The Weekly Dairy Report: Early calves focus farmers of new welfare rules as nutrient issues influences management in the South

The Weekly Dairy Report: Early calves focus farmers of new welfare rules as nutrient issues influences management in the South

Another fine and frosty week making wintering a breeze, however managers know there is a lot of weather to go yet in July and August.

The east coast of both islands still lags behind in soil moisture levels, while the rest of the country has received above average rainfall.

Early calves are now being seen in northern herds and soon the spot light will return to bobby calf welfare by those critics of intensive farming.

Processors warn that while calf skin prices are improving they are still $10/hd behind last year and will limit returns this year.

Environment Canterbury warns that 8% of the water consent holders in the region still haven’t notified the statutory body that they have installed water meters for this season and could face fines for non compliance.

Those in the Selwyn river red zone are also being reminded to provide farm environmental plans by January 2017, so the nitrates in the catchment can be managed and lowered, to improve the water quality of Lake Ellesmere.

This ECan variation to the main environment plan is seen as a template for the rest of NZ in nutrient management, and all intensive farmers should watch this development and how this issue is managed, as failure to comply and improve in this area will see errant farms needing a consent to farm.

While Oceania dairy commodity prices have lifted, last week’s milk auction values continue to lag in the doldrums and while the overall prices were stable, whole milk powder fell again by 1.6%.

However the tide of production out of Europe continues unabated and could even grow greater post Brexit and threaten NZ's commodity based seasonal systems, which some commentators believe need to change.

In the US cheap grains continues to drive milk flows, as costs and regulations have stymied our low input farming operations that once gave NZ a competitive advantage in the global dairy market.

Infant milk formula volumes into China has grown by 28%, and NZ’s share of this market has also lifted, and the increasing value earned from this product is a sound example of how more profit can be earned from milk, and passed back to the farm gate.

Rabobank has warned it’s dairy clients that lower payout levels should be expected in the future, and farming with lower debt and reduced costs will be the way to be profitable in the short term.

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?

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30 Comments

What's your feeling on this one CO? $50000 or so per hectare. A prudent investment for the superfund or a great get out of jail card for the vendor? To me it seems buyers can wait until overly indebted farmers fall over before they need to buy up. No doubt these are great farms but surely the superfund has jumped the starters gun.

Wait for a year........will go down to 25k

Maybe the superfund is taking their advice from Nathan Penny....

The conspiracy theorist in me would say this looks awfully like an attempt to underpin the market. That or the prospect of a large tract of prime Central Southland farmland heading into foreign ownership was too politically charged at the moment. How naughty of me to speculate so.....

ACC couldn't do it as they're putting their petty cash/political slush fund into a damn.

Jumped the starters gun I'd say - or political directive? Here's a bit about the owners. http://www.stuff.co.nz/business/farming/dairy/10314543/20-years-on-dairy...

Are we to meant to believe NZSF is not socialising the losses of the owners and hence their bankers?

I care not as long as unsecured, under rewarded bank depositors are not called upon to undertake the task.

I just don't buy it, Adrian Orr is no mug. I can't see him going near anything he didn't have he confidence a solid profit would be made from. I definitely can't see him taking directive from the government.

May not be a move in its self, could be part of a couple of steps forming a move - that could be in one of possibly several directions.

The $50,000/ha could be as a going concern - so stock and plant included. That would take the land price back to around $42k/ha.

Adrian Orr maybe the man. But he still got ripped bad in Portugal. Look at those links of Ajs. What the hell does that say on our overpriced land. To make matters worse didnt the superfund employ Farmrite to manage these farms? If they still do, well, the people in the industry dont respect that outfit much. As an example. One particular farmrite farm did away with a piece of infrastructure. Just mothballed it. There was nothing wrong with it. Within a month they were borrowing the neighbours for which they paid 30k. This sort of nonsense makes corporate farms a joke. Everyone around these farms sees it, knows it, and sees the end is nigh.
Aj I had a discussion with my agent about the beef market last night. He is very troubled by it. There is no basis for these high prices, other than farmers panicking to secure stock. If we get a warm spring it will go more insane. Nothing worse at a sale than a farmer with grass at home. It looks warm and wet for the next week. Ideal.

Belle, there is a finance company or a bank behind every purchase, could be an interesting summer.
Those corporates will have to rely on tax incentives if they want to compete but then is there much competition in dairy if it all goes to the same company at the same price?
Went to Tesco for my weekly shop, tried to buy a frozen NZ leg of lamb but at £7.50 a kg it was 50p more expensive than the local fresh lamb.

The larger dairy farms are often not set up to deal with the time consuming bobby calves, they are seen as a hassle and theoretically should be shot at birth

I have a problem with the whole concept of the pension funds buying up exisiting businesses, how does that enrich the country? It's daft.
It has worried me for a while that the commitment to save for future pensions in low yielding businesses like farming, will make us all employees of our own pension schemes. Something very twisted in the logic.

Also to start with 350 cows in 1993 and get to 4700 15 years later takes a very accommodating bank. 350 cows didn't fund that expansion out of income.

Pension funds need to invest mostly offshore or in new business and not be used to keep farm values so far above economic worth. They shouldn't compete in the market with Kiwis, Kiwis who often have a much better idea of the value of the asset.
All it's doing is pushing the young and family farms out, to be replaced by corporate structures with deeply flawed models. Especially with the peak production in Southland mostly going into WMP.

Vendor banked rabo, between them and ASB there has been a fight to the bottom for the higher risk end of the dairy book in Southland over the last decade. I saw some data out of a property site not that long ago suggesting their share of listings well exceeded their market shares. Time will tell....

A possible strategy by govt to make out that not all dairy farms are being sold to foreigners? if so I hate to imagine what their plan is

NZ's biggest trading partner fires warning shot for aligning ourselves with USA, threatening reprisals against dairy, wool and kiwifruit.
http://i.stuff.co.nz/business/farming/82092018/China-threatens-reprisals...

Hope the link works, I am on my phone today.

China asking Fonterra to pressure NZ government to stop investigation into dodgy steel, or be forced out of the Chinese market.

When I was at university we had a cranky old lecturer who hated China and always said how corrupt they were, but more and more I see now that he was about right.

NZ should tip its milk down the drain in protest

The problem is that there is more than enough milk in the world, so China is able to stop buying from NZ and the EU has enough production and product in storage to replace NZ.
If anything this could be a big boost for EU farmers and a critical hit for Fonterra and presumably the other NZ milk companies as the world won't really notice if we are gone at the moment.

Very concerning development. You don't have to scratch far below the surface to expose the totalitarian regime. You only have to look at the Chinese reaction to South China Sea decision to see exactly what we are dealing with.

I have an uncomfortable feeling that soon we'll be in the position of having to pick sides in a war.

A trade war is looking more and more likely. Recent political developments suggest the intent of various trade arrangements are going to be severely tested. Anti globalisation and a return to protectionism looks like something we are going to have to deal with.

I'm hearing that some dairy processor clients are refusing to enter in to long term purchasing contracts causing some angst for the processors (and farmer suppliers should also be concerned). So has the trade war already begun?

And do

With the way the USA, China, Russia and assorted cronies are rattling their sabres and butting heads, I hope we're lucky enough to stop at trade war. We're at unprecedented population levels, competing for depleting resources, millions of bodies in excess labour capacity in all those unemployed young men to be mopped up somehow before they channel their energy into revolution, and various ethnic, geographic and religious blocs at each other like weasels in a sack. Lots of tinder and cans of petrol lying around just waiting for somebody to toss in a match.

And always were

Silver Fern Farms shareholders take note. You are in the process of handing over the keys of your supply chain to the Chinese Government. Don't be under any illusions as to their benevolence when push comes to shove.

I have no doubt about that, and back in 2010 many of us were saying that there had to be a reason why Shanghai Pengxin were prepared to pay such an OTT amount for Crafar Farms, and of course being human, put 2 and 2 together. The current milk prices and what seems to be going on now were among some of the answers we came up with.

Meanwhile Canada increases support for dairy farmers.
The Canadian Dairy Commission on Friday announced an unusual second increase this year in the support prices it sets for butter ($8.0062 per kilogram, up from $7.7815 currently) and skim milk powder ($4.5302 per kilogram, up from $4.4176).
Restaurants Canada, a longtime critic of Canada’s supply management system and dairy pricing frameworks, warned in a separate release Friday the new support price hikes will cost its members through higher prices for cheese, yogurt, ice cream and butter.
“Cheese is being priced off the menu and another price increase is only going to further drive down demand,” said Pierre Cadieux, the industry group’s vice-president.

http://www.canadiancattlemen.ca/daily/dairy-support-price-gets-second-bu...

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