should they not be able to price fix? Seems to me they would have that kinda clout. Ask 'em about it and they mumble about how much more milk India produces, of which nearly 0% is traded, and other such fluff.

Any ideas?

Regards,

Bruce

Bruce, Try as I could I could

Bruce,

Try as I could I could not retrieve the Dairy NZ quote as I read it, and for that I apologise and will have to blame post Xmas tardiness and maybe age!! However in trying to locate this source the budget in the Pastoral monitoring report for National Dairy in the Ministry for Primary industries October publication reveals similar figures to that quoted in the article. Large farm working cost expense increases last year and debt levels that on 2,200 farms are out of kilter with sensible business levels are a huge issue for this industry, and the point that I was trying to make is all is not as golden as many are portraying  in the dairy industry.

Tony, I'm agreeing with Mist,

Tony,

I'm agreeing with Mist, dairy farmers are serfs to the banks in the same way as medieval serfs were serfs to the nobility. Living standards have improved but the power structure is eaily similar.

There are a few 'old school' farmers that are so far behind the production curve that their model actually works, extremely low input and debts with less head per hectare. Tends to mean increased production per cow and increased productive life span per cow.

Increased to the order of double a high head to hectare systems in some cases I hear. Back to the future?

2,200 farms at non sensible levels rings true, sadly.

Much like the young guns coming up that won't hold off for the market to drop before purchasing their first herd, too many brought land & plant in the upside of a very big bubble.

Those that can profit by it will always try to make a mastitis riden twelve year old out to be a high production R4. Such is the Tao of the bubble.

Thanks for the links.

Regards,

 

Bruce

 

Bruce, agree. So how do you

Bruce, agree.

So how do you see the future for the 2,200.

We see

1. the banks just squeezing them white, till someone can buy the place for the loan value +/ - the tax write-offs lenders get for dudd loans (and carry value of benefits supplied to lenders by Govt.)....

2. It all happening again (as someone here said rinse and repeat).

And there are plenty of hawkers around to egg-on the starry eyed, or run international junkets sprooking NZ Dairy land....

 

Henry, I've spoken to a

Henry, I've spoken to a couple of farmers, one a first farm buyer, and the other an old hand converting and neither related by either blood or region, who have turned away from Fonterra because of the high price of shares. 

What are you hearing?  I notice Theo has said that they don't want to lose milk and 'will address that should it arise'.  I have spoken to a senior Fonterra insider who said they expect to issue bonus shares in due course.  This suggests a lowering of the share price. Which would raise the question of the constituion and share standard required to supply.

We see it district by

We see it district by district, in that contracts with deferred share purchase, depending on who else one maybe able to supply to.

It seems if there are other supply options with other share or no share costs, such can be sort of matched. - but nothing hard and fast. (Mushrooms all round)

 

1980's (back in the old days eg Alpine etc) the companies were not obliged to take on supply....

 

$14 an hour.. This is not a

$14 an hour.. This is not a sign of wellness..

http://www.stuff.co.nz/the-press/business/farming/8141473/Dairy-farms-tu...

Agri-lobby Federated Farmers estimates that about a fifth of all dairy workers hail from overseas.

A South Waikato farmer, who asked not to be named, said staff with Saudi experience were particularly sought after as they were familiar with working on huge operations using modern machinery and world-class standards.

He said efforts by Work and Income to place unemployed people with farmers seldom yielded results due to a lack of dairy-specific skills, while foreigners came trained and enthusiastic.

Bruce Porteous, who works for farm recruitment firm Immigration Placements, said New Zealand was an appealing place to work for foreigners as the immigration laws paved a way for permanent resident. ........

Additionally, there was the pull of "earning $14 per hour as opposed to $14 per day", he said.

 

Additionally, there was the

Additionally, there was the pull of "earning $14 per hour as opposed to $14 per day", he said.

 

Who is paying for the health care? - certainly not their taxes. 

Something doesn't add up here

Something doesn't add up here unless the $14 is a nett figure.  Immigration NZ won't issue visas for migrant dairy farm workers unless they are being paid $45,000 pa. Given that the average weekly hours worked by a farm worker is 54 hours per week the gross hourly rate is around $16phr.  That doesn't include any fringe benefits farm workers may get.

Mist, I should have said

Mist, I should have said 108hours per 11/11.5 days.  Farmers I know either have a 11 day on 3 day off roster, or 11.5 days on/2.5days off.  11/3 is quite common now in Southland and in parts of the Waikato where I have contacts. Any AgITO training days are in addition to these. So during the study period, the hours worked would be less.

I have never been convinced that contract/lower order sharemilking benefits anyone other than the farm owner ;-) There may be a good contract out there under these but I have yet to hear of it.

  Good to hear you had a

  Good to hear you had a positive experience mist. :-) 

Figures from online job

Figures from online job website Seek show $71,658 was the average advertised wage in the region in November, up 11.8 per cent on January last year.

It rose faster than the national advertised wage but was almost $3000 behind it. The national wage was $74,579, up 5 per cent in the January to November period last year.

 

http://www.stuff.co.nz/the-press/news/8144749/Christchurch-wages-show-bi...

 

How to reconcile with Stats

How to reconcile with Stats NZ latest income survey?

In the year to the June 2012 quarter, there was no significant increase in:

  • median weekly income from all sources – up 1.8 percent from $550 to $560
  • median weekly income for those receiving income from wages and salaries – up $6 (0.7 percent) to $806
  • median hourly earnings – up 48 cents (2.4 percent) to $20.86.

Apparently no need: Dominion Post does it for me.

Kilbirnie residents Lorraine and Rapata Clay worry about what they will have left in their budget to cut back on, if basic living costs continue to rise.

 

Pft. They can still buy tools

Pft. They can still buy tools with their leftover cash. Haven't they been watching core inflation.

Something doesn't add up here

Something doesn't add up here unless the $14 is a nett figure.

 

CO none of it adds up over the long term - importing cheap previously under nourished semi-skilled labour is a recipe for disaster. More so now when the profits are certainly shifting off-shore with foreign shareholders and banks taking more than their fair share - the remaining domestic population is left with a higher proportion of ill educated under paid dross to service the needs of the nation.

SH, got it in one. We are

SH, got it in one. We are talking the same issue from from another dimension (another p in the puzzle)...

Here's some positive news

I've met Tanagaroa Walker a

I've met Tanagaroa Walker a couple of times. He's a top bloke. Wants to get more young people on the path to farming and land ownership.

How many. Say 10,000 farms

How many.

Say 10,000 farms times 2FTE staff [?] times 1/5, equals 4,000 people.

The subtext is the farmers quoted do not wish to pay for skilled staff, and the skilled staff they say they have (or those prepared for poor conditions or to dip their head) see their working reward being wage and residency in NZ.

The National Dairy stats comment farms >1,000 cows show diseconomies of scale.... Something we are working on the maintenance of productivity with size and business system (as opposed to farming system).

Our observation is that the ex pat Europeans, (Brits and Dutcth etc) have a good handle on these...

 

The issue we are working with is sure contract milking and share milking delivers motivated folk (out sourcing), but does not gtee the business system to meet the "business criteria (waste, irrigation, fert. etc) being put atop us (if you do get the result, its difficult for the next along to see).

 

Yes, we were thinking of how

Yes, we were thinking of how many in as overseas workers, you're right number closer to 2,000, or 1 FTE.

The note re seek employment is new jobs being advertised, so the actual (of ppl working, and job types not being advertised) would be different we think.

Cheers & thanks for the thoughful posts over the break.

Henry, Southland Times ran an

Henry, Southland Times ran an article awhile ago on migrant workers on Southland dairy farms. Bruce maybe able to confirm it but from memory they said there were 2000 in Southland.

CO, I can't confirm an exact

CO, I can't confirm an exact number but 2,000 sounds about right. Dr Rupert Tipples, one of the few rural social scientists out there, of Lincoln is doing a lot of research on immigrant farm workers with a focus on Filipino's which both Southland and South Canturbury have many of.  He and the DairyNZ crew will have the best idea of the actual numbers. Welfare and intergration are big concerns for his research.

Some workers come from overseas without any English or even a decent coat!

Winton has such a major population of Filipino's they now have a Tagalog section in the public library and their own church services which are strong indicators of a substantial community.

Regards

Henry,   It all comes down to

Henry,

 

It all comes down to the GDT, which thanks to major drought in North America, China, parts of Russia, parts of South America and too much rain in Austrailia and the UK I would expect has a very tight supply side while having either static or increasing demand. Ergo, "where's the price surge?" Is the question I've been asking myself all year.

I know the NZD is outrageously high but still Fonterra make up most of the GDT from what I recall so should be able to get a good price for their co-op owners, the suppliers.

If we see a good rise then the 2,200 will only have the most indebted bled white and go back to sharemilking or get out of the game.

The school of 'my old man' reckons that the Government and other professional class peoples, banksters etc, still recall when farmers ran this country, way, way back in the days of massive sheep runs which were broken up by the Government and have been making sure that farmers have been disempowered ever since.

If the country was ran as a business as some here are advocating how about a industry levy body voting system like the Forestry Owners Association are advocating?

Simplified slightly everyone gets to vote, those that supply most of the export earnings on the production side get more votes by % of production. Suddenly those that actually produce are back in the decision making process in strenght and we no longer have an Ineptocracy governed by bribes to the urbanites in Auckland.

Regards,

Bruce

How are the BCI scores?

How are the BCI scores?

Sounds like a sound wee

Sounds like a sound wee earner.

Good idea to keep the quailty up. A good rep' is a realitively easy thing to keep, a bad one is a very hard thing to shake in rural circles I find.

Regards

Good points SL, but in JKeys

Good points SL, but in JKeys defence, a trip to Waitangi is coming up, got to be careful as there is a very real threat of ballastic mud pies.

or even real lead....im very

or even real lead....im very surprised someone hasnt gone for "glory"

regards

"I am afraid that the

"I am afraid that the Waitangi boys have been bought orf, so they would not endanger the Golden Goose as he prances around glad handing some more Royalties.....that he has primed the Privy Purse (Mug Taxpayers).....to pay."

Royalities, SL, dude, Tuhoi just got their own country which no one seems to be politically incorrect enough to even criticise.

Damned Maori Party just got the price of tobbacco put up again as well.

Hurt my finger the other day. The scene A&E in Invercargill.

Nurse : So I take it you're a smoker?

Me : Yes, and don't even start. I know it all.

N: So you know it makes wounds take longer to heal?

Me :Yes. Do you eat meat? Let me tell you about how long it takes your bowel to process red meat. My Grandmother died of bowel cancer. I can tell you all about it. Kills alot of people, real nasty way to go, red meat is probably second to smoking in causing it.

N: No thank you. So you're a vegetarian?

Me: No. I'm going to tell you all about it anyway.

N: But it's the Southland way though isn't it?

The diplomatic protection

The diplomatic protection squad, well trained guys and gals they are, are powerless to stop an assassination as long as JK keeps shaking hands with the public.

That's just a tactical reality.

Therefore it's all just a showboat.

I had a chat to a dairy

I had a chat to a dairy farmer who has been under 'management by the bank' but is currently just 'watched'.  They have more than one farm.  Chinese interests have offered them $22m for the farms as they would tie in nicely with the Crafar purchases. Offer was turned down as farmer doesn't want to sell.  Their bank sold them Swaps which has caused their current problems.  They thought they would supply another company and cash in Fonterra shares. Bank said no.  So they are in the process of changing bank - apparently their 'new' bank is quite happy to accept them even though they are at the top end of the debt spectrum.

I bet it's Heartland?

I bet it's Heartland?

If right, shows the banks

If right, shows the banks have learnt nothing....

Other than to milk the farmerfolk and suck on the government teat.

 

http://www.dailyscript.com/scripts/o_brother.html

Bang! A rifle shot kicks up dust in front of the men.

CHILD'S VOICE
Hold it rah chair!

The front of the farm house shows only a harshly shaded front
porch and a dark screen door.

The screen door swings open and a child emerges on to the
porch and steps down into the sunlight, holding a gun almost
bigger than he is. The grimy-faced boy, about eight years
old, wears tattered overalls.

CHILD
You men from the bank?

PETE
You Wash's boy?

CHILD
Yassir! And Daddy tolt me I'm to
shoot whosoever from the bank!

He pokes his rifle at the three men, who raise their hands.

DELMAR
Well, we ain't from no bank, young
feller.

CHILD
Yassir! I'm also suppose to shoot
folks servin' papers!

DELMAR
Well we ain't got no papers.

CHILD
Yassir! I nicked the census man!

DELMAR
There's a good boy. Is your daddy
about?

THE BACK OF THE HOUSE

Wash Hogwallop, a sour-looking bald man, sits near a rusted
bathtub in a yard littered with ancient car parts and farm
implements overgrown with weeds. He is whittling artlessly
at a stick.

No Aj, moved from one Aussie

No Aj, moved from one Aussie bank to another. New bank is BNZ. The farm is cashflow positive and equity negative.

Must be a good

Must be a good operator/operation.

Are we talking a good lender

Are we talking a good lender or a good borrower.

Maybe Mr Jones below should run round and have a chat with the lending / credit department. Cause it seems they have no idea of who he is................:

 

http://www.stuff.co.nz/business/farming/8141475/Climbing-prices-picked-t...

Rising dairy prices are likely to continue to help farmers pay off their debts in the first half of this year, but the heavily leveraged sector still looks vulnerable to price swings and the high New Zealand dollar.

That is according to Mike Jones, a market strategist at BNZ, commenting on the latest Fonterra online dairy auction, where the GDT-TWI Price Index rose 2 per cent......................................

 

No equity eh, not a jot, less

No equity eh, not a jot, less than zip, its in the minus category. Considering this will be based on a valuation that is always subjective as you struggle to find otherwise unless it is freely on the market, and willing buyer willing seller etc etc, then the equity thing can mean little.

But I do have to comment.....however I am so gobsmacked I dont really no what to say. BNZ eh....wow, ok. In the history of this crazy nz farming finance thing, nobody got financed with negative equity. They always cover their asses. So what is new, why would they do that?

So what is new, why would

So what is new, why would they do that?

Possibly for the same reason they (BNZ) lent this oufit money.

Nitschke is facing bankruptcy as BNZ chases him for $841,942.

 

ie.... they are dumb buggers

ie.... they are dumb buggers Stephen? Nah cant be.