Dairy News 10 November 2015

Fish & Game spits the dummy. PAGE 7 OLD IS GOLD AI tech still at it PAGE 27

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DAIRY NEWS NOVEMBER 10, 2015

NEWS // 3

‘Just another bump’ PAM TIPA pamelat@ruralnews.co.nz

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‘CAUTIOUS OPTIMISM’ remains despite the 7.4% drop in the GlobalDairyTrade price index last week, says Federated Farmers dairy head.

Dairy chairman Andrew Hoggard says it is just another bump in the “crappy road we are having this season”.

“We’ve just got to keep optimistic about the season.… Everyone is predicting things will slowly improve. We got our hopes up a little high with four 10% rises in a row; it might have led us to keep thinking that would continue but the markets reminded us ‘no, it’s going to be a long road’.”

Feds Dairy vice-chairman Kevin Robinson says it was disappointing because it had been going up nicely. But farmers are pretty well grounded in the GDT now and the ups and downs.

“I’m pretty cautious about where we are heading; hopefully we won’t lose all we’ve gained -- but cautious optimism on the GDT.” Most farmers hoped that as the volume increased it would keep the same price.

“They are flat out making the product and Skim milk powder dropped 8% at last there’s a certain amount of storage so at the end week’s auction. of the day they can’t fit it all in the shed -- it has to be sold.”

He says if at the next auction the rate of decline are high enough to cover the production falls (in slows or the index comes back up “it will be darn the absence of other producers picking up NZ’s good”. slack). However at this juncture, we disagree.”

The ASB still expects dairy auction prices will ANZ/National Bank economist Con Williams rise over the season. Rural economist Nathan says their official forecast range is $4.25 to $4.50/ Penny says they are sticking kgMS which is unchanged with their $5/kgMS milk price after a couple of auctions. forecast.

Anywhere around the mid 4s “With September NZ “We’ve just got to is probably plausible in the production confirmed as keep optimistic current market environment, weak, fundamentally we’d about the season.” he says. expect prices to hold their “The latest result can – Andrew Hoggard be attributed to market level or increase at this fundamentals still being juncture,” says Penny. pretty challenging,” he says.

“While overall prices are still 46.3% higher than the August trough, “If you are the buying you are probably stepping nonetheless prices have fallen over two auctions.” back after buying cheaper product since early He interprets that as markets overdoing the August.”

There was also a change or announcement of recent surge in prices. “Potentially buyers expect that demand is subdued enough and/or inventories a different product category in terms of its age

profile for whole milk and skim milk powder to be offered from December 1. There wasn’t a lot of information on volumes etc and “understand that might have put a few buyers off as well from this auction”.

“It is difficult to disentangle the market fundamentals from that overall announcement and the effect of those two things.”

Key results from last week’s auction were: AMF index down 5.7%, average price US$3647/ MT; Butter index down 5.6%, average price US$2574/MT; BMP index down 9.4%, average price US$1844/MT; Ched index down 4.6%, average price US$2987/MT; LAC index not available, average price not available; RenCas index down 11.2%, average price US$5469/MT; SMP index down 8.0%, average price US$2018/MT; WMP index down 8.0%, average price US$2453/MT. @dairy_news facebook.com/dairynews

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DAIRY NEWS NOVEMBER 10, 2015

4 // NEWS

Relief for Filipino workers as work visa flow resumes PAM TIPA pamelat@ruralnews.co.nz

A REPRIEVE for some Filipino dairy workers on dodgy visas has been welcomed by the immigrant community.

New rules mean replacement work visas can be issued to many who admit providing incorrect information on their experience or qualifications.

Filipino Bob Bolanos, who runs a Canterbury dairy farm, says it is a good thing because it shows immigration officials are willing to look again at some suspicious employment certificates.

“But not all of them know their papers are falsified,” says Bolanos. “A lot of them rely on recruitment agents who prepare their documents.

“Some of them are even surprised that when they renew their visa they run into trouble because they were not aware their papers were faulty.

“If they don’t know they should try

to find out. A lot of these people rely on recruitment agents and I think the focus of immigration should be to improve the screening side, so that workers with faulty or suspicious documentation are not allowed to come.

“Once they arrived here they would have been up to their eyeballs in debt.

Many of these people are poor and would have depended on loan sharks to finance their trips. So it is a problem for those already here and under threat of being deported. They incur huge debts to be able come here and if they were sent home there is no way they would repay that.

“I am happy the focus has been shifted from the workers themselves and is now on the people who made money out of them – the people who recruit them and make money out of them.”

He says the focus should be on the people who brought the workers here under false pretences, to try to weed

them out.

He is pleased a woman has been charged in Hamilton in connection with an alleged document scam in which more than 1000 Filipinos working on New Zealand dairy farms allegedly paid up to thousands of dollars for fraudulent documents.

Immigration Minister Michael Woodhouse says under the new immigration instructions, applicants who admit to previously providing incorrect information but who are compliant in all other respects will be eligible for a further work visa as long as they meet all other essential skills requirements.

“This approach acknowledges that many of these workers are making a significant contribution to their employers and their communities and are well settled in New Zealand. It also accepts the admission of having provided incorrect information by workers who come forward.

“The changes minimise the disrup-

Not all Filipino dairy workers knew their immigration papers were falsified.

tion that would have been caused by a significant number of workers having their visas declined.

“However, these workers are not guaranteed that new visa applications will be successful and they may need to meet a labour market test to check whether there are any New Zealanders

available to do their job.

“In addition, further visa applications from these workers could be declined if they do not meet other standard health and character requirements, or if their employer has had compliance issues with immigration or employment law.”

Wait for the review – Fonterra board AS EXPECTED, Fonterra’s board has rejected a shareholder proposal to calling for an immediate reduction in the size of its board.

In its recommendation to shareholders, contained in voting papers for this month’s annual meeting, the board says it is reviewing “all aspects of Fonterra’s governance and representation”.

A discussion document will be presented to shareholders early in 2016, followed by extensive consultation with shareholders.

Fonterra says any constitutional

changes will be considered at a shareholders’ extraordinary meeting next May or June.

“It is important that any review is comprehensive and that Fonterra’s governance and representation is looked at in its entirety, and does not focus on just one aspect such as the size and composition of the board.

“The review needs to encompass representation as well as governance and needs to take into account changes in the global operating environment particularly over the last three years.

“Significant progress has been made

in the governance and representation review, but the final phases were delayed as a result of unexpected events such as the WPC80 precautionary recall.

“Due to the particular conditions, the focus over the last 12-18 months has been on the Fonterra business, to maximise returns to farmer shareholders and to support farmers at a time of extraordinarily low global milk prices.”

Former directors Colin Armer, a corporate farmer, and Greg Gent, a respected company director, have put

a remit before this month’s annual meeting.

They want shareholders to vote for a reduction in the size of the board, currently 13 directors -- nine elected and four appointed.

They say accountability for the performance of the company begins at the top.

“A meaningful reduction in the size of the board will improve board efficiency and decision making. A smaller board will give greater clarity to our cooperative’s strategic direction for the future.”

They say boards with double-digit numbers of directors are rare.

Gent says the new governance review would almost certainly recommend a single-digit number of directors “so why don’t we just get on with it instead of paying international consultants to tell us what we already know?”

“The truth is we have never been told why the 2012 governance review sank without a trace,” Gent says.

“There is no reason why this new and hastily constituted one won’t do the same.” – Sudesh Kissun

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Why doesn’t Fonterra outdo the others?

FONTERRA BOARD aspirant Ashley Waugh is questioning why the co-op’s payout is never substantially ahead of other milk processors.

Waugh, a former chief executive of Australian dairy processor National Foods, says this question keeps him awake at nights.

In his pitch to Fonterra shareholders, who are voting for three directors from a field of six, Waugh says Fonterra’s payout is not even a key measure of performance.

“After all the years of substantial capital investment, focus on brand building and massive growth in milk volume, why is the Fonterra farmgate payout not substantially ahead of other milk processors?” he asks.

“We are constantly told that scale and global relevance are critical but 15 years after Fonterra was formed, the payout demonstrates no real advantage over other local competitors who trade in the same global market.”

Waugh and his wife Catherine bought a dairy farm at Te Awamutu in 2012.

He says he has always been a supporter of the Fonterra concept for New Zealand. “My years of working in the global dairy markets convinced me of that.

“I am frustrated with the commercial return we as shareholders and owners get from Fonterra.

“I know from my own corporate

“After all the years of substantial capital investment, focus on brand building and massive growth in milk volume, why is the Fonterra farmgate payout not substantially ahead of other milk processors?”

Ashley Waugh

experience that it’s easy to look over the fence into a business without all the facts and be critical; I don’t want to do that. I want to be part of the solution to improve the governance and performance of Fonterra.”

Waugh is concerned at the increasing presence of offshore owned dairy processing capacity in NZ and the amount of milk they are able to attract.

“Those companies, some larger than Fonterra and not having to play by the same rules, have the ability to continue to devalue our cooperative in terms of milk payout.”

Waugh says the dairy world is changing, both in markets and in NZ, and we need to ensure Fonterra is crystal clear on how it will survive and thrive and pay its shareholders a competitive milk price and a competitive return on capital.

Waugh joined the New Zealand dairy industry in 1991 after 15 years with Ford Motor Company in NZ, Australia and Taiwan.

He worked for the New Zealand Dairy Board for ten years starting as general manager of the New Zealand Rennet Company in Taranaki.

From 1997 to 2001 he was the regional chief executive for the New Zealand Dairy Board businesses in Australia, South Africa and the Pacific.

He then spent eight years with National Foods in Australia, the

FONTERRA DIRECTORS and shareholder

councillors have strongly recommended farmers vote against a proposal to change the cooperative’s capital structure.

Shareholder Murray Beach has successfully included a complex and detailed proposal to change the cooperative’s shareholding rules; farmers will decide its fate at their annual meeting in Waitoa later this month.

Beach is also contesting the co-op’s director elec-

Murray Beach

tions. But his fate already seems sealed.

The ramifications of Beach’s plan are profound.

So in the meeting notice Fonterra’s board has published a damning explanatory note: “The proposal is detailed but contains a number of inconsistencies and unworkable features.”

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NO PAY RISE FONTERRA CHAIRMAN John Wilson will miss out on a pay rise this year -- if a recommendation is accepted at Fonterra’s annual meeting later this month.

The co-op’s remuneration committee recommended no change to Wilson and the other directors’ fees.

Wilson is paid $405,000 a year. Directors receive $165,000 and subcommittee chairs are eligible for a $31,000 top-up.

Fonterra Shareholders Council members will also miss out on a raise. The chairman’s honorarium will remain $90,900. The deputy chair will receive $55,550 and councilors $30,000. – Greg Ford

The board says the proposal “would re-introduce redemption risk which was removed by the changes made to the constitution by shareholders as part of Trading Among Farmers”.

“The proposal is also inconsistent with the current statutory framework provided for in the Dairy Industry Restructuring Act 2001. The re-introduction of redemption risk would undermine the company’s financial strength which would impact [its] strong credit rating and its ability to secure debt funding on favourable terms.”

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last four years as the chief executive officer.

“During my time at National Foods we transformed the business from a public listed company to a privately owned business growing from $1.2 billion in turnover to $2.5b; once again strategy development and delivery, and commercial performance were my core responsibilities.”

Waugh is a director of Seeka Kiwifruit Industries, The Heat Group in Australia, and has been chairman of Moa Brewing since February this year.

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DAIRY NEWS NOVEMBER 10, 2015

6 // NEWS

Port expansion to help offload shipping costs PETER BURKE peterb@ruralnews.co.nz

DAIRY FARMERS

stand to benefit financially from the expansion at the Port of Tauranga, says chief executive Mark Cairns.

The company is now dredging so that by mid 2016 ‘super container’ ships of the Maersk Line will be able to berth at Tauranga -- the only NZ port handling these ships.

Otago is also dredging to take larger ships.

Cairns told Dairy News the bigger ships will create efficiencies, saving money on shipping which is now the biggest cost in the supply chain.

At present the outer channel to the port is being dredged to 17.4m

deep and the inner harbor to 16m to accommodate the bigger ships. Tauranga will then become a hub for cargos from other NZ ports coming there to be transshipped overseas.

Cairns says a Shipping Council report recommended Tauranga as the North Island hub port and pointed out that such a move would save NZ$338 million a year.

He says the idea of a large hub port is similar to the concept in the NZ aviation sector where just two major international airports can land very large aircraft. This doesn’t squeeze out smaller airports or ports, but in certain areas it creates attractive financial outcomes.

The game breaker for the expansion project at

Tauranga, says Cairns, was a deal struck between Kotahi – representing Fonterra and Silver Fern Farms -- and Maersk for a guaranteed output of cargo from the port for ten years. This deal led to the Port of Tauranga expansion because of guaranteed cargo through the port.

“This deal with Kotahi means we will be handling 95% of the dairy exports in the North Island through Tauranga whereas in the past they were going out through different ports serviced by smaller vessels more expensive in ocean freight costs.

“It will be good for the farmers: they will face a much lower supply chain cost to get their goods to market. NZ has the challenge of the tyranny of dis-

tance so cutting freight costs is critical. I take my hat off to Kotahi because they have shown real leadership in doing a 10 year deal with the Maersk line.”

Fonterra, Tatua and Miraka export their products through Tauranga and Open Country Dairy puts some of its products through the port. Like the dairy industry itself, the Port of Tauranga has to be cognisant of the volatility in the market and the production trends onfarm.

“Market volatility in the dairy industry affects us as it does forestry and we have to read the commodity cycles, [seeing] what the long term trends are in any commodity cycle and of course milk production,” Cairns says.

“While it’s predicted that overall milk produc-

Port of Tauranga chief executive Mark Cairns.

tion will be down this season, the actually tonnage of dairy products being exported through Tauranga will be up as these are transhipped through here.”

The Port of Tauranga has a reputation for being highly competitive, expanding its influence beyond Bay of Plenty. It has a 50% share in the Port of Timaru and Northport, Whangarei, and other investments.

It has the advantage of having the space to expand – 190ha, of which only 40% is now used. This contrasts sharply with Auckland which is struggling for space and hampered by the city’s road traffic congestion.

Also, Tauranga is closer to all main North Island farming areas and has exploited this advantage.

Cairns says they have a constant future focus and a multi-layered strategic

approach.

“We also work with the shippers on what markets they need to get their goods to and with the shipping lines to access the European or Asian or Trans-Tasman markets, and the type of vessels calling.”

Dairy industry remains a key driver of the expansion of the Port of Tauranga, as does the meat industry and the booming kiwifruit industry.

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DAIRY NEWS NOVEMBER 10, 2015

NEWS // 7

Fish & Game dumps ‘talkfest’ PAM TIPA pamelat@ruralnews.co.nz

THE LAND and Water Forum has become a “talkfest”, says Fish and Game NZ chief executive Bryce Johnson.

Fish and Game NZ has resigned from the forum and would now rather work more directly with industry, Johnson says.

“We think it has essentially become a process loaded in favour of agricultural intensification and irrigation expansion, and not enough attention has been given to the primacy of the natural environment first,” he told Dairy News.

Its decision to resign is based on growing frustration for some time.

“The forum has produced three reports, and is about to produce its fourth report. The Government has had 156 recommendations from the first three reports and there are another 160odd in the report going up this week or next week. That’s 200 recommendations. There is no implementation plan for that.

“We were told by [Conservation

Minister] Nick Smith at the beginning that the Government wanted an outcome that would resonate with middle New Zealand – I think that is the language he used.

“There has been no communications plan to take that to the public and we have felt we wanted to be able to do our own thing in accordance with our own statutory role.

“We just got frustrated – it has become a bit of a talk fest.”

Johnson says papers arrive 48 hours before meetings, always very technical and in large quantities. Some technical papers arrive on meeting days and no minutes of meetings are provided to participants.

“So you take part in these processes and develop opinions on these very complex issues [but] you are never quite sure how they have been received.”

He says there is a protocol that discourages participants from speaking out in the public arena or lobbying government outside the process.

“We thought it inappropriate that as a statutory body we should have our role and our ability to do the job fated by an

Fish & Game has left the Land and Water Forum. Inset: Bryce Johnson.

ad hoc and informal protocol.”

Johnson says they have given it five years, having been involved in the process from the outset.

He says the idea of the collaborative process was brought back from Nordic countries where the governments had said that if all the competing interests on an issue could agree the government

would commit to implement it.

“In those cases you take part in the process knowing there is a real purpose and a real potential benefit in putting effort into it.

“What has happened in New Zealand is the Government has embraced the term collaborative governance but they have split it in two. They have set up all

these collaborative processes but they have retained all decision making and the discretion for the decision making for themselves. What it means is all the outcomes of the Land and Water Forum have only been recommendations.

“There has been no certainty they would be implemented. It has bastardised the process.”

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DAIRY NEWS NOVEMBER 10, 2015

8 // NEWS

Empower yourself with a plan CHRIS LEWIS

MOST FARMERS will

be looking at their business in the coming weeks as the year winds down and we look ahead.

Waikato Federated Farmers was involved in a couple of seminars recently: Money Matters, a good presentation by KMPG consultants was attended by sharemilkers.

It’s hard keeping an eye on farm finances with all the external distractions and onfarm duties.

Often our future plans go on the backburner as we deal with the present.

But whether the payout is good or not, stay focused and plan your equity.

Good payout years tend to hide business inefficiencies. Positive cashflow doesn’t always translate into great business practice.

Farmers should have an alternative plan of action; the smart way is to document it -- write it down or save it on your computer desktop. Relying on passive thoughts after a few cold beers is not a business plan and you are likely to forget about it the next day. And business plans aren’t merely monitoring cashflow or paying bills.

If you get sick or some unexpected event occurs you need a ‘plan B’ so that the daily business can continue without too much

disruption. If you record and document a plan you will always be able to refer to it, to review or develop the original ideas you had.

Above all, you can give this information to your accountant, banker and staff as a point of reference for discussing upcoming obligations or plans. It also provides proof of your intentions.

No one likes doing budgets and there’s no point having one sitting in the bottom drawer. You need to work out your turnover, actual gross and understand the significance of both.

Good governance is vital too. Ask the questions and see how the answers relate to your business

plan. It won’t work if you have a long term strategy but only a short term vision.

If you need help with your plan seek out advisors or experts involved in agribusiness and consider how often you want to see them and what expectations you have of them.

Make sure they understand your business goals -- not their goals for your business.

Get in people who can add value to your business by helping you set up good, practical systems.

Expect them to add value, and make sure they aren’t just telling you what you want to hear. Good, strong advice might not always be to your liking but it is

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Your business off-farm is not mutually exclusive of your onfarm business.

Well-run farms integrate both and understand the

benefits technology brings to both.

You will empower yourself as you take time out, sit down and draft a plan containing goals to

achieve.

• Chris Lewis is Federated Farmers Waikato dairy chair. @dairy_news facebook.com/dairynews

IN BRIEF Tick for council process

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AN INDEPENDENT review has found Waikato Regional Council’s evidence gathering processes “appropriate, robust, lawful and up to date”.

It also says the council uses best practice when making enforcement decisions when investigations are finished.

In May this year the council started a review of how it investigated farmers’ non-compliance with the Resource Management Act and how it dealt with these malefactors.

This was prompted by criticisms of the council’s enforcement actions.

The findings of the review panel, headed by Wellington solicitor Tom Gilbert and including farmers, iwi, regulators, transport and energy people, were last month presented to the council by Gilbert.

He told councilors that 1400-

1500 potential or actual breaches of rules were dealt with each year.

Formal enforcement action in response to these cases was “very low” as a percentage of the total.

This represented a “conservative” approach, he said.

The size of fines handed down by the courts showed that judges were taking council initiated cases seriously.

“The council does enforcement really well,” Gilbert said. “It might not always be popular but that’s obviously not the point.”

Gilbert says the council’s investigative processes are nationally ‘leading edge’, comparing favourably with some other regulators. “The public should have confidence the right matters… are being prosecuted,” he says.

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DAIRY NEWS NOVEMBER 10, 2015

NEWS // 9

‘Dairy is the sharp end of our work’ PETER BURKE peterb@ruralnews.co.nz

AGRESEARCH CHIEF

executive Dr Tom Richardson says despite making 78 scientists and technicians redundant, research on key projects related to the dairy industry will continue and in many cases increase.

While AgResearch has cut 78 positions it is planning to employ 27 new staff in different areas, one being dairy food research, a growing field.

“We are looking at joint capability with DairyNZ to support the dairy sector and they have said they will continue to invest more with us,” Richardson says. “And there is a lot more focus on farm systems and forages. But the main area of growth is dairy food companies looking to extract extra value from their products – including from dairy goats and the emerging sheep milk sector.”

AgResearch works with Massey University and Fonterra and is a partner in the Riddet Institute at Massey, on whose campus it is building a joint food science facility.

“There is still more science the sector wants done, that’s why we have done well in MBIE contestable funding rounds in joint ventures with the Miraka Dairy company and others.”

Richardson says feedback from the industry

tells them they are doing the science that is wanted.

And private investors continue to use AgResearch expertise. But he concedes there is less interest now in some areas because priorities change.

But a former director of AgResearch, Dr Jock Allison, remains unconvinced about the validity of the AgResearch strategy that has driven the changes in personnel.

He questions why AgResearch is starting to get involved in the food area when Massey and Otago universities are involved, as is Fonterra which he says has 500 staff involved in this area.

“They are getting big in Maori agribusiness. Well what’s different about Maori agribusiness? Certainly there are opportunities on Maori land, but that’s a farm advisors role; you don’t need more science for that, so that is a fictitious reason. And they are getting into areas of farm systems -- essentially a farm advisors job.”

Allison says it seems that AgResearch and the science funding people are now ‘discovering’ the farm extension business, which he says he did years ago. In his day he forced his scientists to talk to news media, but now he sees very little interaction between scientists, farmers and media.

He says when a new breakthrough is announced, farmers and others seeking more information mostly are referred

to ‘head office’ – not to the scientist who did the work.

“In my days at Invermay farm advisors got groups of farmers from all over Otago, and for that

matter NZ, and they came up with priorities about what they wanted. Then they came to regional research advisory meetings and we had the top

farmers, farm advisors and scientists meeting for a whole day and working out priorities. Today they are just reinventing the wheel.”

AgResearch chief executive Tom Richardson.

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IN BRIEF Green light for JV FONTERRA’S CHINESE partner Beingmate last month agreed to set up a joint venture to buy the co-op’s Darnum, Victoria, plant.

In return Fonterra will use Beingmate’s sales and distribution network in China to sell its Anmum branded formula.

Fonterra chief executive Theo Spierings said the global partnership with Beingmate holds growth potential for both companies.

“The partnership will create a fully integrated global supply chain from the farmgate direct to China’s consumers, using Fonterra’s milk pools and manufacturing sites in New Zealand, Australia, and Europe.

“By working with Beingmate we are creating additional demand for ingredients and high-value paediatric and maternal nutrition products.”

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DAIRY NEWS NOVEMBER 10, 2015

10 // NEWS

Sri Lanka offers huge potential for growth sudeshk@ruralnews.co.nz

LIKE MOST New

Zealanders, Sri Lankans are growing up drinking Anchor milk.

However, in contrast to NZ, milk consumption in this country of 21 million

Fonterra Brands Sri Lanka managing director Leon Clement.

people is low: average consumption is less than half a glass of milk per day.

For Fonterra Brands Sri Lanka managing director, Leon Clement, the potential for growth is huge. As Sri Lankans start to consume more dairy products, Fonterra is well poised to take advantage,

says Clement by helping Sri Lankan farmers lift milk production.

Fonterra is already a major player in Sri Lanka, one of the co-op’s four leadership markets around the world. Clement says 135,000 glasses of Fonterra milk is consumed every hour in the country.

After 35 years in this market, and employing 750 people, Fonterra enjoys top brand recognition: Anchor is one of the best known brands.

Full cream milk makes up about 55% of the total dairy consumption; Fonterra’s two brands – Anchor and Ratthi -- have 60% market share.

Milk powder is imported from NZ and turned into full cream milk powder. The co-op also operates two processing plants – a packing and blending plant, and a cultured products and drinks plant.

Sri Lanka is also one of Fonterra’s offshore milk pools: it sources milk locally, making fresh milk products such as UHT milk, yoghurt and curd.

But it hasn’t been always plain sailing for Fonterra in Sri Lanka: product bans, court cases and misinformation spread among consumers have caused headaches from time to time.

Fonterra was forced to suspend its operations two years ago after facing product bans, court cases and angry demonstrators.

The company was banned by a Sri Lankan court from selling or advertising its products after the country’s food safety authorities said they found

Fonterra controls 60% of the milk powder market in Sri Lanka.

levels of the agricultural chemical dicyandiamide in two batches of milk powder. Fonterra vigorously disputed the finding.

A court order later removed the ban, allowing the company to continue its operations.

Clement puts this issue down to misinformation.

He says it took Fonterra only six months to regain its market leadership status after the event.

The Sri Lankan Government is keen to increase domestic dairy production and reduce the country’s reliance on dairy imports.

Clement says about 80% of milk powders are imported; local farmers provide the remaining 20%. He says Fonterra is well aware of this and works with the Government and farmers to boost local milk production.

“We feel it is important to tap into growth opportunities and we play a role in the local dairy industry,” he told Dairy News. “To maintain our leadership position, we

need to be involved in the local industry. We have built strong links with local communities and the Government.”

Fonterra has about 4000 farmer suppliers in Sri Lanka, the biggest farmer milking 20 cows and the average farmer milking four-six. It collects about eight to 10 million litres of milk annually.

Clement says though the Sri Lankan industry is not incredibly efficient there is a shift in its thinking. “Farmers are increasing production and we are supporting sustainable farming families.”

Fonterra is using its expertise from home to

help Sri Lankan farmers.

“Back home we are very good at intergenerational farming -- farming businesses handed down from generation to generation; we are keen to pass that expertise to Sri Lankan farmers.”

Fonterra is training and advising Sri Lankan farmers on nutrition management, animal health and treatment of mastitis with a view to milk yield.

Clement says the aim is to get most farmers up to 20 milking cows, producing quality milk.

The co-op is also supporting school infrastructure in dairy communities.

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DAIRY NEWS NOVEMBER 10, 2015

12 // NEWS

Time for us to re-engage with EU – trade envoy PAM TIPA pamelat@ruralnews.co.nz

AFFLUENT MARKETS

Trade envoy Mike Petersen.

are the key prize in a free trade agreement with the EU, says ag trade envoy Mike Petersen.

“It is a significant opportunity for New Zealand particularly for our primary sector,” says Petersen.

Prime Minister John Key and EU leaders have said that negotiations on an EU-NZ FTA will start as

soon as possible.

Petersen told Dairy News our trade has diversified in the past 20 years away from Europe quite successfully with growth into China and Asia, he says.

“But I have always had

concerns about being reliant on any single market.

The pendulum has swung quite a long way and I reckon it’s time for us to re-engage with Europe.

“There are over half a billion consumers there and a huge number are very wealthy despite the economic woes of Europe.

It is easy to think Europe is in the doldrums economically but many people there can afford to pay what we need for our high quality products.”

In the last few years in his trade envoy role, Petersen, the former chairman of Beef + Lamb NZ, says he has come to strongly believe we have to balance the export markets for all our primary sector products.

“We must have good access to affluent markets, not just emerging markets, and that’s where Europe immediately fits in.”

He admits exporting dairy to Europe is like sending coals to Newcastle. Europe produces 150 billion litres of milk, the US produces 95b litres – and NZ produces 20b litres.

“But for the dairy products we produce, market access into Europe is pretty much prohibitive because of the tariffs applied.

“So it is hard even for the products we specialise in like butter for instance.

It is very difficult to get access to Europe.”

Petersen says the last

agreement we had with Europe was 30 years ago.

“So a lot has moved since then. This is now an old trade agreement and it is definitely due for refreshing.”

Of the 161 WTO member countries, only six don’t have a FTA with Europe or one under negotiation. Those countries are Russia, Hong Kong, China, Taiwan, Australia and New Zealand.

“We have used that argument a lot when we have been up there lately -- saying ‘this doesn’t feel right’; that we have such a long history of doing business with Europe and we are one of the countries that sit outside when it comes to a preferential trade agreement.”

The process could take a couple of years, in the first year looking at the benefits for each country in a potential FTA, and that could take a year.

Then the negotiations themselves will be held, generally expected to take about two years Petersen says we don’t want to rely on any one market, we need to balance that around the world.

“Affluent markets are needed; we are talking about countries where GDP per capita -- purchasing power -- is higher than NZ. Of the 28 member countries of Europe I’m sure there would be about 10 countries wealthier than NZ.

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DAIRY NEWS NOVEMBER 10, 2015

NEWS // 13

Own maize silage cheapest in low payout year MAIZE SILAGE grown on

farm is at its cheapest per kilo of dry matter in low payout years, says Ravensdown agri manager Bryce Fausett, in a paper presented last week at the New Zealand Grassland Association Conference.

The paper, ‘The true cost of maize silage’, co-authored

by Jacqueline Rowarth and Frank Scrimgeour, challenges assumptions that growing maize silage on farm is the more economic choice. It details the many factors that influence the true cost of growing maize.

Faussett says essentially the research shows that in the 2013-14 dairy season, with an $8.40/kgMS payout, the costs to many farmers of growing the maize on their own properties would have been more than the price for which it could have been bought. However, the

opposite would have applied in the 2014-15 season when payouts were low.

The research showed that a significant cost for farmers growing maize for silage on their own properties was the ‘opportunity cost’ (the loss of productive grazing area for cows). The cost of the loss of grazing production was much higher than the cost of purchased maize silage in a high payout year and/or on an intensively farmed property, with the reverse applying on low intensity properties and/ or in a low payout year.

“The more profitable a farm is per hectare, the more the maize is actually costing, so for the most profitable farmers it is likely to be more economical to buy in maize,” Fausett says.

“In situations where onfarm and purchased maize

Home grown maize silage is the cheapest, says Bryce Fausett, Ravensdown.

IN BRIEF Anchor eyes Africa ANCHOR’S GLOBAL has expanded into Ethiopia with a fortified milk drink.

Ethiopia (pop. 100,000m) is the second-largest nation in Africa and its economy is among the world’s fastest growing.

A local food processor, Faffa Foods, will make the drink from NZ milk powder.

Meanwhile, Anchor has also launched a new cream product sold in one- (250ml) and twocup size containers targeting the ‘foodie’ market in Australia. The product will be sold exclusively

by Woolworth’s supermarkets.

Dines joins board

costs are similar,” Fausett says, “a balanced consideration of factors is required. Noneconomic factors, such as yield risk, environmental considerations, effluent use and pasture renewal systems will probably influence the farmer’s decision on whether or not to grow maize on-farm.”

Even in a good payout year,

the economics of growing maize silage onfarm were probably on the good side for low intensity properties, Fausett notes, whereas for high intensity properties the cost of growing maize is more often going to be higher than the cost of buying it.

“By taking into account opportunity costs, the farmer

gets a more accurate estimate of the cost of the feed in that given year,” Fausett concludes.

“In all scenarios, farmers should also take into account the non-financial advantages and disadvantages, including the risks of opting for onfarm production versus purchase, to make a decision that best suits their farm.”

CLINTON DINES is Fonterra’s newest board member.

He will replace Sir Ralph Norris when he retires from the coop’s board at its annual meeting on November 25.

From Australia, Dine has lived and worked in China for 36 years, including 21 as a senior executive for BHP Billiton.

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DAIRY NEWS NOVEMBER 10, 2015

14 // NEWS

Trial on alternatives to importing feed A NEW trial at the Northland Agricultural Research Farm near Dargaville is looking at alternatives to importing feed.

Northland farmers have been questioning how they can reduce reliance on imported feed, in particular palm kernel, and still make a profit – sustainably – given the volatile climate and milk price.

The Northland Dairy Development Trust (NDDT) has set up a three year trial with the support of John Roche, principal scientist with DairyNZ. The farm systems experiment will measure the profit of three farmlets with different feed inputs.

One farmlet will feed pasture only with no imported supplement. The second will import palm kernel according to profit-

ability based on milk price and climate. The third farmlet will not import feed but will grow maize silage, turnips and fodder beet in an attempt to fill feed deficits.

Roche says the trial will provide useful information for farmers.

“Northland’s tough weather and volatile climate combined with a low milk price have made it challenging to keep cows well fed, leaving farmers to question which farming system works best. This trial is designed to address that.”

Pasture growth and quality, crop yield, milk production, and herd body condition score (BCS) will be monitored on each of the 28ha farmlets. “It’s also important to understand the environmental and financial implications

Trial manager at Northland Agricultural Research Farm Karla Frost.

of each farming system, so these will also be monitored throughout the trial,” says Roche.

Kim Robinson, spokeswoman for the NDDT, says costs will be closely monitored.

“Machinery time, feed pad use and labour in feeding crops or supplements will be recorded to try to capture the true cost of each system. Nutrient budgets and Farmax models are also being used to build a comprehensive picture of the long term sustainability of each system.

“Farmers across the country are already showing interest in the trial which is becoming even more relevant with falling milk prices.

“We are looking forward to providing farmers with independent profitability information from a robust whole farm system trial,” says Robinson.

The project, funded

by DairyNZ and the Sustainable Farming Fund, will be valuable to the region says DairyNZ’s Northland regional leader Chris Neill. www.dairynz.co.nz

Gut health focus spurs food researchers THE ASIAN middle classes are the target for an AgResearch-led project on gut health.

Associate professor Nicole Roy says there is a substantial market in Asia for food products with substantiated health benefits.

The project has been allocated $3.6 million by the High-Value Nutrition National Science Challenge.

Roy and other AgResearch colleagues will work with the University of Otago, the Malaghan Institute of Medical Research and Plant & Food Research to research the relationship between nutrition and gut health.

The challenge aims to drive innovation in nutrition research, food science and health, to position New Zealand as a world leader in the rapidly increasing food-for-health market.

“In determining what we were going to do, we started with the consumer – the person buying these food products that will be developed and marketed by the NZ food industry based on the results of our work,” says Roy. “We know there is a link between the food we eat, how our gut functions and our brain. Stress is known to trigger poor gut function and discomfort. We want to

provide knowledge the industry will use to develop food products to address this.

“We are focussing on the Asian markets because there’s already an established culture that understands the benefits of such foods. A large number of these people lead stressful professional lives and experience gut problems as a result, which affects their productivity and quality of life. Gut health is a rising concern for consumers.”

The emerging middle and upper classes in Asia who want to excel as their careers and age advance are an important consumer group. They will buy food and beverage products to feel physically comfortable and fit, to stay mentally sharp and to slow cognitive decline.

“Our focus will also consider the increasing evidence that the two-way communication between the gut and the brain is central to these problems.”

Roy says the research is aimed at fasttracking opportunities helping NZ’s food and beverage industry to develop and market foods with validated health benefits, such as improved gut function and comfort.

AgResearch staff will also work in four other teams funded by High-Value Nutrition.

DAIRY NEWS NOVEMBER 10, 2015

NEWS // 15

Cheese slices heading for global retailers THE $32 MILLION expansion of Fonterra’s Eltham plant in Taranaki has reached a key milestone, with individually wrapped cheese slices now heading for supermarket shelves worldwide.

The new line doubles the amount of sliced cheese that can be made at the plant.

Director New Zealand manufacturing Mark Leslie says Fonterra constantly watches trends in key markets and works with customers to help them achieve their growth.

“Our consumer and foodservice expansions are almost entirely demand-led, meaning from the moment the first product comes off the line it’s already earmarked for customers in one of 100 markets around the world,” he says.

Leslie says these expansions also diversify the

cooperative’s asset mix, giving Fonterra more choices in what it does with farmers’ milk and allowing more agility in meeting changes in customer demand.

Sliced cheese made at Eltham includes individually wrapped slices and slice-on-slice cheese used in restaurants and fast food outlets; it is among the co-op’s most in-demand consumer and foodservice products.

“The product supports our V3 strategy -- to deliver a greater volume of high value products at velocity,” says Leslie.

“Once completed, the plant will make make 2.3 billion slices of cheese each year at Eltham, all sold to growth markets in Australasia, Asia and the Middle East.”

Site manager Brendon Birss says the team is excited to reach such an

important milestone.

“A lot of work has gone into completing the first phase of the expansion.

Local builders and contractors have pulled out all the stops to get us up and running on sched-

ule, and we’ve seen great results from the new lines in testing over the last few weeks,” says Birss.

The second stage of the expansion is due for completion in February next year.

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Co-op says bye to Bega shares FONTERRA HAS sold its 9% stake in Australian cheese processor Bega Cheese for A$74 million.

The co-op bought the shares in 2013 amid a takeover battle for Australian processor Warrnambool Cheese and Butter; Bega unsuccessfully bid for WCB. Fonterra chief financial officer Lukas Paravicini says it is focused on investing in higher value-add dairy products that deliver the best returns for shareholders.

Releasing capital, such as through this sale, for future growth is the best use of our shareholders’ funds, he says.

The sale of Fonterra’s shareholding has no implications for its long-standing relationship with Bega, which includes a license on the Bega brand and a supply contract for cheese.

“The Bega brand has an important role in our cheese portfolio where we are a market leader, and we will continue to build on our relationship with Bega which goes back more than a decade,” says Paravacini.

Fonterra has doubled its wrapped cheese slices from Eltham plant in Taranaki.

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DAIRY NEWS NOVEMBER 10, 2015

16 // NEWS

Farm stores offer good value FONTERRA SAYS its

Farm Source retail arm has delivered good value to at least 9000 Fonterra farmers since it was launched in Methven a year ago.

Director Jason Minkhorst says farmers have so far earned 5.7 million in reward dollars, and the business is expected to award $14 million in discounts on key products by the end of this year. “[The business] was created to make the most of the unity and strength of our co-operative and provide a new level of support for our farmers. We’ve combined services, expertise, rewards, digital technol-

ogy and financial options with local hubs to support the major dairying regions,” Minkhorst says.

Since its launch, the business has introduced seven new heads of cooperative affairs leading regional teams, and opened regional stores marketing services and deals.

Its rewards programme offers deals exclusive to Fonterra farmers, and discounts allow farmers to save on fuel, phone, power, telecoms, etc.

A digital platform gives access to farming information, advice, support, products, deals and rewards online and on

Fonterra’s Farm Source stores have awarded $14 million in discounts to shareholders.

mobile. And farmers can access financial help and advice.

Minkhorst says business data show Farm Source can help support farmers during times of market volatility.

“Our stores have maintained very good performance in a tough

environment, increasing our market share.

While global volatility has affected our milk price and earnings, we have been able to… support the co-op’s farmers through this period.”

At least 6000 farmers have opted for interest-free deferred terms,

and 75% of shareholders applied for the 50 cent cooperative support loan.

“These initiatives give us a point of difference and show the strength of being part of the cooperative,” Minkhorst says. @dairy_news facebook.com/dairynews

Get ready to drill candidates FONTERRA SHAREHOLDERS are being urged

to attend this week’s director candidate roadshow.

Six candidates are contesting three seats: Murray Beach, Greg Maughan, Blue Read, Nicola Shadbolt, Ashley Waugh and John Wilson.

Shareholders Council chairman Duncan Coull says the roadshow is a great opportunity for Fonterra farmers to meet, question and listen to the contenders for the coop’s top table before they cast their votes.

“As shareholders we have a responsibility to understand governance and the qualities required of a Fonterra director, and to use this knowledge to elect to our board the candidates who have these attributes.

“The roadshow… gives shareholders a platform to ask the candidates robust ques-

tions about their governance ability and experience, and how this will translate into driving our co-op forward.

“The objective is to have our farmers leave with a greater understanding of the governance qualities each candidate brings to the table, so I suggest they prepare their questions with this in mind.”

Coull says additional information such as the candidate assessment panel’s results matrix and candidate profiles were sent to shareholders with their voting papers.

“I encourage shareholders to attend the roadshow, read the material in your voting packs and use all the tools provided to make an informed decision that benefits our co-op.”

The roadshow started on Sunday and runs through Friday, November 13.

Check out our websites BREAKING NEWS MANAGEMENT STORIES MARKETS & TRENDS MACHINERY REVIEWS COMPETITIONS AND MUCH MORE...

www.dairynews.co.nz

DAIRY NEWS NOVEMBER 10, 2015

WORLD // 17

Milk worth billions to Oz region’s economy THE AUSTRALIAN

dairy industry is worth about A$3 billion to the economy of Gippsland, Victoria, a regional business forum heard recently.

Growth opportunities were highlighted at Warragul on October 30, attracting the region’s key decision-makers.

‘Gippsland Dairy – Leveraging the Opportunities’ highlighted dairying’s huge contribution to the region.

The farming, manufacturing and export industry spans 1400 dairy farms producing 2 billion litres of milk a year – 20% of Australia’s total. Around 6800 people work either on farms or in milk processing factories.

Speakers at the event included GippsDairy chairman Graeme Nicoll, United Dairyfarmers of Victoria (UDV) president Adam Jenkins and keynote speaker David Williams, an investment advisor with Kidder Williams.

Nicoll, who farms at Fish Creek, highlighted the potential for growth, the importance of dairy industry profitability and the spin-off benefits in investment, jobs and stronger communities.

“Dairy in Victoria has the potential to grow substantially to take advantage of the burgeoning demand for safe, high quality dairy products overseas,” Nicoll said.

“This means more jobs and more economic activ-

ity which, in turn, helps maintain the towns and services that make this and other dairy regions attractive as investment and tourist destinations.

“But we have to work hard to attract investment to bring this prosperity to the regions. Investors, new and existing, have many choices on where to put their dollars. It is not inevitable that they will choose Gippsland or any other dairy region in Victoria.”

Jenkins focussed on roads and transport, social licence to operate farms, water availability and communications as the key factors in the industry’s success.

“We have the soils, climate and proximity to markets to grow profitably and sustainably, and take advantage of the global demand for safe, high quality dairy products,” Jenkins said.

“This means more jobs locally in a skilled industry, more economic activity, vibrant towns and more of the services that underpin the region’s liveability. But we can’t do it alone. We need to work with local, state and federal governments, with other agricultural commodity groups, utilities and the community to leverage the opportunities.”

Dairy Australia managing director Ian Halliday said the Warragul forum showed the industry’s value and potential to the

wider community.

“It’s vital that decisionmakers understand what dairying contributes to regional economies and the Australian economy as a whole,” Halliday said.

“Having a chance to get

people together and discuss our opportunities and concerns is the best way to promote understanding of how we can all help each other build a better dairy industry and a more prosperous Gippsland.”

Dairy is worth about $3 billion to the Gippsland economy in Victoria, Australia.

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IN BRIEF Swales heads Oceania FONTERRA HAS appointed Judith Swales to the new role of managing director for Oceania.

Swales, the co-op’s managing director for Australia since 2013, will report directly to Fonterra chief executive Theo Spierings.

Spierings says Swales was the natural choice to lead Oceania, comprised of Fonterra’s Australian business and its New Zealand consumer businesses including Tip Top. “Judith has a great understanding of consumers and their relationship to brands and has proven her ability to build effective partnerships in the highly competitive supermarket sector in Australia. By having Judith lead Oceania we are ensuring the growth of our brands on both sides of the Tasman.

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DAIRY NEWS NOVEMBER 10, 2015

18 // OPINION RUMINATING

EDITORIAL

Suddenly it’s all on

MILKING IT...

Put him out to pasture

WITH THE payout down and dry conditions looming, what’s the last thing dairy farmers need now?

An ageing political mouth with an overactive media secretary using the industry to try to make political capital.

Winston Peters’ office issues a constant stream of drivel to the media these days, including a doom-and-gloom missive off the back of the GDT result last week, saying the sky was falling, and blaming the “gummint” but offering no solutions or ideas.

This is the man who opposes free trade deals, but then insists we should be free trading with Russia while Putin is complicit in the Syrian war and the Malaysian plane going down over Ukraine.

Ageing All Blacks are not the only ones who should be retiring.

No one’s telling

FONTERRA’S COMMUNICATIONS boss Kerry Underhill has left the coop after only two years on the job.

With no official word from the co-op and Underhill no longer appearing as a member of the co-op’s management team on its website, this one is a mystery.

We believe it may be linked to the Fonterra board’s recent re-think on the co-op’s communications strategy.

With so many great stories to tell in New Zealand and around the world, Fonterra should not be holding back.

They’re walking on it

TWO BRITISH inventors have moo-ved into a new market after launching a range of footwear for cows.

Robert Todd, a professional cattle hoof trimmer, designed the Croc-like slip-ons in a bid to tackle lameness in cattle caused by ulcers and bruising.

They have flexible soles made from beech and oak and are colour-coded by size.

Lameness is a huge problem in modern dairy herds and the Moover shoes are a hit worldwide.

Todd and his business partner Mike Brimble have been approached by retailers in 42 countries, including New Zealand, since the footwear went on sale this year.

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Don’t be fooled

DON’T BE fooled by the packets of almond milk on supermarket shelves.

Although it may be lower in calories and have more healthy fats, almond milk and other nut milks have some nutritional shortfalls. For example, a cup of 1% fat cow’s milk contains 8g of protein, but hazelnut milk has only 2g, and cashew and almond milk might contain 1g or less. And there’s another potential downside. Certain sweetened cashew and almond milks contain almost two teaspoons – two teaspoons – of added sweeteners per cup.

THE FONTERRA board election was looking like a subdued affair.

Chairman John Wilson and sitting directors Blue Read and Nicola Shadbolt were a shoe-in for the three seats up for grabs.

With no disrespect to the other three candidates, it still looks highly unlikely that Wilson, Read and Shadbolt will be thrown out by farmers.

But the actions of two former directors have thrown a spanner in the works for Wilson and the board: suddenly the 2015 vote and this month’s annual meeting promise excitement.

Colin Armer, a corporate farmer, and Greg Gent, a well-respected company director, lobbed a grenade last month. They want shareholders to vote for a reduction in the size of the board, currently 13 directors -- nine elected and four appointed.

Knowing very well that they would not find much support within the board, Armer and Gent have gone directly to the shareholders, seeking approval for “a leaner and fitter Fonterra”.

They argue that accountability for the performance of the company begins at the top. A meaningful reduction in the size of the board will improve board efficiency and decisionmaking, they say.

A smaller board will give greater clarity to our cooperative’s strategic direction for the future.

Boards with double-digit numbers of directors are rare. Other New Zealand cooperatives have smaller boards: Tatua and Ballance each have eight, yet they are high-performing companies. When Air New Zealand was rescued from collapse it had 13 directors; today it is a high-performing company with only seven directors.

However, the Gent/Armer motion has a big hill to climb: they need 75% support from shareholders and a 50% ‘yes’ vote by the Shareholders Council.

With both the board and the council recommending farmers vote against the proposal, in favour of a detailed review of the governance structure, the showdown is on.

Forget the board election results; when voting figures are announced at Fonterra’s annual meeting at Waitoa on November 25, all eyes will be on what farmers thought of the Gent/Armer motion.

A healthy ‘yes’ vote will pile more pressure on Wilson and the board to act -- fast.

Fonterra farmers have faced two challenging seasons. With dairy prices still fluctuating, the light at the end of the tunnel seems some way off.

If Gent and Armer’s proposal for a fitter, leaner board resonates with shareholders it could signal a major upheaval for the co-op.

Farmers have risen against the board and management before: look at the Trading Among Farmers (TAF) consultation. They may be in the mood to do that again.

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DAIRY NEWS NOVEMBER 10, 2015

OPINION // 19

A big bouquet for grassroots environmentalists JAMES STEWART

BEING A dairy farmer

and an environmentalist, I have been perplexed by the banter and politicking over the regional council’s One Plan implementation.

Terms such as ‘licence to pollute’ are ridiculous and obviously come from uninformed sources lacking understanding of what this is all about.

The regional council, meanwhile, is wisely trucking on with its One Plan implementation, and rightly so. This plan enables farmers to make environmental plans that continue to reduce our footprint on the environment, and to keep running viable businesses that help in no small way to grow the region’s economy.

Of course, One Plan is not all about dairy; that is just one part, and surely it’s better to work with all members of the community, including farmers, to work towards achieving outcomes catchment by catchment.

That’s what the National Policy Statement on Freshwater Management says we should be doing.

Remember also that we all have an effect on

James Stewart

the environment, whether by running a business, running a car or in the things we choose to buy or use. We all have a role to play and this is no time for finger pointing. Let’s get behind each other and be proud of environmental progress in the region.

I’m not saying farmers don’t have a responsibility, far from it. Farmers know the importance of looking after land. It’s fundamental to what we do, something handed down from generation to generation. Farmers also recognise a healthy environment is an important aspect of our image as an agricultural

exporting country.

Farmers are also putting their money where their mouths are, we always do. A recent survey

by Federated Farmers showed that farmers nationwide have spent at least $1 billion dollars on environmental work over the past five years.

Here in the Horizons region the spend was slightly higher, with dairy farmers collectively spending at least $100 million on stock exclusion, effluent management and other upgrades: that’s about $110,000 per farmer.

And this investment is delivering results. In 1997

there were 439 discharges of dairy effluent to water.

By 2012 this was zero, removing the direct input of E coli, nitrogen and phosphorous. This has lessened the annual load on the Manawatu River by about 100 tonnes of nitrates and 18 tonnes of phosphorous, equivalent to what a town five times the size of Dannevirke would produce.

Sediment levels are also dropping, pointing to an estimated reduction of 27% in the Manawatu catchment by 2043 if implementation of the sustainable land use initiative maintains its present rate.

Nutrient budgeting, riparian fencing and environmental projects are also positively affecting our water quality.

I’m proud of what the farming industry is doing, though some clearly are not.

The annual load of nitrates and phosphorous in Manawatu River is dropping.

Comments were made recently about fewer prosecutions by regional councils of dairy farms. I say ‘well done’ to our dairy farmers for achieving 97% compliance last season and for all their fencing, planting and upgrades to effluent systems.

‘Well done’ also to the people who are working

with us; farmers are doing a lot but we’re not doing it alone.

The regional council deserves credit for its commitment to its One Plan implementation and so do others in the region.

I’m proud of a major riparian planting project underway in our province that will transform

the appearance of the countryside.

Farmers are in the thick of it, as are environmental groups and local schools.

The community is working together to protect and enrich an environment we all share, as it should be.

• James Stewart is president of Federated Farmers Manawatu/Rangitikei.

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DAIRY NEWS NOVEMBER 10, 2015

20 // AGRIBUSINESS

Too many farmers ‘flying blind’

Academy to train dairy leaders LANDCORP AND Chinese conglomerate

CRAIG SANDERS

NO ONE would fly a plane

without instruments these days. But many farmers are effectively ‘flying blind’ in farm management, ie not having or using the right financial information for sound decisions.

Many farmers only get a fully detailed account of their financial position following a review of their end-of-year accounts with their accountant, often too late to make adjustments for a better financial outcome.

Given the current market situation that is no longer good enough, and now more than ever farm-

ers need accurate realtime financial information.

While volatility is nothing new for agribusinesses, large increases in farm debt over the past decade, particularly in the dairy sector, have put pressure on the industry during the recent fall in milk prices.

All farming operations face pressure when prices fluctuate rapidly, and highly indebted operations often have less room to move.

Rapid or unforseen changes in circumstances such as a major climatic event or a fall in the payout can lead to severe outcomes for underprepared farmers, especially those who are highly leveraged.

Such businesses need

to be fully aware of their current financial position, know what drives their costs, be prepared to review budgets regularly as things change, and be able to make decisions based on the best possible financial information.

Farmers are often very good at tracking cash, but the true impact of decisions on their bottom line can be somewhat veiled. For example, selling stock can often look fantastic for a farming business, generating cash at the time of sale; but depending on what price was received and the costs incurred, the true impact might be very different when reconciling at the end of the financial

year. Without a realtime accrual accounting system in place it’s hard to know.

To be truly successful in seizing opportunities and mitigating risk, farmers need to Craig Sanders have an accurate picture of where their finances are tracking in real sionals can together protime and they need to know duce reports in real-time what impact decisions will for the accountant and have on their bottom line bank manager, tracking key before they are made. metrics like funding headFarmers had best use room, for example, allowthe tools available -- espeing adequate overdraft cially the cloud-based facilities to be maintained accounting software on the well in advance. This can market now -- to put them- avert many a panicked conselves and their advisors in versation. the best possible position • Craig Sanders is an agrito make correct decisions. business and cloud accounting Farmers and rural professpecialist at Crowe Horwath.

World-first methane vaccine coming THE WORLD’S first vaccine to

inhibit methane production in ruminants is being developed by New Zealand scientists and they should know within about four months whether they have cracked a key step in its development, says Dr Rick Pridmore, who leads sustainability for DairyNZ. While claims are often made by scientists that they are world leaders in a given field, it is definitely the case for this group of New Zealand scientists, says Pridmore, who is also chair of the Pastoral Greenhouse Gas Research Consortium.

They are trying to solve the problem of reducing methane emissions from pastoral animals which a vaccine is well suited to, he told the

International Federation of Agricultural Journalists Congress in Hamilton this month.

“If you can get a vaccine that works it is likely that it will apply to ruminants anywhere in the world.”

The vaccine uses an animal ’s autoimmune response system to inhibit the methane produced by micro-organisms in the rumen.

“Because it is an animal’s own body controlling the emissions it produces, there are less concerns about toxicity and product residues” he told the Congress.

“Once you have a proven vaccine it is likely you can bring it to market in three to seven years.”

He says, in contrast, if you develop an inhibitor - a chemi-

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cal compound that you give to an animal to achieve the same effect it might take 10 years to resolve all the issues surrounding toxicity and product residues.

The vaccine, using a little bit of protein from common methanogens in ruminant animals, stimulates the production antibodies that then go on and inhibit the methanogen itself.

Normally this wouldn’t happen because the rumen is big, there’s considerable material going through, and there’s not enough antibodies present.

The antibodies are developed in the saliva of the animal and are continually added to the rumen as the animal eats. “Once the cycle

starts it just keeps going”, Pridmore explained. “The affected methanogens simply get washed out the other end.”

Pridmore says a key paper came out several weeks ago from the New Zealand scientists (who partnered with scientists worldwide).

They looked at the methanogen populations from an incredible array of ruminants, living in a diverse range of environments, with different diets, from all around the world.

They found the methanogen populations were amazingly similar and dominated by several groups of methanogens. He said if you can inhibit these key groups, the vaccine will have general application worldwide.

Shanghai Pengxin have jointly set up a venture to train future farm leaders – at no cost to those chosen for the course.

The Central North Island Dairy Academy will offer tuition, provided by Taratahi Agricultural Training, to develop “mid-level” leadership abilities of people already technically skilled or knowledgeable in dairying.

The 32 week residential course will combine theory, practice and onfarm work to Massey University Diploma in Agriculture level 5.

Ten students will be chosen per year for the free course. They must apply for places and will study on a Milk New Zealand farm -- Ariki Dairy Unit at Wairakei, near Taupo and live nearby.

Taratahi says the graduates will attain the Massey University Diploma in Agriculture levels and will develop leadership and analytical skills over and beyond the graduate skill base.

“Additional time over and above the prescribed 32 weeks may be required for learners who do not meet all competencies outlined in the graduate prior experience skill base,” it says.

In addition to the Massey University Diploma in Agriculture units, the course will train in rural leadership, dairy effluent, artificial insemination, GrowSafe and milk quality.

Developing a farm report for Ariki will also be a course component.

Students will live in houses on nearby Landcorp or SPG owned/managed farms. Their practical work will be on local dairy farms.

Students will be encouraged to get casual work on Landcorp-managed dairy farms during their study breaks.

Applicants should be aged 18-25, want to work in dairying and have the NZQA Level 4 National Certificate in Agriculture or have attained the NCEA level 3 university entrance standard.

Alternatively they may be over 20, have one years full-time farming experience, aiming to become a farm manager in five-ten years and like the idea of working for a corporate farm.

Applications close on November 23.

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DAIRY NEWS NOVEMBER 10, 2015

AGRIBUSINESS // 21

Oz co-op consolidates Tassie holding MURRAY GOULBURN

has bought Mitsubishi Corporation’s remaining 24.1% in Tasmanian Dairy Products Co Pty Ltd (TDP) for A$4.8 million, taking 100% ownership.

TDP, one of Tasmania’s largest dairy companies, processes about 25% of the state’s milk.

MG managing director Gary Helou acknowledged Mitsubishi’s collaboration with MG during its three years work to establish a “foundation footprint in Tasmania’s dairy industry”. “Mitsubishi will continue to be an important business partner for MG,

following the acquisition,” Helou said.

“Over the past decade, the Tasmanian dairy industry has grown strongly. With its rich dairy tradition and favourable climate for pasture based farming, Tasmania is an important, strategic dairy region for MG to have a strong presence in.”

Earlier this year TDP suppliers were invited to join MG and become MG supplier-shareholders. This invitation was well received and from the start of 2015-16 season all milk supplied to TDP

has come via MG’s Tasmania suppliers who joined the co-op.

“We were pleased to be able to extend the benefits of our dairy co-op to Tasmania dairy farmers and we look forward to con-

tinuing to grow our supply base and production.”

MG entered the Tasmania dairy industry in mid-2000 by buying Classic Foods (Edith Creek) and in 2011 it spent $80 million on a

Murray Goulburn chief executive Gary Helou.

milk processing facility for TDP at Smithton.

TDP Smithton started production in 2012; it can process 250 million litres of milk annually.

Last financial year, TDP processed 210 million L.

China dairy firm to list on ASX CHINA DAIRY Corporation Ltd, an industry leader there, will list on the Australian Stock Exchange.

The company, whose value would be A$150 million if the share offer was fully taken up, produces -- with partners -- 600 tonnes of milk daily from 40,000 cows.

It is located in Heilongjiang province, northern China, known for dairying and other farming. It produces and wholesales raw milk and breeds, rears and sells dairy cows.

For ten years it has “built a reputation as a dependable milk supplier to major Chinese dairy product companies,” the company says. Its after-tax profit in 2015 will be A$40m, it holds cash of A$70m and has low debt.

It seeks to capitalise on the growing Chinese appetite for dairy products, forecast by the OECD to grow 38% from 2013 to 2022.

“This growth has strong fundamental drivers including the rapid urbanisation of China’s population as well as government policies which have included China’s dairy sector as a key priority area in the Chinese government’s 12th five year plan,” the company says.

The chairman, Enjia Liu, says the ASX listing will be a “key milestone in China Dairy’s history which will herald a new phase of growth for our company as we capitalise on increasing demand”.

“We are seeing a voracious appetite for dairy products, spurred by China’s rapidly urbanising population which already consumes US$5b of imported milk products annually.

“As more Chinese realise the nutritional benefits of dairy products, the potential for Australian-sourced fresh milk, butter, cheese and other dairy products to become part of the Chinese consumer’s daily diet is immense.”

He said Australia’s dairy industry has an enviable reputation globally.

“We are keen to work with Australian dairy processors to meet that gap in China.

“With China’s domestic milk production being projected to grow only at 3.3% annually between 2011 and 2020, we believe domestic milk producers will benefit from incorporating Australian technology and techniques in our production capabilities.”

The company sees opportunities to grow via offshore expansion and using Australian technology to improve its farming and technology. Within China it wants to diversify into downstream growth markets such as liquid milk.

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DAIRY NEWS NOVEMBER 10, 2015

22 // AGRIBUSINESS

Buyers in no hurry to commit further

Vladimir Putin’s ban on European dairy products has caused an oversupply.

JOHN DROPPERT & AMY BELLHOUSE

GLOBAL DAIRY

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by GlobalDairyTrade (GDT) auction results and European spot pricing.

Key drivers of this lift are the a deteriorating milk production outlook for New Zealand and reduced GDT offer

volumes, but the speculation is that these alone may be insufficient for a sustained recovery.

Hence it was not totally unexpected when the GDT Price Index fell slightly in late October, signalling the possible end of additional demand brought on by the bottoming of the price cycle.

Ultimately needed to see prices meet or exceed ‘average’ levels of recent years is market rebalancing -- elusive for much of the past 18 months as sluggish demand has met persistent supply growth from the biggest exporters.

The removal of milk quotas and a reduction in sales opportunities because of the Russian import embargo have placed Europe at the centre of the oversupply facing dairy markets.

Although European milk production has not grown as rapidly as some had expected in the postquota period, it has been sufficient to weigh on global markets. Europe’s growth of 1.1% (976 million litres to July 2015) represented roughly half the total increase from the world’s four major exporting regions for that period.

With a weaker currency and mountains of product to sell, European exporters have competed aggressively on price in traditionally Oceaniadominated demand regions such as Southeast Asia.

There has been no wholesale slowdown in production growth in Europe but Oceania is a different story. Australian production is up 3.1% season-to-date, although dry conditions are causing growth to slow.

Of particular note at the regional level, warnings of a sharp contraction in NZ’s milk intakes are beginning to be borne out. September numbers from the Dairy Companies Association of NZ reveal a 7.5% fall, relative to September 2014.

Fonterra has reported a milk flow peak about 4%

lower than last season, with some year-on-year recovery evident during October. High culling partly explains the lower production; the weather during the spring peak has so far been favourable.

A full season decline of up to 10% has been flagged by industry observers; Fonterra is forecasting its own full season intakes will be 5% below last year.

In the US a milk production response is evident also, albeit less dramatic. Growth is at its slowest since December 2013: September output was 0.4% higher than the same time last year (7.5 billion litres), compared to a 1.4% increase year-todate.

Growth has come from a strong domestic market helping to insulate the US dairy industry from global price movements.

This and a stronger US dollar caused exports to fall sharply. But rising global markets have brought domestic and international prices closer together, hence US export offers are increasing.

Consequently, while Oceania supply-side issues are beginning to pressure the prices, this is being mitigated by European and increasingly US competition, with the continuation of northern hemisphere production growth likely to provide some comfort to buyers who don’t specifically require Oceania product.

While prices seem to be finding support at current levels, further short term upside appears limited and a period of range-bound trading around the current level is likely.

Production trends during the southern hemisphere spring peak will help provide further direction, but a supply response in the northern hemisphere and a broader demand recovery are what the market needs.

Expectations are for that to happen mid 2016 at the earliest.

• John Droppert and Amy Bellhouse are Dairy Australia industry analysts. @dairy_news facebook.com/dairynews

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DAIRY NEWS NOVEMBER 10, 2015

24 // MANAGEMENT

Plan to seize power s One of the last stops south for Westland Milk Products tankers on the West Coast is shareholder number 21. This is the farm of Graham and Jenny Berry, a few kilometres from the tourist town of Franz Josef. Reporter Peter Burke met them recently.

UNTIL RECENTLY

Graham Berry, one of Westland Milk’s furthest Southern supplier.

Graham Berry was the furthest southern dairy farm in Westland, but now there is one other supplier down at Fox Glacier.

Their 125 ha farm runs

from the main highway back onto the bush clad and often misty hills of the Westland National Park. Its rugged beauty is in a high rainfall area: up to 5000mm can fall there

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and this naturally brings its own set of challenges which Berry and other farmers deal with daily.

Berry is a born and bred, passionate, proud coaster. He was raised on a sheep and beef farm near Greymouth and learned all about rearing calves and raising bull beef. But when he left school he got a job on a dairy farm and liked it. He tried other things and even went across to Canterbury to try dairy farming on the plains. He also went to Ireland to have a look at farming there but the call of the coast was strong, and about 11 years ago he bought his present farm, in a rundown state.

“When I arrived here the farm was producing 28,000kgMS from 230 cows. I now have 265 cows and last year we produced 101,500kgMS. Currently the stocking rate is 2.2 which fits in with the climate. I had to re-fence all the laneways as trees had fallen on these. I also had to build a new effluent pond, replace water pipes, put in a stand-off pad and upgrade the dairy shed. I also upgraded the houses on the farm to bring them up to a good standard. It was a lot of work but this location is so beautiful it

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Graham Berry’s power station is run by water from a nearby creek.

was worth the effort.”

Berry has worked hard on upgrading his pastures, spreading lime, adding dolomite and putting on ‘spring mixes’ -- a natural fertiliser. His emphasis is on growing clover which means using less nitrogen. He produces baleage on the farm, grows kale for winter feeding and buys in straw. PKE is not used on the farm and he doesn’t like the way the PKE thing is heading. As far as he’s concerned it’s all about a clean green image and PKE doesn’t fit such a regime.

He also believes too much emphasis has been placed on supplements generally, pushed by advisors as a means of increasing production.

“This idea is backfiring. If you feed your cows properly and even drop 10 cows off you do better production. Why not go back to the simplicity and lifestyle because that’s what I want as a farm. I want to be happy and have happy staff, not people working their arses off all day.”

Berry has also placed a lot of emphasis on improving the BW of his herd and owns a top BW cow.

“Cow number one Perivale Waro is in the top 3% in NZ and she normally

DAIRY NEWS NOVEMBER 10, 2015

MANAGEMENT // 25

r saves Coaster from boredom gets embryo transplanted. also noted that a farmer in has to leave 30L/sec in the creek but take can as much Canterbury was running Unfortunately this year of the remaining water as his centre pivot irrigator her daughter died which he wants. off a turbine. was very gutting for me.

“But we are only going Then followed a lot of Until now she has had to take up to 75L/sec, three bull calves in the last investigation and discusthree years. The first one I sion with the Department and in a dry spell we’ll be utilising about 18L which marketed myself and took of Conservation on how him over to Kaiapoi Breed- to get approval and finally is enough to run the farm.”

He has had expert help ing Services and got straws build the turbine power on the project, some off him and they of it pretty useless. have been selling “We’ve had fun and But he got there in them off. This year I games and it’s been the end – building got a live heifer calf a learning curve for an intake, a pipeline from the embryo and a shed to house programme which everyone but I’d be the turbine generwas great.” bored.” ator.

Berry enjoys the – Graham Berry “A local comrelationship with pany bashed up the CRV, especially Phil bush with a digger to make station. Berry says both Beatson their breeding a track a couple of metres he and DOC learned a lot, analyst. wide just to fit a digger His partner Jenny rears especially that there were few protocols for building through. I designed the the calves and runs their a small power station such intake and a mate built holiday house which they it for me. I also designed rent to tourists who enjoy as his. the pipe network which “I was in the middle the country life and can ground. DOC were used to consists of a pipe 250mm chill out and enjoy farm diameter and bigger at the the big mining companies life while only being three end where the water gets and big hydro schemes minutes drive from Franz to the turbine – simple but I was in between all Josef. rules of physics. The turthat. Essentially I talked He employs a herd manager, Danaki Thom, so with DOC for years before bine and all the electrical work comes from China I started building the he can get on with other scheme, so that I could get which has caused a few projects. This passionproblems trying to read my head around the projate coaster has looked the manuals in Mandarin.” ect.” for other challenges and Berry’s had good supThe creek Berry has found one – building his port from the local power tapped into goes underown power station run by company who can see the water from a nearby creek. ground about 400m from benefits and who are benInspired by the rain and the intake so there is no eficiaries of his scheme. mountains and the numer- impact on the environment. One condition of his The small turbine will ous creeks that flow past consent to install the mini produce enough electrichis farm, Berry decided power station is that he to give the idea a go. He ity to run the farm and Herd manager Danaki Thom in the milking shed.

Graham Berry with partner Jenny and her children Abbey and Wiremu.

the remaining 60% will go back into the national grid.

The farm will remain connected to the grid in case he has to shut his system down for maintenance.

“Everyone has been pretty sharp and there is a lot of interest in it because people are asking ‘why don’t we use this water resource more for schemes this size?’ We’ve had fun and games and it’s been a learning curve for everyone but I’d be bored shitless if I didn’t do this job.”

Cows returning to paddock after milking.

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DAIRY NEWS NOVEMBER 10, 2015

26 // MANAGEMENT

Thumb the clumps BRENT BOYCE

PASTURE QUALITY is crucial for profitability, for achieving high milk solids production, cow condition score targets and good in-calf results. But what a pain it has been trying to manage quality during

Brent Boyce

this season of stop-start growth.

Research has long backed the need for quality pasture at every grazing. Lately the Lincoln University Dairy Farm has attained impressive performance by focusing on producing high ME feed for every grazing.

How do we emulate these results on our own farms?

Crucially, aim always to get the cows to graze down to a post grazing residual of 1500-1600kgDM/ha -- the famous 7-8 clicks.

Most importantly, target grazing at the third leaf stage of pasture growth by

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means of correct grazing rotation.

Trouble is many farms don’t have perfect paddocks or a high enough stocking rate to apply enough grazing pressure every day during the critical times of the season.

Also many farms do not have pivot irrigation or they have minimal new pastures; and some farmers lack the time or management skills to achieve the desired post grazing residuals at every single grazing. Mistakes happen.

With the cold winter for many this season, the onset of sudden stem syndrome will come surprisingly early in a lot of regions. Ryegrass stem elongation (with the associated hardened stalky clumps) is appearing now, well in advance of typical seed head emergence.

Average pasture covers are going from rags to riches on my farms and right around the country from all accounts.

This is starting to cause serious grazing management issues.

If too much grass has been left behind, another common option earlier in the season has been to use available dry cows or yearling heifers to clean up. Alas these ‘follow-up’ grazers often don’t take the clumps down. They simply take the grass down between the clumps, further exacerbating the quality issue.

We dearly need those hardened clumps back in the grazing round as they typically grow twice as fast as the rest of the sward.

They will produce lots of available feed in the next round if they can be made palatable again.

Paddocks are being dropped out for supplements and summer/winter cropping, and of course the milking cows are being put back into paddocks wherever practical to clean up high grazing residuals; then, the first thing to ask is “is it achievable?”

Sometimes the pasture quality in that residual may be too far gone (stalky and ungrazeable) and you may achieve very little apart from cows bellowing at the gate and a shock in the vat at the next milking.

Also, consider the cost of time shifting the mob twice, the likelihood that the next designated paddock will now also have a quality problem due to a grazing delay, and the possible issues you may have with lost milk production, increased lameness, reduced cow condition score or reproduction losses due to the likelihood of underfeeding or low quality feed during the clean-up of that paddock.

For many, the problem of these increasing post grazing pasture residuals will need to be dealt with by burning diesel. So, if we are going to burn diesel, what’s the best way to do this?

Be strategic with your mowing: Always let the cows graze it first when you have it right.

If the cows leave clumps that will have a detrimental effect on cow performance – top it.

Top any clumps or high residuals left after grazing. If you can’t mow the paddock, use the cows to clean it up; but expect lower production. Aim for 1500-1600 residuals with the mower.

Mow excess feed in front. That is, feed 200kgDM/ha + more than cow requirements, but only mow in front if you have quality feed down to the 1500-1600 residual.

This can be a useful tool if you don’t have a genuine surplus -- just a couple of paddocks -- or if the silage contractor is delayed.

Note that if there was poor quality, a high residual or weeds on the last round, better to let the cows pick the eyes out of it and top behind. You can then mow in front on the next round if there is excess feed, or simply let the cows graze it.

It is important to remember that clumps left going into summer don’t grow either. They are usually unpalatable and are not eaten by the cows – so top any rubbish pasture going into the dry. It is good practice to get these clumps sorted down to 1500-1600 whenever practical.

• Brent Boyce is FarmWise consultant for Nelson & Marlborough.

DAIRY NEWS NOVEMBER 10, 2015

ANIMAL HEALTH // 27

AI tech still on the job after 56 years FIFTY-SIX YEARS is a long time to stay in one job, especially if you’ve spent much of it working with your hand up a cow’s bum.

At the ‘mature’ age of 80, it’s no surprise Kevin Bell has outlasted the original farmers he worked for at the beginning of his AI career.

The original farmers may have handed over their farms, but Bell is still working – not as fast as he used to, he admits, but who’s timing him?.

Due to turn 81 in January, he trained with the Auckland Herd Improvement Association in 1959 at a freezing works in Auckland, aged 24.

“It was new technology in those days. I had followed a family member up to Waikato from Christchurch to help him on his farm and I’d see this joker driving up and down the road and wonder what he was doing,” he said.

“He told me about artificial breeding and I thought it sounded like a good string to add to my bow, so I did the training and have worked in AI every year since.”

This spring, with failing eyesight and uncertain if he will keep his driver licence, Bell is doing just five herds around Rangiora, where he lives, but

it’s still “a couple of thousand inseminations”.

“In those days, I only used to do ‘spring’ groups, where I was employed eight or nine weeks of the year, but I used to do a spring group in the Waikato and then another group back down here in the South Island, so I would get about 17 weeks of AI out of that every year. I did that for about 10 years.”

At the end of those 10 years, he got a full-time job with the South Island Herd Improvement Association, mainly as an artificial breeding technician servicing the town supply of Christchurch, but he also trained technicians and did a lot of maintenance work for the herd testing department.

“When the Herd Improvement Association was taken over, I decided to go out on my own.”

By that time he was married and living in Rangiora, so he joined Guthrie Breeding Services, which had a bull centre in Kaiapoi, where he worked full-time running his AI business outside work hours, inseminating cattle on the way to and from work.

It sounds like hard work, but Bell says when you enjoy what you do you

don’t work very hard.

And enjoy it he did, carrying on for another 10 or so years until Guthrie Breeding Services was taken over

by Elders and then Ambreed (CRV Ambreed) and eventually Excell Breeding.

Now working for CRV Ambreed and himself, operating under Kevin Bell – Bovine AI Services in the rural area outside Christchurch, he says while a huge amount has changed in the dairy industry in the last 56 years, the method of getting semen into a cow has not.

“They no longer use carbon dioxide to freeze semen; it’s liquid nitrogen now, and instead of storing the product in ampules, we use straws, but other than that, not a lot has changed.”

Through it all Bell says he feels pleased at having done a good job for the farmers he’s worked with.

“I haven’t had too many complaints, it’s all been very enjoyable to me and I’m glad I’ve been able to work so long. It gets me out and about and in touch with the industry and the younger farmers.” @dairy_news facebook.com/dairynews

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Research shows that sub-clinical and clinical mastitis can damage the fertility of dairy cows.

Any type of inflammation in the cow’s body can affect her reproductive system. Inflammation produces chemicals that can affect the release of hormones (required for reproduction) from the cow’s brain, and directly affect the function of the ova-

ries and uterus.

“If a cow gets mastitis before mating, it affects the production of oestradiol (a hormone which allows expression of heat) and therefore the time before mating and calving will be longer than for those cows not affected by mastitis; in fact research has shown a delay of up to 22 days,” says Davis.

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Davis says while problems caused by mastitis were well known including extra labour, discarded milk, reduced milk production in the remaining lactation, cow welfare issues, medication costs, increased culling rates and the risk of antibiotic residues, the effects on fertility are more difficult to see and can occur months later.

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DAIRY NEWS NOVEMBER 10, 2015

28 // ANIMAL HEALTH

Turning down heat in the calf shed GEMMA CHUCK

AS SUMMER

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Consider the impact of heat on calves this summer, says Australian vet Gemma Chuck.

effect of heat stress in our dairy calves.

The effect of heat stress in the milking herd is well known and farmers are using shade and sprinkler systems to reduce the impact on

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milk production.

However, the effect of high ambient temperatures on dairy calves is often not considered.

The ‘normal’ core body temperature of a young calf is 38.6oC (range 38.5– 39.5oC). There is an ambient temperature range at which a calf is comfortable and needs no extra energy to warm or cool its body.

This is the ‘thermoneutral’ zone -- for a new-born dairy calf 10-25oC. This zone changes as a calf grows due to the production of heat from fermentation in the rumen.

For example, the thermoneutral zone for a one month old dairy calf is 0oC to 25oC. Calves tolerate higher ambient temperatures better than adult cows: their larger body surface to live-weight ratio allows better dissipation of heat.

The exact ambient temperature at which calves start to show signs of heat stress is not clearly defined. However, clinical signs arise with higher ambient temperature (outside the thermoneutral zone) and relative humidity and with increased time of exposure.

Ambient temperature greater than 25oC, with relative humidity of ~80%, pose an increased risk of heat stress to young calves.

When high daytime temperatures are followed by cooler nights, calves (and cows) are able to dissipate accumulated body heat. Thus calves are at highest risk of heat stress when there are high ambient temperatures on consecutive days, with no drop in temperature overnight.

Research in North America has shown that calves born in summer have lower daily weight gains than calves born at other times of the year.

This is due to an increased energy demand to maintain body temperature and decreased grain intake during hot weather.

In periods of cold stress, calves older than three weeks will often compensate for the increased energy demand to regulate body tempera-

ture by consuming more starter (grain).

This is not the case for calves enduring heat stress, which will often consume less starter.

Combined with the fact that more energy is directed towards maintaining body temperature through evaporative cooling (sweating and panting), the result is a reduction in average daily weight gain.

Reduced starter intake can slow rumen development, increasing the risk of a slump in growth postweaning.

Additionally, heat stress can also compromise immunity rendering heat-stressed calves more susceptible to disease.

The severity of heat stress will vary depending on the duration, temperature and humidity, however the signs include: ■■ Reluctance to move ■■ Reluctance to lie down ■■ Reduced feed (milk and grain) intake ■■ Increased water consumption ■■ Seeking shade ■■ Standing/splashing water ■■ Increased respiratory rate ■■ Panting/open-mouth breathing There will also be an increase in rectal temperature and if this exceeds 41.5oC, then a calf is at a very high risk of death from heat stroke.

In strategising to manage heat stress, aim to reduce the ambient temperature to within the thermoneutral zone so that calves are utilising less energy to regulate their body temperature.

Shade is essential to help achieve this, along with assessing and modifying shed design to improve ventilation.

Side-wall vents, openpitched roofs and whirlybirds can be utilised in passive ventilation systems. Fans and positive pressure ventilation tubes are not widely used in calf sheds in Australia but have been successful in North America in active ventilation systems.

• Gemma Chuck is a vet with the Vet Group in Victoria, Australia.

DAIRY NEWS NOVEMBER 10, 2015

ANIMAL HEALTH // 29

For hoof health and increased immunity…

A sprinkler controller or timer will use less water and reduce the potential for water to run down on to teats.

PICTURE: COOLINGCOWS.COM.AU

Plan to tackle heat stress, mastitis in Oz Farms expecting this will now be planning to help cows cope with the heat, especially where temperatures and/or humidity can be extreme.

Farmers wanting more information, or to critique their current strategy, can visit Dairy Australia’s Cool Cows website (address below), a resource with lots of information about managing heat stress.

A strategy to deal with heat stress is extremely important. Also, there is commonly an increase in the risk of mastitis under these conditions: each year we see a mastitis outbreak during or immediately after a heat event. Is it possible to reduce that mastitis risk, while still managing heat stress effectively?

The two core principles for reducing the risk of mastitis are: 1) minimise the number of bacteria on the teat surface and 2) maximise and maintain teat end health.

Tight groups of cows milling about and lying shady areas will lead to a lot of faecal contamination there, markedly increasing the risk of contaminating teat skin with dirt and faecal matter.

Naturally shade is going to be essential, but to reduce the level of contamination could you manage the amount of time cows spend in this area, and/or make the area cleaner?

For example, do the cows need to be there overnight? Do they need to be there at times when the heat is not excessive?

Could you clean the area with, say, a grader? Could you position feed and water a little way from the shade so cows will defecate less often in the shade area?

Sprinklers in the dairy yard are an effective, comparatively cheap way to cool cows, but they also increase the risk of wet, dirty teats at cups on.

Could you install a sprinkler controller or timer to cycle them on and off, using less water and reducing the potential for water to run down onto teats?

There are cheap automatic systems with an inbuilt temperature sensor and

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timers that start the sprinkler cycle once the ambient temperature exceeds a preset threshold.

One key opportunity for managing mastitis risk is in dealing with teat contamination when the cows reach the milking platform.

Introducing a wash and dry programme for at least the contaminated teats prior to cups on during these hot days will substantially reduce the number of bacteria on the teat skin and consequently the risk of mastitis infections.

In some herds, pre-milking teat disinfection at this time may help, but only if it is done correctly: use a registered product, get good coverage with the spray, allow 30 seconds contact time to kill the bacteria, then wipe off with a paper towel. Also, this is when post-milking teat disinfection needs to be as good as it can possibly be: all milking staff should aim for 100% coverage of teat skin.

Having sprinklers wetting cows immediately post-milking before teat orifices have closed properly can dramatically increase the risk of new infections: washing off the teat disinfectant and replacing it with contaminated water/dirt is not a good idea. So be very careful with sprinklers immediately after cups off.

Optimising teat end health is more of a medium term factor.

Hopefully liners will have been changed on time (every 2500 cow milkings for rubber liners) and milking machines tested for correct running to help maintain healthy teat condition. If not, the right corrective action taken now could resolve most teat condition issues quickly – in about 3-4 weeks, and there is a lot more summer to come.

Plan your strategy now and get the appropriate advice where necessary; the potential benefits are significant in a hot summer. www.coolcows.com.au • Rod Dyson is principal veterinary consultant and team leader at Dairy Focus, in Tongala, Victoria.

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DAIRY NEWS NOVEMBER 10, 2015

30 // MACHINERY & PRODUCTS

The yellow digger turns 70 MARK DANIEL markd@ruralnews.co.nz

THERE’S NO better recognised brand and trademark than JCB, famous for its bright yellow diggers.

All its 12,000 employees worldwide got a lie-in on Friday October 23, to celebrate the company’s founding on that date in 1945, when Joseph Cyril Bamford (JCB) set up a workshop in a lock-up garage in UIttoxeter, UK, making trailers from wartime scrap metal.

Today the company operates 22 factories – 11 in the UK and others in India, US, Brazil and China, annually generating revenue of around 2.7 billion pounds.

Chairman Sir Anthony Bamford

On the agricultural front, how many farming operations have had their materials handling revolutionised by a JCB Loadall and their transport operations accelerated by the unique Fastrac that still turns in a credible performance in the paddock?

The business remains privately owned by the original family and still works to the ethos of Mr JCB who said “our customers make payday possible and we need to listen to and work with then closely”.

To celebrate the milestone a Platinum Edition 3CX will be built in a limited number of 70, with red buckets, a full white cab and red wheels.

They will give JCB followers something to remember: this look was last seen on the 3CIII in 1979.

marked the milestone: “My first memories of my father were that he was always dreaming up ways of doing things better, as epitomised by the invention of the backhoe loader in 1953, which proved to be a godsend and caused a revolution in the construction industry.”

Today backhoe loaders are part of a product portfolio of at least 300 products produced and sold globally -- over 600,000 backhoes since those early days.

The backhoe range alone runs to 40 different models from the compact 1CX to the mighty 5CX. While the backhoe loader was undoubtedly the building block of the company, diversification over the years saw a move into agriculture, military and industrial products.

JCB recently celebrated its 70th birthday.

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DAIRY NEWS NOVEMBER 10, 2015

MACHINERY & PRODUCTS // 31

Finer chops deliver denser bales MARK DANIEL markd@ruralnews.co.nz

DESIGNED TO clear

large areas quickly by producing dense well-formed bales, the output of MF 2200 series balers looks likely to move up a notch with the new Pro-Cut option, which will deliver a finer, more uniform chop length resulting in denser bales.

From the pick-up, quad augers constantly feed the 650mm diameter Pro-Cut rotor, which spins at 120rpm and utilises 26mm wide fingers laid out in a spiral ‘v’ formation to deliver crop to the knife system. Rotor fingers are a three-piece design with each finger clamping around a central tube and secured by bolts, and offering quick replacement of any damaged items in the event of a foreign object being ingested.

The chopping knives are mounted in two banks fitted in a hydrau-

lic ‘drop down’ magazine which can be easily rolled out to the nearside of the machine for maintenance or repairs. With a knife spacing of 43.5mm, the 80cm chamber carries 17 knives (the 120cm version uses 26) and offers a fine consistent chop. Each 4mm knife has a new serrated edge design said to increase intervals between sharpening and reduce overall power consumption.

Each bank of knives has individual hydraulic control which allows engagement or disengagement of the chopping function and the ability to change chop length. Foreign object protection is achieved by a hydraulic accumulator system that allows knives to fold back if an object is encountered. The system is ISOBUS compatible and utilises the MF C1000 terminal.

With increased densities comes increased loadings, so the driveline is upgraded -- bigger gears,

higher load bearings with heat resistant seals, and a slip clutch assembly that transmits 35% more torque.

MF2200 series balers come with the Pro-Cut option.

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Deere buys gear maker MARK DANIEL markd@ruralnews.co.nz

As a general rule-of-thumb, tractors cost around $1,000 per horsepower unit. A 150hp tractor will set you back somewhere in the vicinity of $150k – give or take.

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Monosem, a designer and maker of precision planting equipment. The purchase includes four factories in France and two in the US. John May, Deere’s president of agricultural solutions and chief information officer, said “with this purchase we will consolidate our… leadership in precision agriculture.

Monosem has shown innovation and success in precision planting technology that is admired worldwide, and the acquisition of a market leader will allow John Deere to serve more customers worldwide.”

Monosem has been family owned by three generations since its foundation in 1948. Deere has no plans to change the independent nature of the business which will continue to operate under its own brands and trademark.

May says acquiring Monosem “will help accelerate John Deere’s market reach in precision planting equipment and add engineering expertise in further developing precision planting solutions”.

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DAIRY NEWS NOVEMBER 10, 2015

32 // MACHINERY & PRODUCTS

Where there’s a will, there’s a weigh MARK DANIEL markd@ruralnews.co.nz

KUHN NZ has announced updates to its electronic weighing and data management systems for Euromix and Profile diet feeders which can be supplied as an option or retro-fitted to existing machines.

The KDW 340 and 360 weighing and feed tracking systems use three load cells mounted at the drawbar and on the main chassis to weigh accurate to

Three load cells accurately weight ingredients.

0.5kg; they can store 200 ingredients or 25 mixes containing eight ingredients each. They can also recalculate each item as the numbers of animals in

a group change or as the load size changes.

Self-contained and powered by a machine mounted ancillary battery, the unit can be used

unhitched from the tractor.

A clear back-lit display of six figures with 43mm high characters makes the unit useable in bright sun or darkness.

Data is easily transferred to a farm office via a standard USB flash drive.

In conjunction with the weighing units, a wireless display unit called KDR 300/400 can be fitted to a loader tractor or telehandler to give the operator accurate information about the load as

Pasture rejuvenation made easy THE INTRODUCTION of low cost machines for pasture renovation have made a difference to farmers wishing to get the most out of their valuable asset, whether sorting out pugging from over-wintering, or reseeding damaged areas.

The technique has caught on over the last few years The Zocon Greenkeeper, built in Holland and recently introduced by machinery specialist Ag Attachments, is available in 6 or 8m versions, with a heavy-duty galvanised frame said to be particularly useful for areas of high rainfall or harsh winters.

The machine can be used to level paddocks -helping to dissipate cow pats and flatten molehills.

The layout sees a front levelling board followed by three banks of 10mm scarifying tines said to be 30% heavier than used by competitors; these are used to comb out dead or matted areas and stimulate new growth.

Above the spring tines is a 300L variable application seeder unit that delivers through 10 diffusers mounted across the width of the machine.

With a choice of 12V electrical or hydraulic drive, and able to deal with a wide range of grass or cereal seeds, the unit is particularly versatile and easy to fill via wide, galvanised steps over the cultivation module.

Hydraulic folding is standard and the rams can be operated in floating or fixed position. www.agattach.co.nz

Accurate information is given to driver as load is being formed.

it is being formed. The units have 90m and 300m ranges, respectively, and the display units have sixdigit 25mm high characters, and can work with up to 12 different feed wagons

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Brian Robertson, Kuhn operations manager, noted “the ability to weigh out precise rations is the key to efficient milk produc-

tion, and the unit’s ability to measure to 0.5kg accuracy and transfer data to dairy professionals such as nutritionists or vets will be incredibly useful.” www.kuhn.co.nz

DAIRY NEWS NOVEMBER 10, 2015

MACHINERY & PRODUCTS // 33

Katana – a cut above the rest MARK DANIEL markd@ruralnews.co.nz

WITH THE recent news

that high-end tractor specialist Fendt intends to go ‘long-line’ by offering a product range of AGCO sourced machines in their familiar green and red – in Europe at this stage anyway – it’s interesting to see upgrades to the Katana 65 self-propelled harvester.

Named for the long, single-edge sword favoured by Japanese samurai, this machine sells in 13 countries and at least 200 have been sold in three years of production.

Now the model is ready for upgrades required by emission regulations and prompted by customer feedback.

Out goes the V8 Mercedes engine to make

way for a MTU in-line straight six (625hp and more torque than the previous unit) redesigned to address power consumption: it has a much larger cooling package that slows air passage. This allows a smaller cooling fan and releases more power to the cutter-head.

Tank capacities have been increased to 1225L of diesel, 205L of AdBlue and 215L of water or silage additive.

More room has been created at the rear for storage, and general access is improved by lighter, LED-lit panels around the machine. Serviceability is better, with three air-line connection points protected by one large centralised air filter.

On the technical front, throughput and yield monitoring can be recorded,

allowing yield maps to be created, with the ability to communicate to the additive dosing system and automatically apply product according to crop

Katana selfpropelled harvester.

yield.

Finally, an upgrade to the tyre package has the machine with rubber up to 900-70R42 sizing. www.fendt.com

ONE INSTEAD

OF THREE!

Flow gives you go GLOCKEMAN PUMPS easily move water where

there is no power or where the need to monitor stationary engines is a headache, because the pumps use water itself to do the job.

Needing only about 0.5m of head, the pump is placed in a stream or river where it collects water through a drive tube and delivers it into the diaphragm chamber, then it exits via an exhaust valve. The water pressure against the valve slams it shut, allowing the pressure in the diaphragm chamber to increase, which distends the diaphragm and moves the piston forward in the piston bore, which forces water through a non-return valve and up the delivery pipe.

At the end of the push stroke, when the energy is spent, pressure drops in the chamber and the exhaust valve springs open, a strong return spring then pushing the diaphragm back to its original position. The piston returning in the bore draws in water via the lower non-return valve and the cycle repeats itself.

Construction of the main housing is cast iron, other components are stainless steel, and the diaphragm is made from tractor inner tube-type material.

Dependent on the amount of head required to push the water to the storage tank a range of interchangeable piston tubes are available, the narrowest delivering up to 200m head. The product is low tech, has few moving parts and notably has no metal-to-metal contact areas so is said to have a long service life with piston cups achieving 6-9 months use and diaphragms lasting 1-2 years before servicing is required. – Mark Daniel www.eacs.co.nz

TOW AND FERT DOES THE JOB OF 3+ MACHINES: - ATV Duster - Boom Sprayer - Fert Spreader - Seed Broadcaster The Tow and Fert is a versatile machine that can dissolve urea in cold water combined with selective weed spray in one pass.

Apply mag-oxide evenly with no waste resulting in no under-dosing or over-dosing of your cows during the spring.

Easily oversow pastures with seed at the same time as a nitrogen application.

TF TOW AND FARM by metalform

0508 747 040 Call us for your FREE demo now: WWW.TOWANDFARM.CO.NZ

DAIRY NEWS NOVEMBER 10, 2015

34 // MACHINERY & PRODUCTS

Self-propelled foragers will soon land in a paddock near you MARK DANIEL markd@ruralnews.co.nz

WITH THE end of 2015 in sight, New Holland has recently released details of the FR range of self-propelled foragers for 2016.

Five models (FR 480, FR 550, FR 650, FR 780 and FR 850), all leviathans of harvesting, deliver 470, 544, 653, 775 and 824hp respectively.

Power comes from FPT Industrial engines that

meet Tier4B emission regulations: the four smaller machines run Cursor 13 or 16 engines, the flagship FR850 sticks with the massive 20.1L Vector.

With a combination of AdBlue / DEF and DOC to deal with emissions, the 2016 set-up is said to use around 13% less fuel than the previous Tier 3 versions, while maintaining the same length of cut.

As part of the 2016 upgrades all models are now fitted with

ECO mode which reduces fuel consumption when the engine cannot be fully loaded, with the engine management system controlling engine speed to suit the job at hand. There is also an option of the NH Powercruise system which monitors power use and can adapt forward speeds

achieve the highest work rate in variable conditions. The package is further enhanced by larger fuel and DEF tanks to enable longer intervals between refills.

All models will come with fuel saving technology.

to

At the front end, HN claims to have the largest feed channel in the industry -- a 750mm wide feed roll unit delivering to a chopping cylinder with a chevron knife layout. A

A new cabin gives 360 degree views.

choice of 2 x 8, 2 x 10 or 2 x 12 knives give a range of chop lengths of 6-33mm, 5-27 mm or 4-22 mm respectively.

An added bonus is the NH Hydroloc system

EFFLUENT SEPARATORS If you are in the shit we can help you.

We’ve been supplying these systems around New Zealand for over 14 years and they’re still going strong.

• Meat works • Truck wash stations • Dairy farms • Pig farmers

with on-the-go adjustment of chop length as conditions dictate. This system can be used to combine with the optional NH Activeloc system which monitors information from moisture and yield sensors to adjust length of cut automatically, based on moisture content, with the ability to adjust by up to 5mm over a 5% moisture change.

At the delivery end, 2016 sees a new spout layout with full length, replaceable side and top liners, a hard faced flipper at the spout’s end and a larger flipper control ram.

At the base of the spout an improved lubrication system fends off wear and tear, and the optional NH Intellifill will fill trucks or

trailers automatically in all conditions.

The operator is not forgotten either: a new cabin gives 360 degree views, notably an exceptional, uncluttered view of the header and spout areas.

A deluxe air suspension seat has auto weight adjustment, variable shock absorption adjustments to suit all shapes and sizes An optional leather luxury seat can be specified in the three larger models. A slim double jointed steering column, and the CommandGrip control lever combine to offer fingertip control, and the Intelliview display screens monitors all machine functions. www.newholland.co.nz

8 models from 15 kVa to 115 kVa

$28,500

excludes freight, installation & gst

INNOVATIVE AGRICULTURE EQUIPMENT www.pppindustries.co.nz / sales@pppindustries.co.nz / 0800 901 902 CONTACT US TODAY!

06 759 8402 | sales@agriquip.co.nz | www.agriquip.co.nz

The NexT GeNeraTioN of farm DeTerGeNTs has arriveD. easy To Use, easier oN The eNviroNmeNT.

at ecolab we’ve been taking another big step to reduce our environmental footprint.

In addition to Optimum2, Optimum we have added Aquaklenz HV Concentrate at a low 0.5mls per litre*. All concentrates are now available in 200 litre MEGA packs equivalent of up to 400-600 litres of traditional formulations. Making them easier to handle, easier to store, and reducing the environmental footprint.

Contact one of our 27 Ecolab Territory Managers to find out more about the new concentrated products and a new wash programme.

We work harder so you can work smarter.

NorTh islaND 0508 732 733 | soUTh islaND 0508 737 343 | WWW.ecolab.com *On good water conditions

A complete service for all your dairy water and irrigation needs.

Contact PGG Wrightson Water today.

With more than 40 years in the design, construction and maintenance of irrigation systems, PGG Wrightson Water are leaders in the design and installation of ‘turnkey’ irrigation and pumping solutions for agricultural, horticultural, commercial and residential customers.

Auckland 2/4 Sultan St Ellerslie Ph 09 582 0570

Hastings 1203 Omahu Road Ph 06 873 9230

Kaiapoi 530 Mill Road Ohoka Ph 03 311 8505

Christchurch 44 Mandeville St Riccarton Ph 03 968 3220

Freephone 0800 864 774 www.pggwrightson.co.nz

Ashburton 447 West Street Ph 03 307 8590

Timaru 7 Eversley Street Ph 03 684 2440

Cromwell 16 Pinot Noir Drive Ph 03 445 0467

Helping grow the country