By Guy Trafford
An interesting comparison can be drawn between the dairy industry in New Zealand and the coal industry in Australia. Both seem to have the ability to polarise groups and yet both countries economies are heavily reliant on them.
Coal prices have had a resurgence to over US$100 per tonne which is resulting in calls for increasing the amount exported from Australia. Currently, coal brings in about AU$58 bln, one of the major Australian exports.
Dairying in New Zealand holds a similar place and both hold about 30% of world trade. An observation noted while I am here in Australia is the diversity of commentary in the ‘mainstream media’. In Northern Queensland where coal mining appears to be held in very high regard, the major Cairns newspaper editorial seemed to typify the attitude of many. One piece leapt out which showed the gulf I believe exists between most Kiwis and certainly a section of Australians, “Environmental radicals sit in their West End homes with heating and air-conditioning, driving petrol-guzzling cars and generally in a way that generally consumes plenty of energy, most of it coming from fossil fuel sources”.
At the same time back in New Zealand police had been brought in to remove GreenPeace protesters from a large dairy farm development being carried out in the McKenzie country. I couldn’t help but be struck by the difference in the tone of the reporting from two different media companies. Not with each other but with the Cairns paper. The New Zealand media of which one was a rural /farming paper were non-judgmental and simply let the facts stand for themselves. To be fair to Australians, in other centres at different times there has been plenty of public push back against mining just as in New Zealand dairying has coped plenty of flak.
The large Simons Pass dairy developer must have been spoiling for a fight tackling this project and despite having ticked the boxes with the local authorities having Fish and Game, GreenPeace and WWP opposing, it means this story is likely to run for a while yet. The developer has put aside 40% of the blocks land area into a conservation block and the development is well progressed so it is unlikely that the development will be stopped unless something radical and retrospective comes out of the Minister for the Environment David Parker land and water reforms due later this year.
The lowering kiwi dollar is managing to mask the deterioration in the global milk price with WMP dropping below the US$3000 level to US$2905. This is the eight drop in the GDT over the last ten auctions.
Analysts have ‘blamed’ the increase in WMP production that came out of New Zealand in May for the drop. However, all products apart from butter milk powder and rennet casein experienced similar drops - although WMP with a 7% drop on the last sale did experience a higher drop than other products which were around the 4% mark.
Around the globe milk exports are up fortunately on the back of increased demand from Latin America, Asia and China. The Middle East and Africa in the previous period also experienced import growth. With the increases in oil prices, the demand from the oil-based economies is likely to keep increasing.