Farmers weekly NZ April 24 2017 by AgriHQ

Best on show

Vol 16 No 16, April 24, 2017

farmersweekly.co.nz

Store lamb concern People are buying on a per-head basis rather than per kilogram. They’ve realised they need numbers on the ground to get back in.

Alan Williams alan.williams@nzx.com

HE market might be buoyant but Wairarapa store lamb buyer Nathan Williams says there’s stiff competition and concern about future margins. “It’s a grass market and it’s paying over the odds.” While pasture growth continues at “phenomenal” levels, the store lamb price is expected to remain close to current levels but he was not as sure about the outlook for the schedule offered by meat companies. Williams buys between 3000 and 6000 store lambs a year – from autumn through till spring – as part of arable-dryland farming operations near Masterton. He thinks margins might be hard work in the months ahead. Central Hawke’s Bay farmer Richard Ellis is another big store lamb buyer throughout the year – his farm irrigation puts him in a strong position through the region’s summer drought period. He was able to buy in at reasonable prices at the start of summer but because the market has become more aggressive his average annual profit per lamb will be reduced. Williams also said the market has become very competitive over the past month or so because of the excellent Hawke’s Bay autumn. There are enough lambs to meet demand now but he’s expecting the supply to tighten up later in winter, in the July-August period. “Finally, the breeding farmer is getting paid for his efforts.”

Adrian Arnold Farmer

COMPETITION: Central Hawke’s Bay farmer Richard Ellis was able to buy at reasonable prices at the start of summer but because the market has become more aggressive his average annual profit per lamb will be reduced. Photo: Graeme Brown

He said there was talk of a schedule in the $6.50/kg range at some point in the months ahead. Even though store lamb prices have spiked to high levels above $3.10/kg for lighter males in recent weeks, Williams was looking at a margin of $15-$25 a head once the lambs were finished. “You need to work towards this to pay for the cartage, drench, fertiliser and debt.” Even farmers who don’t usually trade in store lambs are thinking of doing so if feed conditions keep improving. Vince Galbraith, who farms in the Tikokino area of central Hawke’s Bay, said he was looking

at the possibility in the next three to four weeks, but like other farmers was also considering grazing dairy cows as a viable option as they were dried off. Galbraith got his own lambs away earlier in the season, as usual, with weights lower than usual because of the drought. Once that broke, the whole farming environment changed within 10 days. “It’s been unbelievable,” he said. His ewes have gone into mating in excellent order, and he thinks there should be really high lambing percentages achieved in spring across many parts of the country.

Although the schedule has gone higher than anyone expected, Hawke’s Bay Federated Farmers meat and fibre chairman Adrian Arnold said the store lamb market was a numbers game, because farmers who sold at $2.10kg$2.15/kg during the drought had found themselves short of stock to manage pasture levels. “People are buying on a per-head basis rather than per kilogram. They’ve realised they need numbers on the ground to get back in.” Price levels meant margins would be slimmer and the returns would come from turnover levels. Because of the low prices

secured earlier, farmers were now hanging on to the lambs they had retained to build up weights and processing margins. There was also time for farmers who had to spend up to get their stock replacements to get them up to maximum weights. “I can’t remember an autumn as good as this one. Conditions went from worst to best within a couple of weeks because of the nitrogen boost from the rain,” Arnold said. Arnold isn’t a store buyer, but sold 1000 lambs at the going rate in February as farmers “hit the wall” in February. Farmers had strong memories of previous years and took a proactive stance to look after their capital stock. “We worked on doing that with our ewe and hoggets and also lifting the lambs we still had on board.” The ewes had lost little weight and blossomed on the feed that came with the rains, and hoggets had improved from ordinary to looking really good.

MORE: STORE LAMB PRICES

NEWS

OPINION

22 Alternative View Alan Emerson says Sir Peter Gluckman has the right idea on water quality. Editorial �� 20 Cartoon �� 20 Letters �� 20 Pulpit �� 21 Alternative View �� 22 From the Ridge �� 23

4 Ahuwhenua Trophy finalists

From the Lip �� 23

Soil Moisture Anomaly (mm) at 9am April 21, 2017

60 Wetter than

normal (mm)

-10

-20

-30

begin field days

-50

Drier than normal (mm)

The season of three field days on finalist farms for this year’s Ahuwhenua Trophy – BNZ Maori Excellence in Farming Award began in the Far North last week at Kaikohe.

7 Farmers baying for sunshine Bay of Plenty farmers are crossing their fingers for at least two weeks of dry weather heading into late autumn as they grapple with the effect of lost pasture at the tail-end of the milking season.

13 Making the quantum leap New Zealand has an abundance of threats but equally there is an abundance of opportunities, Te Hono Movement founder John Brakenridge says. GDT trend hints at parting dairy clouds �� 3 Ahuwhenua Trophy finalists begin field days �� 4

Map reading tips

REGULARS Real Estate �� 24-37 Employment �� 38 Classifieds �� 38 Livestock �� 39-43

MARKETS

Feeding the demand �� 5 Farmers baying for sunshine �� 7 New Canadian milk price system rings alarm �� 8 Online auctions see massive growth �� 11 What you didn’t see on Sunday �� 12 Making the quantum leap �� 13

NEWSMAKER

18 Giving young farmers a

hand up

To Willy Falloon the answers to several significant questions facing sheep and beef farming were blindingly obvious.

Job

of the

Week

Livestock representative (x2). PGG Wrightson is one of New Zealand’s leading nationwide providers of products and services to the rural sector. An exciting opportunity has arisen for two livestock representatives to join our experienced and passionate team in Gisborne/Wairoa and Hawke’s Bay. For more information and a full job description visit the Farmers Weekly jobs site: farmersweeklyjobs.co.nz and click on Agribusiness category. To find all other agjobs click on ‘All Categories’. #agjobs at your fingertips.

EU trade deal may favour Aussies �� 10

Regional finalists in to win �� 16

This map shows the difference or anomaly in soil moisture level at the date shown compared to the average, generated from more than 30 years of records held by NIWA.

48 Cervena seeks its place in

the sun

Marketing Cervena venison as a lighter summer eating option in Germany will be a challenge but it’s a move Deer Industry New Zealand has confidence in, venison marketing manager Marianne Wilson says.

Market Snapshot �� 44

Contact us Editor: Bryan Gibson Twitter: farmersweeklynz Email: nzfarmersweekly@nzx.com Free phone: 0800 85 25 80 DDI: 06 323 1519

WORLD

WIDE

A G R I C U LT U R A L Lincoln University Lincoln, July 5-7 Earlybird Registrations end May 1st Farmer speakers from Australia and New Zealand

DICK TAYLER – NZ Guest Speaker Dick was the 1974 Commonwealth Games’ gold medalist in the 10,000m and held many New Zealand titles over 1500m to 10,000m distances

TIM REINBOTT – USA Will discuss his work using the Albrecht programme on corn and forages and the effects it has on soil health

STEPHANIE HOWARD – New Zealand Will discuss market issues around genetic modification (GM)

DR DON HUBER – USA Will talk on the role nutrients have on plants and how these protect it from specific diseases

NEAL KINSEY – USA Discussing how to achieve nutrient-dense crops and foods. He will also discuss the role of sulphur

BOB PERRY – USA Will provide an overview of peer reviewed papers investigating Albrecht and testing methods

PETER EGGERS – Canada He will talk about why and how his yields are better than both GMO and conventional crops

JOAN TIMMERMANS – Netherlands Will speak on use of plant sap analysis

DR DALE BLEVINS – USA Discussing the inter-relationship between calcium and boron, and why we need these two elements

PETER NORWOOD – Australia Peter will be discussing human and animal nutrition

To register visit www.wwag.co.nz or email bruce@wwag.co.nz

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WORLD WIDE AGRICULTURE CONFERENCE

News

THE NZ FARMERS WEEKLY – farmersweekly.co.nz – April 24, 2017

NEWS BRIEFS BOOST: Dairy analysts say a recovery in GlobalDairyTrade results since late March suggests buoyant and stable prices ahead for the remainder of this season.

GDT trend hints at parting dairy clouds Hugh Stringleman hugh.stringleman@nzx.com WIDESPREAD rain in New Zealand dairying districts during April may have boosted prices in the latest GlobalDairyTrade auction, market analysts suggest. The GDT price index rose 3.1%, on top of two consecutive increases of 1.7% and 1.6% in early April and late March respectively. Therefore the market has recovered all of the most recent 6.3% fall, on March 7, and the trend suggested buoyant and stable prices for the remainder of the current dairy season. “The country has been in storm mode for most of the past month, but the saving grace for dairying is that it has come late in the season and the major dairying regions have escaped

the worst of the production impacts,” ASB Bank rural economist Nathan Penny said. After counting the cost for Bay of Plenty farmers, Penny said there was a silver lining to lost dairy production – some upside potential on his current $6/kg farmgate forecast. “Moreover, the recent auction results reaffirm our $6.75/kg forecast for next season.” Rabobank dairy analyst Emma Higgins said products made from milk fat such as butter, anhydrous milk fat, and cheese, maintained their high prices. Milk powders also burst into life – skim milk powder (SMP) was up 7% to climb above US$2000/tonne, and whole milk powder (WMP) went up 3.5% to just under $3000/t. As the northern hemisphere spring peak approaches (in

May), the spread between SMP and WMP prices should persist and SMP will probably go into European Union intervention storage. “Despite this, market prices generally seem to be steering clear of breaking below the intervention price threshold for now but we shall see if that holds true across the coming weeks,” Higgins said. She earlier said that the current season would end at about $6/kg milksolids and the new season was likely to bring $6.25/kg. A milk price of this level next season would allow NZ dairy farmers to emerge from the woods after two years of very low milk prices. The cashflow benefits from higher prices were only now getting to farmers’ pockets and another profitable season in

2017-18 was essential to rebuild confidence in the sector. AgriHQ dairy analyst Susan Kilsby said WMP futures prices had made solid gains over the past few weeks and that had been a big factor in the revised farmgate forecast price of $6.18/ kg. “Buyers are showing much more interest in locking-in prices as the NZ season draws to a close,” she said. “Farmers have shown considerable interest in using milk price futures to secure some certainty around next season’s milk price. “The September 2018 milk price contract - for next season’s production – has shot up in price over the past fortnight. “It now trades at $6.20/kg, whereas at the beginning of April this contract was priced at $5.80.”

Long service FISH & Game New Zealand chief executive Bryce Johnson is retiring after 37 years running the organisation and its predecessor. He was initially the national director of the Acclimatisation Society from 1980 and moved to his current posiBryce Johnson tion when Fish & Game was established in 1991.

Rabobank positive

NEW Zealand dairy farmers are likely to get a higher payout from milk processors next season as global output remains subdued while demand picks up in China, underpinning prices, according to agri-banking specialist Rabobank. In its recent report, NZ Dairy Sector – Out of the Woods, the lender forecast a farmgate milk price near $6.25/kg of milksolids for the upcoming 201718 season, ahead of Fonterra’s $6/kg forecast for the current 2016-17 season.

Decision delayed THE Hawke’s Bay Regional Council has agreed to delay the report back on the review of the Ruataniwha Water Storage Scheme for two weeks in order to have further advice prepared. Originally planned for April 26, the report back will now be on May 10. The council commissioned the review of key contractual, legal, financial, economic and environmental elements of the scheme, including the effects and consequences of implementing Plan Change 6 with and without the scheme, as well as the implications of withdrawing from the scheme. Council chairman Rex Graham said regional councillors had received a large volume of advice on many critical issues affecting the council’s decision on the scheme, and have asked for further information on some matters.

Going for Gold… Wairere tested 53 ram lambs for FE tolerance in February 2017 with a sporidesmin dose rate of .45. Of the 53, 42 had a nil result, 1 was marginal, 8 were slight, 2 were a moderate response. The Wairere FE Tolerant flock is three quarters of the way to FE Gold status at .6. Couple that with Wairere’s exceptional lamb growth rate: Peter Roberts managed a centre pivot finishing farm in mid Canterbury for 13 years, processing 500,000 lambs during that time. The best growth rate he ever measured on a line of lambs was a line from Wairere South, which gained 446 grams per day.

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News

THE NZ FARMERS WEEKLY – farmersweekly.co.nz – April 24, 2017

Trophy finalists begin field days Hugh Stringleman hugh.stringleman@nzx.com THE season of three field days on finalist farms for this year’s Ahuwhenua Trophy – BNZ Maori Excellence in Farming Award began in the Far North last week at Kaikohe. Omapere Farm, the 902haeffective lakeside beef and sheep farm of the OmapereRangihamama Trust, was shown to more than 150 people, who were also hosted on the Ngapuhi marae, Kohewhata. Two further field days will be held at Puketawa Station, Eketahuna, on April 27, and on Pukepoto Farm Trust, Ongarue, on May 4. The 2017 awards dinner will be in Whangarei on May 26. Sponsored by the Bank of New Zealand, this year’s awards are for excellence on Maori-owned sheep and beef farms. Ahuwhenua Trophy management committee chairman Kingi Smiler said the contest and the presentation of the finalist farms keeps growing each year. “We spend a lot of time gathering the details of each property – its history, governance, farm management and financials, plus benchmarking with like farms. “Those people coming to the field days can pick up on that material and ask the

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EXCELLENCE: The standard of entries and presentations goes up every year, Ahuwhenua Trophy management committee chairman Kingi Smiler says.

right questions, because as we know a key part of farming is implementing the right policies at the right time. “Many annual reports for Maori farming enterprises around the country now put in benchmarking data to build confidence among shareholders about how well they are doing relative to everyone else.” Smiler said across all Maoriowned primary sector businesses there was a drive to performance sustainability and resilience for the benefit of generations to come. Omapere-Rangihamama Trust was a good example of sustainable environmental practices hand in hand with financial performance

and social enterprises, he had observed. It had fenced its waterways and protected and enhanced its taonga tupuna, especially Putahi maunga and Lake Omapere. The Kaikohe-based trust had contributed more than $15 million into the community over the past decade under new leadership, trustee Te Tuhi Robust said. Its key objective was natural resource management, because its two farms were on show 24-7, adjoining the town and split by the Twin Coast Cycle Trail – Pou Herenga Tai. Omapere Farm, occupying the south side of the lake edge, wintered about 1200 bulls, 80 beef cows and 1600 ewes. Bull calves

SILVERWARE: Omapere-Rangihamama Trust chairman Sonny Tau, left, gets acquainted with the Ahuwhenua Trophy on Kohewhata marae, under the guardianship of Kingi Smiler.

were bought between three and eight months of age and processed at 21-27 months, at a target weight of about 600kg liveweight. The lake boundary was fenced off from stock access in 200607, including riparian planting averaging 50-70m wide. The farm operated with three full-time staff members led by manager Lloyd Brennan, plus a casual trainee shepherd. It also

had a five-person farm committee that reported to the board of trustees under chairman Sonny Tau. The trust also owned a dairy farm producing 190,000kg milksolids annually, more than 300ha of forests, land for a forest nursery, leased-out a quarry and overwintered 200 beehives. Lake Omapere is the only Maori-owned lake in the country.

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News

THE NZ FARMERS WEEKLY – farmersweekly.co.nz – April 24, 2017

Feeding the demand Alan Williams alan.williams@nzx.com HAWKE’S Bay farmers who quit many of their lambs as stores in the severe drought of January and February have been buying back in to keep on top of the remarkable turnaround in feed conditions. They have to restock because of the strong pasture growth that started with warm rains in March, but their buying is also a sign of confidence in lamb values over the finishing period ahead, through winter and early spring, NZX Agri analyst Rachel Agnew said. Early indications from meat companies were that a $6/kg schedule could be on the table by the end of May, but in the North Island by mid-April it was already at $5.90/kg as processors bid for the scarce supply of lambs. In-market export demand and prices are strong in comparison to low worldwide supply. It was crucial for the lamb breeding sector that the current market conditions remained at least through the December-toFebruary period next year so that breeding farmers “could reap their benefits”, Hawke’s Bay-based Agnew said. Many of them have missed the autumn premiums this season, with the gains going to finishers. The outlook through the next several months was good but there were too many variables in the industry to provide any guarantees. This season has been “out of the bag”. Autumn was more like spring conditions. At this time last year, the North Island schedule was about $4.95/ kg. In the South Island, the

schedule has moved from about $4.65/kg to $5.60/kg at time of writing. Export market signals were overwhelmingly positive at the moment, with many in-market prices above their five-year averages, Agnew said. The closest comparison was 2011-12 but high prices then were followed by a collapse. Some caution was needed, but a big difference is that then there were very high inventory levels when high prices made endconsumers gun-shy. Now, global inventories were very low. With the rain and pasture growth, farmers have been holding lambs back from processing to put on more weights, adding to pressure on meat companies as they try to meet their month-on-month chilled product programmes. When they are put up, the prospect was for a surfeit of heavy lambs. The market preferred lighter lambs, and farmers needed to be wary of that, but given the numbers shortage the companies could not be too choosy, Agnew said. Some companies were offering price incentives to farmers to hold lambs for processing rather than sell them as stores. During the January and February drought, as water supplies dried up, Hawke’s Bay farmers were selling lambs as stores at $2.10/kg-$2.20/kg. When the grass started growing again in March, they soon found they were short of stock – store prices were soon approaching the $3/kg mark, and have been up to $3.10/kg through April. “That buying back at those prices hurts and it’s not a good situation, but they still think they

GOOD OUTLOOK: Hawke’s Bay farmers have had to restock lambs because of strong pasture growth that started with March rains.

can make a dollar,” Agnew said. Many of the lambs sold in the summer heat – possibly about 200,000 or so – ended up in the South Island, widely spread throughout the Omarama, Middlemarch, and Hakataramea areas, as well as Mid and South Canterbury, stock agent David Hazlett said, whose firm was involved in some of the deals. Those lambs were fattening up in an “extraordinary” autumn and there would be good gains because they were sold for processing at the South Island schedule levels.

“Those farmers will be trying not to crow about their margins, as the season unfolded in a way they couldn’t control,” Hazlett said. “It’s one of those years that you can’t budget or plan for.” Anzco Foods general manager agriculture and livestock, Grant Bunting, said regional kill numbers suggested many of those lambs might have already have been finished and processed for good returns for the buyers, given when they were bought and how the schedule has held up since then.

Those farmers will be trying not to crow about their margins, as the season unfolded in a way they couldn’t control. It’s one of those years that you can’t budget or plan for. David Hazlett Stock agent

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Farm with greater certainty

News

THE NZ FARMERS WEEKLY – farmersweekly.co.nz – April 24, 2017

Farmers baying for sunshine Richard Rennie richard.rennie@nzx.com BAY of Plenty farmers are crossing their fingers for at least two weeks of dry weather heading into late autumn as they grapple with the effect of lost pasture at the tailend of the milking season. All in the region are still coming to grips with biblical levels of rainfall that in some cases have set new records, and made this April one of the wettest ever recorded. Edgecumbe farmer Bruce Woods said he had received 1200mm of rainfall for the calendar year, almost 80% of his yearly total, of which half has fallen in two major rainfall events in the past month. Between March 24 and April 3 he recorded 300mm of rain, including 186mm in only three hours. The second big event from April 4-6 recorded 356mm. While Cyclone Cook may have been relatively short lived, it still added another 150mm-plus to an already saturated catchment, and the region continued to experience rainfall after the Good Friday event with 12mm, 16mm and 17mm falling each day from Easter Monday to mid-week. “There is a lot of maize in the region that will not be able to be harvested for silage, and will have to be left for grain harvesting,” he said. “The problem is worsened by a very poor spring, meaning maize was planted about a month later.” Woods was counting himself lucky, only having about a hectare of land that will need regrassing after the floods. He knew of growers with contracted maize crops who still have at least 100ha to harvest. “We really need the two weeks of fine weather to be able to get machinery on to paddocks.” Crops had also been badly damaged by the intense wind gusts experienced at the peak of Cook’s fury late on Good Friday.

BIBLICAL LEVELS: Edgecumbe farmer Bruce Woods recorded 300mm of rain between March 24 and April 3, including 186mm in only three hours.

The difficulty in harvesting maize had a double-whammy effect for pastoral farmers who may have been relying on the grain for autumn-winter feed supplements. It also meant that maize country may not be regrassed in time to provide valuable annual ryegrass feed over the winter period. Sharon Morrell, DairyNZ Bay of Plenty regional team leader, said some farmers were acting quickly to try and get pastures restored now, rather than waiting for paddocks to dry-out for machinery. “They are making the call to fly seed and fertiliser on now because

there is not a lot of time left – the longer it’s left the less likely it is to guarantee them any pasture over winter.” She knew of one farmer who had arranged a fixed-wing aircraft and had got six neighbours to share it. The application included a blend of both annual and perennial ryegrass. “It’s not perfect, but it is a stopgap that will give them some feed over winter, and get them through the season.” Offers of grazing for stock had been prolific from within and beyond the region and DairyNZ had ended up sharing some of those offers with farmers

in Waikato who were still struggling with sodden paddocks, particularly in the Hauraki Plains district. “There has also been an issue with power loss and wind damage that added another layer of difficulty to the damage,” Morrell said. Darryl Jenkins, Federated Farmers’ Bay of Plenty president, said almost 90 pumps had been operating 24-7 to clear the flood waters, with much of it moved by Easter Monday. The need for out-of-region grazing had also opened up an income opportunity for farmers in Hawke’s Bay who were baulking at the cost of buying in weaner animals on an overheated store stock market. Last week, Stortford Lodge had good lines of 210kg-240kg steers topping $1000 a head, a price Jensen said was leaving some looking at other options when considering how best to deal with a late-autumn flush of growth. “It is a lot to outlay and 18 months to finish, and the Hawke’s Bay is looking good for feed,” he said. The opportunity to graze dairy cows over winter for Bay of Plenty farmers could provide a good cashflow option. Meantime, farmers in the region wanting to

There has also been an issue with power loss and wind damage that added another layer of difficulty to the damage. Sharon Morrell DairyNZ get their animals back home to finish the milking season were being challenged by damaged infrastructure, including broken fences and races. Jensen said while it was a maligned feed source, palm kernel was going to prove valuable to help farmers get through a pinch as pastures recovered or were regrassed. “We will be talking to Swap [Stockfoods] about getting more palm kernel and if another shipment would be needed,” he said. Rural Support Trust chairwoman Sandy Scarrow said the trust and Red Cross would be visiting individual farmers affected by the floods to offer any assistance needed in coming days.

Waikato flood control upgrades needed CYCLONE Cook’s swathe of wet weather has revealed the need for councils in the Waikato region to work on upgrading some of the Hauraki Plains’ flood control systems as several hundred hectares remain under water. Hugh Vercoe, Waikato Regional Council (WRC) councillor for the Waihou district, said there had been discussion before the double

whammy of cyclones Debbie and Cook about how the Piako River system needed investment to upgrade its capacity in dealing with high water events. “It has been designed to spillover into designated ponding areas, and some of those still have a significant amount of water within them,” Vercoe said. It was always a risk for farmers with land in those spillover areas

that the system could become inundated, and some had been caught out with maize plantings this year in those zones. The Piako River flood protection scheme was operated by the Hauraki District Council, while the neighbouring Waihou River scheme was run by WRC. Vercoe said delays in getting a consent for a major pumping station near Ngatea had meant

some properties had suffered more flooding than would have otherwise been the case. “We are also being told that council drains need to be cleaned out more often. We are committed to looking at the scheme and bringing it up to standard.” The cost would depend on how intensive Hauraki District Council wanted the upgrade to be, and the desired timeframe.

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News

THE NZ FARMERS WEEKLY – farmersweekly.co.nz – April 24, 2017

New Canadian milk price system rings alarm Nigel Stirling nigel.g.stirling@gmail.com WARNINGS that a new Canadian milk pricing system could significantly disrupt global dairy markets have been raised several decibels after dairy leaders again called for the matter to be challenged at the World Trade Organisation (WTO). The New Zealand Government is still considering the matter seven months after the dairy industry in this country first raised the possibility of a WTO case. In September last year the NZ, American, European, Mexican and Australian industries wrote to their respective trade ministers raising concerns about proposed changes to Canadian milk pricing classifications, which they said had the potential to lead to increases in subsidised dairy products making their way on to world markets.

We are trying to line up the [dairy] industries of the US, Australia and Europe and their governments to try and work on the Canadians. Philip Turner Fonterra

Dairy Companies Association of NZ executive director Kimberly Crewther said the letter’s concerns had been confirmed as more detail emerged about how the classifications will work. Of most concern is a new milk class – Milk Class 7 – that determines how much Canadian farmers are paid for their milk according to its final product uses. By reducing the payment for the skim milk component below

the world price, Canada was attempting to remove an obstacle to exporting the product that previously its farmers had been paid above the world price for, and that the industry consequently had struggled to argue was not subsidised. Crewther said the new classification was nothing more than a sleight of hand by the Canadians and did nothing to alter the fact that its farmers received overall prices substantially higher than the international benchmark by virtue of a system that saw milk supply on the local market restricted and the country’s consumers effectively subsidise them through high retail prices. If it’s not challenged, the NZ dairy industry believes the measure could result in an extra 100,000 tonnes of skim milk powder – previously unwanted by Canadian consumers and mostly dumped on paddocks by the country’s farmers – finding its way on to the global market this year. Seen in the context of the 130,000t traded annually through Fonterra’s GlobalDairyTrade platform, such a surge in supply had the potential to hit prices already suffering from an overhang of European intervention stocks. “Based on the information that we have, we see no way that Canada can proceed with this policy while still adhering to its WTO commitments, and we are engaging with the Government to seek support because we are concerned that the policy, if it is not challenged, will result in significant disruption to the international market,” Crewther said. The new milk pricing system is also hurting United States farmers. Last week, they got the backing of President Donald Trump who said he would “stand up for our dairy farmers”, adding that “in Canada some very unfair things have

OVERSUPPLY: The New Zealand dairy industry believes Canada’s new milk pricing regime could result in an extra 100,000 tonnes of skim milk powder being added to the global market this year.

happened to our dairy farmers and others”. Trump’s intervention came after the US National Milk Producers Federation a fortnight ago wrote to the administration calling on it to “fight back against protectionist Canadian trade policies that are slamming the door to American dairy exports in violation of existing trade commitments between the two nations”. Fonterra’s director of global stakeholder affairs, Philip Turner, said the industry in NZ was comfortable with the approach being taken by the Government so far. “We think this is a very serious issue for NZ, and the world dairy market. “We are trying to line up the industries of the US, Australia and Europe and their governments to try and work on the Canadians. “We would certainly like to see all of those countries take very seriously the prospect of dispute

settlement at the WTO, and I think NZ is looking at that very seriously.” Sources said the Government was giving “active” and “serious” consideration to taking a case but had still to make a decision. The dairy industry, as well as bureaucrats at the Ministry for Primary Industries, are understood to be keen to push ahead with a case as soon as possible but officials at the Ministry of Foreign Affairs and Trade – who would lead any case – were mindful of the wider relationship with Canada and were treading more carefully. One Wellington insider said Trade Minister Todd McClay was likely to tack on a trip to Ottawa to discuss the matter following a trip to Washington DC, expected in the next couple of months once his US counterpart is confirmed by Congress. The insider said the Government was possibly wary of

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upsetting the Canadians, which it hoped could still play a part in reviving the stalled Trans-Pacific Partnership trade agreement. “The NZ way is to use all bilateral channels before going to dispute settlement because there is still a view that it would be a hostile act, whereas it is not – it is actually a way of resolving a problem that has been going on for some time, and you take it out of the bilateral equation.” If it does proceed it wouldn’t be the first time NZ has challenged the Canadians at the WTO over their milk pricing system. In 1997, NZ and the US challenged new milk classes enabling Canadian processors to buy milk for export below the domestic milk price. The WTO appellate body ruled in favour of NZ and the US in 2003 but not before Canadian exporters released nearly 50,000t of highlysubsidised skim milk powder on to the world market the year before.

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10 THE NZ FARMERS WEEKLY – farmersweekly.co.nz – April 24, 2017

EU trade deal may favour Aussies Nigel Stirling nigel.g.stirling@gmail.com LEAKED documents show New Zealand farmers are being lined up for a worse deal than their Australian counterparts in trade talks with the European Union. Trade Minister Todd McClay and his European counterpart, Cecelia Malmstrom, last month announced the completion of studies setting out the scope of negotiations for a free-trade agreement. Two years in the making, McClay said the studies cleared the way for formal negotiations to start this year. “NZ and the EU both recognise there are substantial benefits to be gained from free trade, and we are now one step closer to a highquality, comprehensive FTA that can deliver great outcomes for our citizens.” In NZ the dairy and beef industries want rid of high tariffs severely restricting trade with Europe in those commodities. Sheep meat exporters are also anxious that tariff-free access is maintained following Britain’s exit from Europe. But if the language in the EUNZ scoping study is anything to go by, NZ negotiators are already on the back foot.

PROBLEMATIC: A European Union-New Zealand trade study says full tariff liberalisation should not come at the expense of European farmers.

While it says the agreement should “aim” for full tariff liberalisation it indicates this should not come at the expense of European farmers. “Consideration should be given in negotiations that each side may have such as for certain agricultural goods, including through the use of long dismantling periods, tariffrate quotas or any other specific treatment agreed by both sides.” Former trade negotiator Charles Finny said such a clause suggests tariff cuts for agricultural products where they are able to

be negotiated will come in over a longer period than the seven years targeted for all other industries, only apply to limited volumes restricted by a quota, or be left out of the negotiations altogether. “We are already conceding that we are prepared to negotiate on longer phase-out periods and possible tariff-rate quotas and other specific treatments, which could mean exclusion.” The language contrasts to that used in the recent EU-Australia FTA scoping study. As with NZ, the EU and Australia say they will merely “aim” for

full tariff liberalisation without making any firmer commitment to scrapping them. But while the document says that for the “most sensitive products, special treatment should apply” it includes no reference to longer tariff phaseouts or quotas for agricultural products as in the NZ study. Finny said the difference in language between the Australian and NZ studies could be significant. “It could mean the same thing but it is fleshed out in the NZ document and some of those things are problematic.” Former NZ ambassador to the World Trade Organisation (WTO) and now Professor of International Trade at Lincoln University, Crawford Falconer, said the contribution to the document from the European side came from officials in Brussels who now have the not necessarily straightforward job of getting a mandate from all 28 member states to begin formal negotiations with NZ. Longer phase-out periods and quotas will have been included to calm anxieties about the threat posed by NZ agricultural products to Europe’s farmers should they lose the protection of high tariffs. “That to me is the minimum

political message – one would presume that this highlights that they feel more threatened by us on some products than they do Australia,” Falconer said. Otherwise the document included demands typically made in all of the EU’s freetrade negotiations, including for greater legal protections for food associated with European place names such as Parma ham or Parmigiano-Reggiano cheese. One exception to this standard format – and not included in the EU-Australia study - was reference to state-sanctioned export monopolies. Falconer said the clause will have been aimed at Zespri and Fonterra and included at the insistence of the Europeans who would be hoping it would provide them an extra bargaining chip in negotiations. “They will be able to argue that ‘well, we can’t give you full liberalisation on the market access side because you do not appear to have done anything on the export monopoly side’.” Falconer said neither study gave indications that the EU was willing to go any further in restricting subsidies paid to its farmers than it was already signed up to at the WTO and was already being negotiated multilaterally.

News

THE NZ FARMERS WEEKLY – farmersweekly.co.nz – April 24, 2017

Online auctions see massive growth Neal Wallace neal.wallace@nzx.com BY 2020, internet company AuctionsPlus aims to be handling 20% of Australia’s livestock sales. It now handled 3% of the national cattle market (about 400,000 head) and 7.5% of sheep traded (2.5 million head), chief executive Anna Speer said. But she believed her 2020 goal was achievable given current growth. “It’s a massive growth trend. We expect to be handling 20% of the market by 2020,” she said. March was the biggest month ever for AuctionsPlus with 50,000 cattle listed, well up on the previous monthly record of 39,000 cattle. The number of farmers registering with the company was growing at 30% a year. Stock, predominantly store, was listed from throughout Australia and sold at auctions each week, which allowed AuctionsPlus to set its own market level, Speer said. It was 20c to 30c/kg liveweight above the physical market. She attributed that to the quality of the offering and competition among buyers. Just how disruptive AuctionsPlus could be to a market was illustrated in 2015 when the price of Australian wagyu cattle rose after the internet auction company provided competition in what was a closed market. Speer said previously the beef was sold direct between grower and user with little price transparency, though believed to be about $A3.80/ kg liveweight. Within three weeks of AuctionsPlus becoming involved and disrupting, the AuctionsPlus chief price rose to $4.20/kg then executive Anna $6.20/kg a few weeks later. Speer. Sellers had to be accredited as an approved assessor, having attended a course and met criteria in objectively measuring and describing the stock. Speer said AuctionsPlus had 950 accredited sellers and there was strict observance of how stock weights were quoted and criteria of how stock were objectively measured and described. “We operate a tight tolerance and have sharp penalties such as not being able to sell on the platform again.” An independent arbitration panel resolved disputes. “We train our assessors to consider ‘what will the buyer think when the animals come off the truck’.” Vendors were moving from providing still photographs of stock to video footage. Speer said reduced transportation, keeping stock onfarm until sold and choosing when to sell were major benefits along with the cost. It cost about A$16 to sell a cattle beast through saleyards compared to $6.80 through AuctionsPlus. Sheep were $2 compared to 70c online. Buyers paid for and arranged transport and by creating a nationwide market, the buyer pool had also become nationwide, meaning stock was trucked all over the country. Most transactions were between farmers in the eastern states but cattle had been bought in Western Australia and trucked to the eastern states cheaper than if they were bought on the east coast. AuctionsPlus was a joint venture between rural servicing companies Elders, Landmark and Ruralco but Speer said development of the auction system had been largely “learn as we go”. United States-based Superior Livestock was the only other company operating similarly. The big difference was the AuctionsPlus system required one person to run an auction while Superior Livestock used 40 people. The US firm handles 1.5m cattle a year. Speer said she had eight people working in technology development and new systems and their inspiration and ideas came from companies

GROWTH TREND: A listing from Australian internet auction company AuctionsPlus.

like Uber, Airbnb and Amazon. The biggest challenge for AuctionsPlus was to find a system that developed relationships between buyer and seller. The company was originally formed in 1986 as an electronic exchange and after several machinations became an internet auction platform in 2011. While it sold mainly store stock, it also sold stud stock complete with inspection days before the sale, small numbers of horses, dogs and some wool.

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12 THE NZ FARMERS WEEKLY – farmersweekly.co.nz – April 24, 2017

What you didn’t see on Sunday Hugh Stringleman hugh.stringleman@nzx.com FIFTH-generation Hauraki Plains resident and dairy farmer Conall Buchanan didn’t come down in the last shower regarding land-use effects on water quality. He’s spent the past three years representing farming on the Sea Change: Tai Timu Tai Pari project, drafting the community plan to manage environmental and social aspects of the Hauraki Gulf. Fifteen stakeholder representatives, informed by the latest science and community expectations, drew up a consensus marine spatial plan for the future of the gulf, to be implemented over 30 years by regional councils and government departments. Buchanan’s 1000-cow Awaiti farming business backs on to the Waihou River. He is deputy chairman of the Waikato Regional Council’s Waihou-Piako catchment committee, and a trustee of the Paeroa Community Support Trust. When television production company Attitude wanted the names of dairy farmers on the Hauraki Plains, DairyNZ suggested the motivated, articulate and informed Buchanan. He spent two hours with the researcher and three hours with presenter Cameron Bennett and a film crew, showing them many aspects of farm life including

the cows, pasture management, riparian fencing, native tree planting and whitebaiting in the Waihou. None of that footage was shown in The Price of Milk, TVNZ’s controversial Sunday episode screened on April 9. “The production company sent me an email saying their programme design had moved in a different direction and my material, along with stuff from other farmers, wouldn’t be included. “To be fair, apparently they had talked to people who were very negative about dairy farming, and their views weren’t shown either.” Buchanan and other Hauraki Plains farmers were told the programme would show the realities of dairy farming and their communities, widened somewhat to look at environmental aspects. “What was taken on my farm was very different to what was shown (on contrasting Hauraki Plains farms belonging to Gavin Flint and Jasmine Purnell). “Unfortunately those farms were portrayed as being normal and a whole lot of information was shown out of context. “From the first contact I was concerned about the motivation for the programme and explained the features of this catchment and the Sea Change process. “The researcher responded that they were coming round to

DIFFERENT DIRECTION: Hauraki Plains dairy farmer Conall Buchanan says footage taken on his farm, and not used in TVNZ’s recent Sunday programme, was very different to what was actually shown on air.

That wasn’t representative of dairy farming anywhere in the country – it really hurts to see us portrayed in that way. Stephen Allen Farmer the view there was not much fire under all the smoke about the dairy industry.” Buchanan said that was an outcome of the Sea Change exercise – science showed that nutrient levels in the Hauraki Plains’ waterways hadn’t changed much in 20 years. “It is still an open question about the effects of nutrients on the Hauraki Gulf, although we know the main issues for water quality and kaimoana stem from sedimentation.” Therefore the Sea Change spatial plan included a timetable for setting limits for sediment and

nutrients getting into the marine environment from land-based activities. Higher on the Hauraki Plains, at Tatuanui, dairy farmer Stephen Allen said he felt disappointed and let down by the Sunday programme. Another fifth-generation farmer, the chairman of milk price-leading co-operative processor Tatua, and a member of the Waikato Dairy Leaders Group, Allen responded to an Attitude production company request to be interviewed on two understandings. The first was that dairy farmers nationwide had been through very tough times with the wet spring and low milk prices and many were facing mental health challenges. Tatua had taken an initiative on that issue last year by organising an open seminar featuring mental wellness speaker Mike King, so Allen agreed to be interviewed. “The other suggestion was Tatua’s record in adding value to milk, so I asked chief executive Brendhan Greaney to be present.

“We wouldn’t have normally agreed to appear in the media, but the proposal had merit in helping portray the realities of dairy farming in a constructive and positive way.” The Tatua pair then spent three to four hours with Cameron Bennett and the film crew on Allen’s farm, none of which was used in the Sunday programme. “Instead we saw sensationalist journalism, especially the home killing, which was totally unnecessary. “That wasn’t representative of dairy farming anywhere in the country – it really hurts to see us portrayed in that way. “Our dealings with rural media are normally constructive and accurate, although not always good news. “But I would say that Sunday programme has made the whole industry gun-shy of mainstream media.” Attitude had rung Allen a week before the broadcast to say there had been a “change of approach” and he and two or three others would not be in the final programme.

Good PR is a self-help exercise Neal Wallace neal.wallace@nzx.com A UNITED agricultural sector needs to promote itself by telling positive farming stories, public relations expert Deborah Pead says. Industries such as dairy were constantly under scrutiny and having to defend themselves when the correct strategy was to get in first and tell the public what they were doing to address those concerns. “It is hard to argue when you see a river dried up and farmers are flat-out irrigating but what is the solution? What are farmers doing about it?” She found it unbelievable the agricultural sector was silent when New Zealand was recently ranked first-equal in the world for animal welfare, a perfect opportunity to remind the public

they were doing an excellent job. Sustainability was not a word she heard regularly. Pead was commenting on the recent TVNZ current affairs Sunday programme that purported to be an opportunity for dairy farmers to respond to criticism of their industry but many saw it as a set-up showing farmers in a poor light. She could understand why some farmers took exception to the programme but felt it was balanced, did not pursue an agenda and informed what life on a farm was actually about. However, she noted Sunday had a history of unfavourable “blockbuster” documentaries on pig farming and the handling of bobby calves. “They are not going to earn any points for putting a rosetinted view on it,” she said of the most recent programme.

“They will show it in its raw, gritty form.” Pead said when a brand was attacked it was a case of “putting on the flak jackets and fighting”. “You ensure your voice is heard. You protect your brand in the bad times and remind the public of the good stuff.” By being regularly reminded with positive images and messages about how good NZ farmers were, viewers would not believe how dairying was portrayed in programmes like Sunday because it wouldn’t resonate with their view of the industry. “People would come to its defence because they would not believe it.” Industries like agriculture did not need traditional television documentaries or media to get their message across or to tell their stories.

“In 2017 we don’t need to rely on Sunday or current affairs programmes to tell our stories for us.” By using social media farming could spotlight its heroes and tell its own stories but it needed an industry-wide commitment to an agreed communication strategy. Such messaging should not shy away from the unpalatable aspects of farming but be honest and explain why it was done and reinforce the fact farmers followed accepted, humane practices. She described the Fonterra 4.31am campaign as “a good job” but it only scratched the surface of what could be covered, such as the love and care of animals, pest control, land and water management and conservation. But it required an industrywide agreement and commitment to a strategy.

THE GOOD WORD: Kiwi farmers should accentuate the positives about their industry, public relations expert Deborah Pead says.

“Where are all these organisations working together and talking holistically about all the good things.” Country Calendar did a great job of showing the positive side of farming but Pead said the sector could not leave it up to a few programmes a year.

News

THE NZ FARMERS WEEKLY – farmersweekly.co.nz – April 24, 2017

Making the quantum leap Annette Scott annette.scott@nzx.com NEW Zealand has an abundance of threats but equally there is an abundance of opportunities, Te Hono Movement founder John Brakenridge says. In his address to the Te Hono national summit in Christchurch earlier this month at which 240 business leaders attended and 90% of New Zealand’s primary sector exporters were represented, Brakenridge introduced Project Leapfrog, a framework designed to help NZ and its companies to leapfrog global competition. The one-day summit was a gathering aimed at reaching out beyond the Te Hono alumni to share ideas more deeply and further build an appetite for action. The programme included industry speakers, government leaders and interactive forums. “There is an incredible journey ahead, we need to get out of silos and work more collaboratively,” Brakenridge said. The journey was about NZ’s opportunity to be an exemplar to the world. “Not the best country in the world, but the best country for the world.” There were a number of threats economically, socially and environmentally but there were as many opportunities. “If NZ was to sink to the bottom of the ocean, what would the world miss it for? “Our aspirations should be aimed at being the global exemplar that the world misses.” And this year was going to be the big year, Brakenridge said, as he honed in on Project Leapfrog. “We will leapfrog from being realistic where we are today to the place we want to be in the future. “We will need to be deliberate and specific who we target with our products – we can only afford

TEAM WORK: New Zealand’s primary industries must collaborate to succeed in a global marketplace, Te Hono Movement founder John Brakenridge says.

We are going beyond volume, to value – this is a big evolution of the paradigm of our primary economy. Peter Chrisp NZ Trade and Enterprise to food and clothe 30 million people so we will need to target those who will reward us.” Brakenridge said there was no better chance than now. The health and wellness market was driving change and there were endless opportunities emerging. “We can engage with consumers where previously that has not been possible.” He said the past five years for Te Hono had been about developing a platform of trust and collaboration. “Capability and sophistication

was now required to embrace change and understand the complexity that exists through solutions around collaboration.” The model of product-led was the way of the past – the new model would put the end-user in the middle with market innovation developed to capture the heart then the mind, not the mind then the heart, as it had been. “As we look at our (NZ) reputation we want to look at propelling those brands that can be world leaders. “Every time we go to the world with a brand and stand tall, all our businesses will stand tall.” But all the inflection points must line up including business structures, market sophistication, education and talent, research and development, social structure, environment and water, and technology. “The more we can have common languages working in all these areas the greater the benefit.”

RICH RETURNS: NZ Trade and Enterprise chief executive Peter Chrisp says taking advantage of premium market niches throughout the world is the way forward for Kiwi primary producers.

Stanford 2017 in July this year was the time to shift the dial. “We will have the opportunity to plug into all the influential thought leaders of the world that can help us pick up and leapfrog to where we need to be. “We can’t reinforce enough the importance of leapfrogging our competitors and positioning NZ for a quantum shift in performance.” The goal of 2017 for Te Hono was to begin propelling Aotearoa NZ to global leadership – economically, environmentally and socially. “This is the challenge for Aotearoa as a global exemplar – if we sink to the bottom of the ocean we will be missed,” Brakenridge said. NZ Trade and Enterprise chief executive Peter Chrisp said the future of NZ depended on the emergence of a value-adding, knowledge-intensive, diversified economy. “This means a country

delivering more services to the world, more niche hunting, more specialist manufacturing and more value-add.” Over the past 150 years NZ had built its economy around a core primary commodity production model, initially wool and meat, then wood and dairy. When competitive this was a perfectly good business model but there was now wide consensus of a need to go beyond that. “We are hunting for more valueadd primary products and services delivered to premium market niches throughout the world. “We are going beyond volume, to value – this is a big evolution of the paradigm of our primary economy. “We need to lift our own personal and organisation capability in order to change our companies and agencies towards the new paradigm. “These are exciting times, and Te Hono is a catalyst for change,” Chrisp said.