AGRIBUSINESS
MANAGEMENT
Wine exports on track to hit $2 billion by the end of 2020. PAGE 29
Don’t start spray programmes too early advise FAR. PAGE 34
NUTRIENTS Various sectors must overcome differences to develop common principles.
RURALNEWS
PAGE 16
TO ALL FARMERS, FOR ALL FARMERS
SEPTEMBER 2, 2014: ISSUE 568
www.ruralnews.co.nz
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FONTERRA EXPECTS dairy prices to rise during the season but advises caution amid very high volatility, says chairman John Wilson. Fonterra held its forecast farmgate milk price at $6/kgMS for the 2014-15 season, which has just kicked off. With a dividend of 20-25c, the forecast cash payout for the year is $6.20-6.25. “We’re cautioning our farmers in their business planning and budgeting that this is a risk around this number,”
Wilson told a media briefing last week. But Wilson later told Rural News the cooperative expects prices to rise during the season. It is watching this carefully and will update farmers as its gets more information. “But please be very cautious, manage your business prudently,” he urges. “We’re obviously seeing global dairy trade drop significantly but we’ve seen the currency come back which is good. “We’re three and half weeks into the financial year. Looking at global analysis [by our peers] and ourselves, it is our view that prices will come up during
the season. “This [price] point now is the result of very high prices about six months ago and the reality of those high prices is that farmers around the world have increased their milk production.” With very high $4500-5000/t powder prices earlier this year demand fell off in some consumer categories in some emerging markets. Customers and other global cooperatives have seen that as well. “We now expect with prices coming back we will start to see demand increase at the consumer shelf.
No flash in the pan
“So the fundamentals we still see are strong, but we undoubtedly have significant volatility at the moment. You’ve seen prices come from $4500 to $5000/t as recently as 10-11 months ago to where they are today at $2800/t. “Our management team is doing a lot of work to formulate a view going forward on the information we have and it’s not just about where prices are today.” Production has kicked off well around the middle of the country, with Northland and Southland facing some challenges, but it is very early in the season. The next forecast will be at the end of September when Fonterra will also announce its final milk price for 2013-14. – Fonterra’s Chinese move page 4
GUY GETS HIS GREENS Primary Industries Minister Nathan Guy was one of many people thanked for helping commercial vegetable growers in Manawatu, Horowhenua and Tararua districts. He got his thank you in the form of a box of produce, dished out by George Sue, secretary of the Tararua Growers Association. Guy said the area covered by Horizons Regional Council has huge potential and could double its value of primary exports from the present $1.9 billion to $3.8 billion by 2020. A government study to see how this can be done is being planned. Guy told the growers horticulture offers good opportunities in the region, as do sheep and beef.
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GOOD PRICES for lamb and beef are not a flash in the pan and should hold for the medium-long term, says Rabobank. Hamish Midgley, national manager food and agribusiness, told Rural News it’s been a good year for the sector with none of the wild price swings of past years. The steady increase in price throughout the year have been “fantastic”. “We are confident there is a reasonable medium long-term shift in the market. The reason is demand for beef in the US is high at the moment, but the herd there is at a 60-year low so they are going through a rebuild. “Obviously that rebuild will take a number of years to come to fruition, so we expect to see good demand there from the beef side.” The bank also expects good demand for sheep because China is taking 44% of NZ’s lamb and mutton. “You also see increasing demand from Europe, so we’re expecting reasonable prices for sheep and beef for the next two-three years.” Midgley says all indicators point to more lambs this season. Higher scanning percentages and weather, so far, favour a higher lamb drop than last year. Lower ewe numbers may prompt some farmers to hold some better ewe lambs to rebuild their flocks. TO PAGE 3
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