Certainty, yes. But disastrous

Rural News

The MPI solution to the mycoplasma bovis threat will be very tough indeed for those farmers subject to the cull

26th Mar 18, 8:22pm by Guy Trafford

By Guy Trafford

The news that MPI are going ahead with the plan to eradicate all cattle from the 28 mycoplasma bovis infected farms will provide certainty for those farming families affected, but it is also disastrous.

The details of how the cull is to be conducted has not yet been announced.

For those farms where the milking herd contains the infected animals not only will this mean having to rebuild a herd which in most cases has taken many years to build up to their current genetic base, but presumably to help ensure that traces of the mycoplasma bovis infection remain the farms well have to remain empty of cattle for a period of time.

Many farms normally do destock when cows are not being milked, from June through July. Whether this period will be long enough to satisfy MPI is doubtful given the seriousness of the situation and if farms cannot get cows on to the milking platform for calving things may get complicated.

The best these farmers could hope for will be to try and get a herd together and then find grazing somewhere where they can also be milked. Sounds simple on paper but this is going to be a major challenge.

Also, at this stage MPI have said that compensation will be paid for “verifiable losses”.

What these “losses” extend to has yet to be defined, so whether it is ‘just’ for capital stock having to be destroyed, or whether it will extend to the potential lost income and additional grazing expenses is a decision that these farmers will be seeking clarification.

Among the 28 are some sharemilkers for whom the herd represents their largest asset.

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15 Comments

by waymad | 27th Mar 18, 9:56am 1522097802

The financial impact can be judged by reference to IRD's National Standard Cost (2018 guidelines here). Say an average of $400/head, as a lower limit.

At a cull (announcement here) of 22,300, that's $9m in round figures. But MPI notes that the value will be determined by on-farm valuations, so the actual compensation could easily be 2-4 times that.

My pick is that there will have to be another package alongside the herd compensation, for loss of income at least over the dry-herd period June-August.

This is gonna haveta be costed into the May Budget, so a few more lost weekends seem certain for the CFO's concerned.

by Casual Observer | 27th Mar 18, 11:08am 1522102115

Agree waymad it will be much more than $400. Imo it would be more like $1200 - It depends of the BW (Breeding worth) of the animal, that's why it is based on on farm valuations. High BW stock is worth more than low BW stock. These records are kept by companies like LIC/CRV so the farmers can't just suddenly say their animals have a higher BW than they do. The income compensation may need to be longer than the dry period as you are assuming that these farms are going to be able to go out and buy replacement stock but not have it delivered until September - there is a 90day stand down period for any stock coming on to the farm. This means there will be no income from the sale of calves from cows that will have already calved and the farmer will need to make arrangement for someone else to milk these cows - if such opportunities exist.

by solardb | 27th Mar 18, 10:13am 1522098811

You can't buy a decent dairy cow for $ 400 . more like $ 1400 as a low price.

by solardb | 27th Mar 18, 10:16am 1522099016

Something is seriously wrong with that IRD page. Older Stock should be worth more than younger stock , and the values are way to low .

by solardb | 27th Mar 18, 10:23am 1522099427

this is the IRD values to use.
http://www.ird.govt.nz/technical-tax/determinations/livestock/national-…

by Casual Observer | 27th Mar 18, 11:14am 1522102450

The ones people seem to forget in all of this are also the dairy calf rearing businesses - in Southland these are usually sheep farmers. The buy and grow on calves - dairy breeds to be leased/sold as dairy bulls for mating - and dairy beef cross calves for rearing on and selling. Some of these operations are quite large - 1000 calves. There are more of these businesses affected in Southland than there are dairy only businesses.

by Andrewj | 27th Mar 18, 11:26am 1522103204

There was a calf rearer from Southland who was affected and lost 330 calves out of 1400 but had many more left with health issues. I agree it looks like the bull beef rearers could be taking big risks especially as they buy in from multiple herds and then mix them all up.

I think compensation depends on numbers, 3 or 4 thousand is doable 1 million harder for the govt to swallow and 3 million probably never going to happen, so first in best dressed.

I found link to calf rearer
http://www.nzherald.co.nz/the-country/news/article.cfm?c_id=16&objectid…

by Casual Observer | 27th Mar 18, 4:10pm 1522120238

If they are talking eradication Aj, all his calves will go as there is no cure. There is a 90 day stand down period for any stock to be taken on farm once all stock is killed. I know of one farm that already has had all it's calves killed. At least the young farmer didn't have to be on farm while it was happening.

by redcows1 | 27th Mar 18, 11:27am 1522103272

Compensation will be the value of the cow which can easily be valued by "independent" agents. It will then be offset by the works value which in the case of cows and heifers is considerable. It's the income compensation that will be problematic. Timing means most likely no dairy supply for next season unless they can ditch all the cows before may and purchase another herd to hold off farm over winter. Very problematic for VoSM sharemilkers and contract milkers who will no doubt be reliant on the goodwill of the farm owners as compensation sounds like it will be via the herd owners, not a nice place to be.

by mberka | 27th Mar 18, 1:37pm 1522111048

Why are the farmers being compensated by the government? It's their risk of doing business that sick animals need to be destroyed. Why is this being forked out by the taxpayers? What are we, the USSR?

by Andrewj | 27th Mar 18, 1:50pm 1522111841

depends how it got here , it tough to lose all your animals and be expected to lump it if it's a third party at fault. I haven't heard how it got here, although I note that second hand machinery is getting better checks , forestry equipment often stripped back to basics.

by Casual Observer | 27th Mar 18, 4:11pm 1522120296

If we were the USSR there wouldn't be any compensation. ;-)

by skudiv | 27th Mar 18, 8:53pm 1522137212

Yeah it's the USSR where government pays everyone affected by disaster, not that it costs numpties on the dole a cent, as they are mooching every day yet few people even care. The country as a whole benefits from being rid of MBovis, just like we all benefit from being free of mad cow disease, and many other diseases that have been erradicated in the past. It is also worth mentioning that 'government' doesn't have money except what it takes from the very few people in the country who actually pay tax, the very same people who stand to benefit from this.

by Rumpole | 28th Mar 18, 3:20pm 1522203643

If you can't get commercial insurance for this type of event over which Farmers have no control no compensation means Bankrupt Farmers, Bank Bad Debt to write off, employment losses and reduced product for Fonterra to sell so smaller trade balances of likely bigger trade deficits and best of all your BBQ Beef steaks will become a fond memory of the good times past.

by rastus1 | 28th Mar 18, 3:27pm 1522204026

Much needed wake up call perhaps? Imagine if it was f&m.

https://www.stuff.co.nz/business/farming/100059267/farmers-given-ultima…