What happened Monday

A review of things you need to know before you go home on Monday; the NZ$ drops sharply, Auckland rents are picked to rise, the banks offer some relief for owners of leaky units and there's trouble in Hong Kong.

29th Sep 14, 3:59pm by Greg Ninness

For Monday, September 29, 2014. <a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

Here are the key things you need to know before you leave work today.

TODAY'S MORTGAGE RATE CHANGES
There were no changes today.

TODAY'S DEPOSIT RATE CHANGES
There were no changes today.

RESERVE BANK CONFIRMS INTERVENTION IN CURRENCY - NZ DOLLAR FALLS SHARPLY
The NZD fell sharply after Reserve Bank data confirmed it had sold a net NZ$521 million during August, its biggest sale of New Zealand dollars since July 2007. Prime Minister John Key also weighed in, saying he thinks the New Zealand dollar's fair falue is around US65c.

AUCKLAND RENTS PICKED TO RISE BY 5% OR LESS
Barfoot and Thompson's latest survey of landlords shows most are expecting to increase rents by 5% or less in the coming year. That won't be enough to cover their rising costs and will push yields down further. However most landlords are expecting to reap capital gains on their portfolios.

THE BANKS LAUNCH A NEW SCHEME FOR OWNERS OF LEAKY UNITS
The Bankers Association and major trading banks have launched an escrow-based scheme to fund remediation work on multi-unit complexes, avoiding the need to manage funds through their body corporate accounts.

DEMONSTRATIONS ESCALATE IN HONG KONG
Pro-democracy demonstrations gathered pace in Hong Kong sending a ripple of uncertainty through Asian financial markets and forcing Hong Kong's chief executive to issue a statement denying rumours that the Chinese army was set to intervene.

FONTERRA REBRANDS RD1 STORES AS FARM SOURCE
Fonterra is rebranding 67 RD1 rural supplies stores under the Farm Source banner and will also roll out a new customer loyalty scheme.

WHOLESALE RATES
The 90 day bank bill rate is unchanged at 3.73%.

OUR CURRENCY
Check our real-time charts here. The Kiwi dollar fell sharply in afternoon trade following confirmation of Reserve Bank intervention. The NZD is currently 77.9 USc and 89.3 AUc. The TWI currently sits at 75.99.

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24 Comments

by Henry_Tull | 29th Sep 14, 6:47pm 1411969647

New Zealand dairy co-operative Fonterra is considering launching a NZ$100 million ($77.4 million) fund in the next year which would tap external capital to lend to its farmer shareholders in the face of falling global dairy prices.

Theo Spierings, Fonterra's chief executive, said on Monday the world's largest dairy exporter is looking at ways to give its shareholders access to cash that would allow them to expand after it cut its farmgate milk price forecast to a six-year low last week. Fonterra is owned by 10,600 farmers.

"With the milk price being low and the share prices being strong, farmers really will be constrained for cash," Spierings told Reuters in an interview.

"We shouldn't force them to go to the bank to borrow a whole lot of money. We should make it available ourselves."

http://uk.reuters.com/article/2014/09/29/fonterra-fund-idUKL3N0RU1P020140929?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews

by Andrewj | 29th Sep 14, 6:52pm 1411969931

The guys a genius, the market is full of milk, the solution is to keep over producing. I suppose the fund is second in line to the Aussie banks. Then again it will pay the interest.

Hey Henry, what if NZ dairy farmers are .50c a kg more eficient than the USA but Fonterra is a $1 less efficient?

by Henry_Tull | 29th Sep 14, 7:01pm 1411970483

page 16 & page 17

http://issuu.com/ashguardian/docs/dairy_foc_nenewnewnewnew_-_july

look at the graphic, not the headline

by cowboy | 29th Sep 14, 8:02pm 1411974133

By making a fund "available" then they can throw any number of capital demands at their suppliers, demanding that they allow Fonterra to buy-in (fund equity) from the fund if they can't afford the changes. Anyone who can't afford it, is of course, a terrible farmer and be subject to non-compliance penalties.

Commerce Commision asleep at the wheel again......

And I ask for the second time where is this money coming from??

by Henry_Tull | 29th Sep 14, 9:05pm 1411977912

it has a name:

Spierings said the Equity Partners' Fund was another tool to give farms access to the equity they need to grow. The ANZ Greener Pastures report in 2012 said farmers face significant challenges in raising sufficient capital to fund growth and support farm turnover.

http://www.nbr.co.nz/article/fonterra-considers-equity-fund-part-farms-source-launch-bd-163155

Fonterra Cooperative Group may establish an Equity Partners' Fund that would source capital from investors for farmers in New Zealand and Australia.

It's one of the new offerings rolled out today by the giant dairy co-operative under its new Farm Source hubs which will combine retail service, support, rewards, digital technology and financial options.

http://www.scoop.co.nz/stories/BU1409/S00993/fonterra-considers-equity-fund-as-part-of-farms-source-launch.htm

and a start date:

and a funder/funding source:

Fonterra wants to establish an equity partners' fund before the end of the year that would source capital from global investors for farmers in New Zealand and Australia.

http://money.msn.co.nz/businessnews/national/8912554/fonterra-considers-new-equity-fund

by Casual Observer | 29th Sep 14, 9:16pm 1411978610

Henry, I wonder if their timeframe isn't a little optimistic. I hear it is a little way off being put to farmers yet. Will be interesting to see what comes up at the meetings being held at the moment.

by Henry_Tull | 29th Sep 14, 9:41pm 1411980060

CO, you are probably right, but the PR or communications mgt of this afternoon's events seems a shocker.

by Casual Observer | 29th Sep 14, 9:52pm 1411980766

Absolutely Henry! Fonterra's PR being a 'shocker' seems to have become the norm now.

by cowboy | 29th Sep 14, 9:22pm 1411978970

So this was the money that was being raised and spent for the Chinese Infant Formula Company????

" raising sufficient capital to fund growth and support farm turnover."

Mein Gott!!

Am I the only one who hears alarm bells? So... this capital is going to be cheaper and less "fishhooks" than bank lending?? And the investors don't want decent returns or assurances?

by Casual Observer | 29th Sep 14, 9:48pm 1411980526

My alarm bells rang on 28 Aug when I read Van der Poel believes TAF will not last forever.

In the future, the co-operative would have to evolve again as it outgrows that capital structure.

http://www.stuff.co.nz/business/farming/dairy/10397713/Retiring-Fonterr…

by Belle | 29th Sep 14, 8:05pm 1411974332

China?

by Belle | 29th Sep 14, 8:24pm 1411975451

I just listened to the broadcast again. Sounds like Fonterra will be encouraging young farmers to invest their money in the scheme.

by Henry_Tull | 29th Sep 14, 9:14pm 1411978443

Fonterra chief executive Theo Spierings says it wants to give flexibility to farmers to "share-up" following concerns that the eight per cent growth in milk production this season could mean some farmers would have to borrow significant loans to meet the share standard.

http://money.msn.co.nz/businessnews/national/8912554/fonterra-considers-new-equity-fund

pre TAF one could lvr shares to 100% at the bank. Now not so.

Whats at the core, poor incomes, or poor share returns (being dividend and share price) or too high a share price.

why not just let folk buy a supplier share and simutaenously flick on to the fund. (i.e. no need for outside equity or fund loan or whatever)

what are we missing here?

by Casual Observer | 29th Sep 14, 9:21pm 1411978877

what are we missing here? KISS, commonsense and a genuine desire to do what's right for the shareholder suppliers? ;-)

by Colin Riden | 29th Sep 14, 9:40pm 1411980035

The same, but in a bigger context and less PC:

http://www.oftwominds.com/blogsept14/whats-optimized9-14.html

by Henry_Tull | 29th Sep 14, 9:48pm 1411980528

hope so, what do you make of the mention of funding Australian farms as well.

by Casual Observer | 29th Sep 14, 10:03pm 1411981426

Is this being driven by a higher political force? Aussie farms are in parts struggling, chinese have bought up large over there and the locals are getting a bit antsy. Could this be an ANZ initiative to counter the march of the Asian Tiger? Or is it a way to allow the Tiger to spring ever higher?

by Casual Observer | 29th Sep 14, 10:04pm 1411981483

by iconoclast | 29th Sep 14, 11:39pm 1411987183

Listened to a debate in the Senate last week about AU dairying

Senator claims 98% of all australian Dairy Farms are Family owned

Fairly limited corporate farming

AU is pissed off it doesnt have an FTA with China

The Dairy industry in Australia is worth about $1 billion pa in exports

Mainly to China

Apart from New Plymouth Council selling out The Van Diemens Land Company to China the industry is fragmented

That's the only sale of Dairy land to the Chinese that I've heard of - most acquisitions are Wheat and Cotton (Cubby Station) farm operations

Remember Doug Meyers and Lion Breweries

watch this Financial Review interview with Lion

talk about going in a full circle

They're talking about a coming shake-up

http://www.smh.com.au/tv/Business/show/Financial-Review-Sunday/Milking-it

Read into that what you will - they are trying

by Henry_Tull | 29th Sep 14, 11:43pm 1411987422

confronting to see how they are spinning round on A2 story.

by cowboy | 29th Sep 14, 9:24pm 1411979073

young farmers? They don't have money, they are the borrowers

by Belle | 29th Sep 14, 9:34pm 1411979657

I meant young young farmers. The sort that are saving to buy their first cows. Thats the gist of what I heard on the broadcast.

by Dairy farmer joe | 29th Sep 14, 9:54pm 1411980858

Interesting Foterrra rebrandng RD1 ,last time they reminded us that RD1 was part of Fonterra they spent a million on reprinting the tankers,management need to be more frugal with spending just like we are being told to be.They do need to do something about a loyalty scheme though-like CRT Farmlands has- last time they tried was a failure due to the fact it was near impossible to get any rewards unless you were doing a conversion.I will always support RD1 though because it is part of the co- op &it it keeps all farm shops honest

by Henry_Tull | 29th Sep 14, 11:25pm 1411986359

is it any wonder that the brands earnings have fallen in ANZ when the supers use tricks like this (with regard to freah bread):

The offending breads were sold under the brands 'Cuisine Royale' and 'Coles Bakery', with labelling and advertising claims that they were "Baked Today, Sold Today" and/or "Freshly Baked In-Store".

ACCC investigators said the goods had in fact been made months earlier on the other side of the world, namely, Denmark, Germany and Ireland, before being frozen and transported to Australia.

The court is yet to make a decision on whether to fine Coles, which faces penalties of more than $3 million.

The ACCC investigation was launched after Jeff Kennett complained when he discovered a loaf of Coles bread that was advertised as freshly baked in-store had been made in Ireland.

On Monday Mr Kennett said the ruling should serve as a warning to supermarkets and advertisers.

not a great endorsement for fly in fly out exec workforce.