Guy Trafford hunkers down, keeps things ticking over, is sceptical about banks, watches China for recovery signs, and thinks about tidying up the hedges while waiting for rain

Guy Trafford hunkers down, keeps things ticking over, is sceptical about banks, watches China for recovery signs, and thinks about tidying up the hedges while waiting for rain

About 24 hours into the lock-down and on the farm what do we know?

Well, there are still some stock movements occurring, as the neighbouring farm had a truckload of lambs arrive this morning. We have delayed some small sales to individuals for a week to let the dust settle, although we have given the local stock agents a list of store lambs to go and cull ewes for the works. This was to get them into the system as much as any real expectation that they would be moving.

Having spoken to a couple of stock agents their thinking was that within a couple of days there will be some new protocols developed to take into account the new paradigm we are in.

The couple of staff we employ have been told to stay home and well for at least a week. We as a food producer presumably could still operate however again, we are working on letting any bugs caught pre-lockdown show themselves. Hopefully the risk of contracting any illness after a week of lockdown will be less and if Covid-19 is spreading widely then that will become more obvious and we can continue with the current policy. We do have plenty of maintenance jobs that we could get staff to do while maintaining a 2+ metre safety zone but a conservative approach feels more comfortable at the moment.

To date one application for a staff member’s wage subsidy has gone into the bank and awaiting the second. Our main retail outlet at the Riverside Market has been shut down and without that the need, to keep our production line going is going to be minimal.

Much has been made about the banks coming to the party. Really! From where I stand, they look like they may be delaying some short term income for more longer term. For us all we have received is a passing on of the reduced OCR and our floating has dropped to 4.69% (Doesn’t start until April) and the fixed rate is left unchanged. Any future risks they may have appear to be largely avoided by the underwriting by the Government.  The logic no doubt is Government wants to avoid any runs on the bank and keep the public reassured. However as one person writing on the comments in the banking section said : The old classic, "privatise the profits, socialise the losses". It is early days yet and all we know is the ‘world’ will look different coming out the other side of this. New Zealand may weather the storm reasonably well, we hope, but we already know that parts of Europe, and looking more likely the USA, there are going to be major problems ahead. Heaven knows how the poor buggers in the undeveloped parts of the world are going to go through this.


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The only glimmer of hope is the news coming out of China continues to get better.

As with other countries the China's central government has set up a stimulus package. In this case it is supposedly worth US$7 trillion although ‘only’ US$1 trillion targeted for spending in 2020. Some of the larger cities are making available vouchers to help kick start their local economies.

By last Thursday, Nanjing had giving out ¥318 million ($45 million) worth of vouchers to its residents. People are invited to participate in lotteries for e-vouchers which can be used in restaurants, gymnasiums, bookshops as well as tourist spots, helping the service sector bounce back.

Sounds a bit random but then we are talking about China. One Chinese survey has reported a change of eating habits occurring in China, perhaps it is really a speeding up of what was already happening there with the uptake of a more western style diet increasing,

Fresh fruit and vegetable purchases have seen a significant spike, with 37% and 40% increasing their consumption in each category. Eggs and dairy has increased 35% and 33% respectively. Rice, pasta and noodle buying has also increased among a good number of respondents, resulting in the largest net overall uptick among product categories.

Much of this has been put down to stock piling although canned food sales have remained steady, unlike New Zealand judging by our household.

Another issue that is becoming obvious is that the farming sector in China is “grappling” with shortages of fertilizer, seed and labour. A university survey of rural villages found that 60% of respondents were pessimistic or very pessimistic about the “planting season”. It is likely that China won’t be alone with this problem, India comes to mind as another with a looming problem. It feels ghoulish to ponder upon the opportunities that may come New Zealand’s way due the COVID-19 but at some stage they will come.

In the meantime, we still await rain and so the sheep need feeding and later the hedges might finally get tidied up.

Y Lamb

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24 Comments

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Logs are coming off the wharf in China at close to pre-crisis levels - will we be loading them at this end?

This could lead to a change in global domination, as the current model is not working for the masses.

The US internal economy is in meltdown, and with most dividends suspended (including interest payments) from their offshore investments, their cashflow is disappearing.

Their monopoly weapons factories are not going to save them this time.

While still early days in the equation, the short game that western democracy has been playing has just exposed its frailty.

NO logs being loaded now, inventory in China falling, customers anxious as all other sources stopped, price going up. Watch this space when we start again!!!

As a bank shareholder I urge them to use this opportunity to purge their portfolios non-performing or high risk loans and transfer them to the public sector. It may be a decade before they vet another chance.

We are still owed a good restructuring to get productivity back on track.

Hopefully this is tongue in cheek, if not it's a sad commentary on the state of corporate greed driven by shareholder greed. Thanks for giving us direct evidence of "privatise the profits, socialise the costs".

With any luck, the overseas banks get nationalised. The profits are outrageous, and nowhere to be seen in the downturns.

They are nothing but parasites who abuse their power, by privatising profits and socialising losses.

Explain to me why a middleman should get the lions share of all profits, yet ask for government assistance when the chips are down.

The new lending model could/should be shared gains and loses, so it encourages responsible lending, rather than fat bonuses for the board and executive; not to mention the greedy shareholder.

we are working on letting any bugs caught pre-lockdown show themselves.

It's a very good strategy.

Saw a article in stuff from Marlborough suggesting that the wine harvest was not production of an essential item, wine being a luxury n all, and heard yesterday of someone refusing to work in kiwifruit locally for the same reason.
That actually made me think, I'm more than 90% through my seasons production as are most spring Calvers. Should we not also be shutting down along with everyone else, autumn Calvers no, given the timing why should we have tankers on the road and workers at the factories?

Essential we keep paying the bills so if you are safe keep milking! In my mind any one who can demonstrate they can work in isolation should be allowed to keep working. Fully mechanised harvesting/trucking should be able to keep working - more essential than bleeding horse racing!

Given the lack of rain until just recently, if you could afford to dry off and build a surplus of feed that would help in the coming spring? Also, the cows will be in great nick come spring. Just a thought.

Banks are not going to be the loser. Business that keeps real economy alive on floating rate 4.69%. How much goes in banks account. Did hear Tony Alexander say this is not a banking crisis. But in 2008 it was.

perfect for the banks. 6 month payment holiday means more lending for longer, What other business is just handed more sales? They couldn't have asked for better. No worry about "responsible lending" cos the government told them to do it. They will just take their margin on $billions

I had a notification from Westpac on my floating rate. Now 3.65% from 4.15%. Considering RB gave .75 I am not happy.

It's a very good floating rate Belle but speak to WP and let them know

If they could do 4.15 a month ago what the hell are they doing dropping it only .5, they said they would be passing it all on.

Belle our bank is passing the full .75% reduction on floating including overdraft next week. We still wont catch you but getting closer. Kicking myself though on all the 2-3 year fixed I committed at up close to 5%. If interest rates stabilize at these levels at some point the number guys are going to start looking at farms again? One caveat on future farm prices is how many overseas owners needing to free up liquidity will want to unload their farm investments in NZ.

10
up

I am not a farmer but support the farmers. The trendy lefties are going to get a lesson on who is going to save the nation (as usual) yes, you guessed it, the farmers producing real goods like Dairy, Meat, Wool, Horticulture etc. The city 'elites' (read academics, bureaucrats, politicians, media) whose income depends on 'real' goods producers like farmers should be bowing down in homage and apologising for their misguided past rantings.

can't upvote this enough

Macca - a touch unfair on academics. Many are rural based and I've been a tad surprised how entrenched the rural views of many such academics are since my arrival in NZ. But then such sweeping generalisations often are unfair. IMO farmers are undervalued by society, driven by the availability of cheap food - hopefully the masses will appreciate producers more given the current, very difficult, circumstances.

Shutting down the butcheries doesnt compute. With all takeaways, restaurants, cafes closed, meat will be on the grocery list more than ever. The supermarkets wont be able to supply enough.

By creating a bottle neck into the supermarkets we are effectively trimming the numbers that can be processed. It looks like a lot of the North Island is not going to recover from this drought before Winter. Weaners havn't been sold. We must process whatever cattle we can. And preferably have a sale for the meat in New Zealand if we can as export will be looking very sad.

Supermarkets are already gouging. My mrs paid 32$ for a kg of chicken thighs. Shameful

A rural butchery that also has a home kill service is staying open (approved) Home kill options used to be work or on-farm kill. Only on-farm will be operating. This will be a relief to some lifestyle block owners who had stock to kill for home use, but got caught out.

China "might" be recovering from the virus, but the masses have debt issues that will limit their buying power - i.e. no more red meat and milk?
https://www.scmp.com/news/china/society/article/3077450/coronavirus-glob...?

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