Is dairy NZ's coal?

Rural News

Guy Trafford finds polarised views flowing from what some urban consumers say (loudly), and how they live their lives with the market signals they send to producers

4th Jul 18, 5:05pm by Guy Trafford

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.

Dairy prices

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Source: GlobalDairyTrade and USDA

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33 Comments

by The_4th_estate | 4th Jul 18, 10:03pm 1530698599

Its a shame the hopelessly shortsighted National Govt wound up selling Solid Energy to the Talleys, it must be making them EVEN more richer at $100tonne!

by scarfie | 4th Jul 18, 10:34pm 1530700450

I worked out a year or so back that if my energy efficient solid fuel combustion technology was adopted across Australia electricity generation it would save them $5B AUD per annum at the price at that time.

by dtcarter | 5th Jul 18, 7:45am 1530733555

[ Unacceptable comment. Please make a point. Don't just smear others' views. Criticism is ok but silly name-calling just because you disagree is not. Ed ]

by rastus1 | 5th Jul 18, 8:34am 1530736482

"The developer has put aside 40% of the blocks land area into a conservation block"

Sucked in like the rest of mainstream. That land is uneconomic. You buy the big block to get the good bits, then irrigate and fertilize the good stuff... and never mind turning our public lakes and streams into nutrient ponds and drains for your personal gain.

by Larry76 | 5th Jul 18, 9:06am 1530738408

The issue is not that "all fossil fuels are bad" or that "environmental radicals" are all crazy and should be ignored. The issue is that we have a learned dependence on digging stuff up and burning it - we can't comprehend how energy can be more efficiently extracted or used from the sun, wind, tides and even geothermal energy. This is compounded by companies and communities that grow to service these extraction industries - northern Queensland, Canterbury dairy farmers etc.

Take the issue of Peak Oil. This was never about running out of the black stuff, rather it was about the most economically viable sources being used up faster than new, equally viable sources were being discovered. If you have to put more money (and energy) into extracting the stuff it not only gets more expensive for the end user, it also reaches a tipping point where the energy put in approximates the benefit of the energy released = net zero gain = stagnation.

Fracking brought us all a temporary reprieve from the 2010's, but this is only attractive at high oil prices (~$70 per barrel?) and if you look at the debt accumulated by the frackers, arguably fracking is not profitable at all. Certainly I think the chickens will come home to roost in the US with polluted water tables, land subsidence, heavy metals in the food chain etc....

So where does that leave Australian coal miners and the like? Renewable energy by its very definition is unlimited, therefore anything not renewable will ultimately become cost prohibitive and collapse. Australia has plentiful solar resources, lots of lithium, useful wind and enough 'cleaner' natural gas to happily move towards sustainable forms of energy production.

But first we need to ditch our 19th century view of energy, retrain, and wake up to the fact that 21st century prosperity will depend on burning less stuff just to satisfy shareholders' myopic need for quarterly returns. Hmmm, maybe we're too dumb to achieve that.....

by JB | 5th Jul 18, 9:34am 1530740090

When you talk of energy you must always differentiate between base load and intermittent such as wind and solar.

You can't run a train system or smelter on batteries.

Nuclear is the obvious option for dependable low cost energy in the heavily coal dependent Australia's of this world which we will need to charge the electric car invasion sweeping the world. Charging them with coal only exacerbates emissions.

The facts are that not a single individual in the western world has ever been killed as the results of a nuclear power incident - yet best estimates are over 50,000 pa alone US deaths from coal emissions.

We just have to get voters informed of the benefits of nuclear power which is not actually banned or required in NZ - only weapons.

The most paranoid are quite happy to accept the numerous radiation treatments offered in our hospitals without question when required for them personally.

Interesting !

by waymad | 5th Jul 18, 10:14am 1530742465

Indeed, JB. Leaving SA aside, because it is already the crash test Dummy of a high reliance on intermittents, the poster child here is NSW, where the Tomago aluminium smelter is going through enforced shutdowns because Them Wot Know Best keep taking out baseload generation by coal, and increasingly relying on sunshine and breezes.

Now, I'm all for sunshine: I've just put in a top-tier solar array. 10kWh battery and clevver inverter, which even in the depths of winter allows us (hopefully, depends on Gaia, clouds, El Sol, clean panels) to self-consume during the day, and use cheap night-rate power for topping up etc. My motivation, as I've stated here before, is not Green in the least. It's simply that the installed system cannot be OBR'ed yet has a 25-year life-span, by which time I shall be looking at the lid. It's just commissioned, kiosk view here.

But as Guy notes, the virtue-signalling of the Urban Elites is always good for a larf. The real damage commences when these Elites and their Minions start to adjust whole-systems designs. They are bent on so doing in Australia and Germany, to name but two of the basket cases emerging from such attempts. In both cases the result, viewed from an engineering perspective, is to reduce reliability, availability, and resilience of entire power distribution grids.

Unintended consequences.....and the anti-dairy rhetoric here, justified as it may be in highly specific instances, is the equivalent of sawing off the economic branch we all depend on, at least in part.....

Now NZ is blessed with abundant hydro possibilities, and we all benefit from the foresight and massive schemes that went in from the 1920's on, and with greater speed from the 1950's. If, as Transpower's 'Vibrant Haven' scenario predicts, we end up with 10 million souls, and power, food, housing and EV transport demands to accompany that, where, oh where, are we gonna get them Extra Electrons from?

by positivelywallstreet | 5th Jul 18, 11:00am 1530745217

Can you share with us your expected return on investment for the solar installation, ignoring the possibility of an OBR or the second coming of Christ.

by waymad | 5th Jul 18, 11:14am 1530746098

Not a consideration, but likely to be horrendously low. Far too soon to look at annual production given it's been in two days, but assuming 7000kWh/year production, and working back from system cost (no opportunity costs figured in) the cost per kWh over a 25-year life is in the region of 17c. That's a bit above night rate, but about half of day rate power. As I implied, it's a 'peace of mind' rather than a financial dividend.

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by Larry76 | 5th Jul 18, 1:59pm 1530755990

Awesome that you invested in solar+battery. Presumably it's a fairly small system ~5kW? There will be a lot more of these developments in coming years....

Not sure about this statement though - "because Them Wot Know Best keep taking out baseload generation by coal, and increasingly relying on sunshine and breezes" Who is Them? If you are referring to 'greenies' or the State government that is inaccurate - most generation issues in SA have been caused by generators supplying commercial users ahead of residential users due to rate/kWh distortions, as well as aging transmission infrastructure that got blown over in a storm event.

Baffling that you appear to mock sunshine & breezes on the one hand and then select it for your personal use on the other? I'd rather breathe your power supply than supp from the smokey chimney.

by waymad | 5th Jul 18, 2:28pm 1530757706

Yes, 15 LG Neon2 320 watt panels, an LG RESU 10H 400V battery, SolarEdge/StorEdge electronic magic boxes, plus SolarEDge optimisers on every panel (stops a shaded or weak panel foobarring production of the entire string).

But panels are in two faces, east-west-ish, so the theoretical max of 4.8 kW won't ever happen.

The point of the battery is simple: to time-shift residual grid consumption (which we estimate to be about 1/3rd of our 10200kWh annual consumption) to night rate only. But it's currently (sorry, bad pun) too high a price for widespread usage: the battery alone is north of $12K.

Solar without battery (the present norm) leads to the dreaded Duck Curve, which demands baseload generation capable of very high ramp rates when El Sol Sets, and also induces power grid regulators to limit (curtail) or stop solar input in the middle of the day to stop overvoltage, too-rapid rate-of-change-of-frequency (RoCoF) and other uncontrollable effects in grids and generation assets that were designed and tuned to deliver power in one direction only.

I can see a time coming where local battery storage is mandatory, as solar penetration increases and emergent effects need to be managed. At present, NZ suppliers are fairly blase about the whole thing, but WA experience is that this is a temporary attitude...

As for my 'inconsistency', that misrepresents the situation. Sunshine and breezes are perfect, if correctly sized and backup generation is guaranteed or storage is assured, for small installations such as houses, boats and off-grid towns. It is hopelessly inadequate for large-scale industry such as aluminium smelters - a potline freeze at Portland cost $AUD240 million.

Simple, horses for courses.....

by powerdownkiwi | 5th Jul 18, 2:44pm 1530758644

The first home dump-load is into your hot water. Solar PV is cheaper than solar water-heating systems - takes a bit more space but.

by kiwimm | 5th Jul 18, 2:01pm 1530756071

For Chch, you will get 1300kwh/year per installed kW. We made 1294 last year in South Chch. Based on our electricity load and usage pattern over the last year, the payback is 8.3 years including marginal mortgage costs. Our panels are guaranteed to output 80% of their rated capacity after 40 years so long term, it has a huge return as the cost is fixed at 2017 prices whereas electricity prices will increase over time.

by Pragmatist | 5th Jul 18, 2:28pm 1530757701

Do you have storage? Or large daytime loads that you can usefully use the power for when its generated? everytime I've looked at solar its just not anything like cost effectivel for us (nobody home during peak generation hours mostly, so little ability to utilise teh power generated) without storage, and the costs of battery storage just don't make it worthwhile yet.

by powerdownkiwi | 5th Jul 18, 2:48pm 1530758931

Pragman - things can be timed to turn on, or can be turned on by the sun appearing - that's old-hat stuff. We've been off-grid since 2003, and I can't count the thousands we haven't forked out in power bills. It needs some self-discipline, though, and a working with the weather, seasons and sun rather than just a sense of entitlement. :)

by Pragmatist | 5th Jul 18, 2:59pm 1530759591

Doesn't change the fact that most of our power usage is at night when there is no solar.

No point having lot of solar power in the middle of the day when we are at work and can't use it. Running the heat pump in the middle of the day while we are at work is entirely pointless, and I prefer my dinner hot at 6pm, not cooked on a timer in the middle of the day and cold when i get home. Ditto having the TV and computer running all day while we are at work. Totally pointless.

You might be happy wrapping up in 12 layers of hessian sack, but I prefer a heat pump to keep warm at night.

If we were looking at building a house, then there are several things that could be done to make far more use of daytime generation, but for now, until battery costs come down rather a lot (or net metering is mandated) then rooftop solar is economically daft for most people that work 9-5 jobs and go places in the weekend.

by JB | 5th Jul 18, 4:16pm 1530764199

Net metering is totally economically irrational - Why would a generator want to buy power at retail when they can obtain it from the market at a fraction of the cost.

The shareholders of the generators would not be very happy !

by Pragmatist | 5th Jul 18, 5:46pm 1530769608

Irrational for the generator/retailer, but rational for the customer, and the environment *shrug*

Without it I won't be looking at solar till storage costs come way down, at which point I'd overbuild on the batteries and the panels and tell the power companies to go jump. At some point it'd become cheaper to keep a small petrol or diesel genny in the shed for the rare series of 5 or 6 overcast days in a row than pay monthly connection charges.

by JB | 5th Jul 18, 4:16pm 1530764200

Net metering is totally economically irrational - Why would a generator want to buy power at retail when they can obtain it from the market at a fraction of the cost.

The shareholders of the generators would not be very happy !

by positivelywallstreet | 5th Jul 18, 4:23pm 1530764622

Yes,
I dont see solar as value for money at present though we live far north.
Diaried for review in 2022 when prediction is costs down 25% and solar efficiency up by the same.
Probably wont happen.

by Andrewj | 5th Jul 18, 5:53pm 1530770010

China just canned some huge solar projects, the expectation is they will now flood the market with cheap panels

https://www.solarpowerworldonline.com/2018/06/why-chinas-abrupt-halt-on…

https://www.pv-tech.org/news/china-putting-major-breaks-on-solar-deploy…

by positivelywallstreet | 5th Jul 18, 6:53pm 1530773583

Yes, I see that as collaboration between our Donald and our Xi
Better than boring trade talks

by Didge | 5th Jul 18, 10:21am 1530742876

Nuclear fusion has proven to be extremely difficult to exploit. For decades it has always been 30 years away. Now truly enormous sums of money has been invested in solving this. Our knowledge of fusion generation is now moving faster than moore's law. Experts are now talking of fusion generation within 12 years.
A few years back when doing research on Bougainville Island I met a Canadian entrepreneur who was there negotiating with local landowners toward opening up another copper mine. He was quite confident that a friend of his would solve economical nuclear fusion. Thus I have followed the subject with a little more interest than most. https://www.youtube.com/watch?v=b-LCfx9v4YQ

by Larry76 | 5th Jul 18, 2:01pm 1530756097

We already have nuclear fusion for energy - it comes from the giant fusion reactor hanging in the sky and it costs nothing to use its energy for several billion years.

by powerdownkiwi | 5th Jul 18, 2:00pm 1530756028

JB assumes that BAU is a given. But nuclear only does electricity - we've not got the time to go there, and if the whole planet went there we'd have perhaps 50 years - at zero growth and having triaged a good deal of the presently-available fossil energy to do the job. But we are using that full-noise already, and yet globally there is more than a dollar of debt for every one of GDP - even with GDP avoiding real accounting.

by JB | 5th Jul 18, 11:24am 1530746678

Fusion has always been 10 years away as long as I can remember and I suspect that will not change in any reasonable lifetime of anyone born today.

The crazy thing is that these devices will still leave huge volumes of radioactivity in the plant components - even though the basic fusion only involves H and He.

The best thinking on where nuclear is going today is with the Chinese and the massive as in 700 of their very brightest scientists working on the Molten Salt Breeders - technology that operated for many months many years ago. Room pressure - so no explosion risk, high temp so high thermal efficiencies to conventional turbines.

Simple shut down with any power loss to a refrigerated freeze plug dumping fuel and stopping reaction.

Very high burn up ratios - high 90 %'s, can burn U 238 of which there are already vast stockpiles ( UK has sufficient for 50,000 years ), can burn Thorium - vastly more available than Uranium.

BUT - the big problem - they don't produce Plutonium ! Problem in the 1950's - not today !

Sure there are problems with continuous waste removal - materials stability, corrosions but all soluble given the commitment and the Chinese are quite open - the world will be licensing this technology from China in the years ahead as they build one of the world's great nuclear capability. Happening as we speak !

In between they are also committed to a conventional nuclear build program from licensed producers with some 60 units planned or under construction so one opening every few months as they wean their nation from coal.

by workingman | 5th Jul 18, 12:12pm 1530749574

The money is in tidal energy - harnessing the power of the moon. See https://www.ocean-energy-systems.org/ . Ocean Energy Systems involves 25 nations, and estimates a global potential for wave and tidal energy of 750GW by 2050 - stated as almost twice today’s global nuclear capacity.

Check New Zealand here: https://report2015.ocean-energy-systems.org/country-reports/new-zealand/

by Didge | 5th Jul 18, 2:46pm 1530758803

We humans are currently building ITER, a fusion device that is expected to provide ten times more energy than is required to start fusion. Thus time will tell. https://www.iter.org/

by dictator | 5th Jul 18, 3:03pm 1530759803

ITER will be a confirmation of what we know about producing viable fusion energy. Once it's running it is a full scale prototype. After that, no doubt, there will be capital intensive proposals for fusion energy plants. It will be an exciting time but I'm expecting design and construction to take a long time.

by dictator | 5th Jul 18, 3:03pm 1530759826

doublepost

by russellj | 5th Jul 18, 12:39pm 1530751172

Exactly so re the Mckenzie Basin. It is this type of development that give fuel(rightly so) to the anti dairy lobby. As does the most recent cow abuse defended by Sharemilkers Association ( he is a good bloke who made a mistake!! - Yeah Right.)

by powerdownkiwi | 5th Jul 18, 2:16pm 1530757017

Trafford is right - NZ dairying and Aust coal have one thing in common. They're both temporary.

One because when it's dug out and burnt, it's gone. The other because it needs fossil oil to do the tractor and truck bit. And both need to be paid for by people doing work - which currently is 86% fossil fuelled, the whole thing has a bootstrap problem as the quality of the FF diminishes.

The Limits to Growth sees fiscal collapse by 2030 - I see it sooner. What price corporate dairying at that point? Palm kernel? Fertiliser? Market? It's a joke. It's bit like watching someone setting up big in blacksmithing, about 1930.

I see those who have to leave the cities flooding back to the land, more people per hectare, local food. And I see it before 2030.

by Casual Observer | 6th Jul 18, 9:23am 1530825820

Electric tractors - https://www.agriland.ie/farming-news/video-john-deeres-fully-electric-t…
It could be said that all life is temporary but that doesn't mean that it doesn't evolve and adapt to change while it is alive. Same with farming.