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22 Jan 2018

MPI says disease is contained

Despite the growing number of properties testing positive for the cattle disease Mycoplasma bovis the Ministry for Primary Industries (MPI) remains adamant it has the disease contained.

MPI on Wednesday confirmed three new infected properties, two in Southland and one at Ashburton, bringing the total number of properties testing positive to 17, including one in Hawke’s Bay.

The number of restricted place notice properties is 34 and the number of properties for casing is 206.

MPI incident controller David Yard said he still expects more properties to become positive as the tracing and testing programmes ramp up.

“From one Ashburton farm alone we anticipate tracing some 30 additional properties,” Yard said.

All three of the latest properties were closely connected with previously infected properties and were identified through tracing of animal movements.

Because of the increasing number of infected properties MPI would now be publicly notifying infected properties only when there were significant developments such as a positive property in a new region, Yard said.

MPI would continue to update figures on its website and in weekly stakeholder updates.

“When any properties go positive we strongly encourage the owners to notify their neighbours.

“These properties are very obvious to locals as legal restricted place notice (RPN) signs are placed on the entrance.

“Any risk from these properties is mitigated by the RPN they are served with under the Biosecurity Act and this essentially places the property in quarantine lock down.”

Yard said MPI continues to work on the assumption the disease entered New Zealand reasonably recently.

“We are tracing properties from the original cluster (van Leeuwen Group) as well as performing more general surveillance.

“Based on analysis of the likely entry onto the first infected properties we have performed forward and backward tracing of properties which have sold to and/or received animals from the initial infected properties.

“As we find more IPs, we perform the same analysis using NAIT and personal interviews to locate properties sending to or receiving animals from the new IP within the past six to 12 months at the discretion of our tracing team.

“With ongoing developments, including the detection of new infected properties, decisions on future management are currently dependent on the assessment of the emerging picture.”

That included the culling of infected herds.

“The controls in place are adequate until the situation is more clearly understood,” Yard said.

While MPI would now roll out national bulk milk testing in February, six months on from the start of the response, it remained confident its surveillance and testing approach had been appropriate from the start.

“At the outset of the response it (bulk milk testing) was considered secondary in importance to tracing and checking out from the known infected farms, which was the primary goal of the first months of the response.”

In defence of the van Leeuwen Group’s challenge to the MPI claim all infected properties linked back to their initial source, Yard said as the web of infected properties continued to be traced and the understanding of the connections between farms evolved, there were animal movements substantiating MPI’s claim

However, he acknowledged that could change.

“The web of connections between farms in NZ is very complex, therefore, as new connections become clear, our understanding of the situation may change,” he said.

MPI continued to believe it had the disease contained.

“We do not believe the recent positive finds are new spread, rather they are the result of arduous tracing activities which have uncovered animals previously infected by movements from known infected places,” Yard said.

22 Jan 2018

Fonterra sells fresh milk in China

Fonterra China has launched daily fresh milk through a new retailer at the premium end of the Shanghai market, at a price equivalent to more than $5/litre.

The milk is from Fonterra’s dairy farms in Hebei province and bottled in a New Hope plant in Hangzhou. It will sell for 19.5 renminbi for 750ml.

The retailer was Hema Fresh, a subsidiary of Alibaba, with its 14 stores in Shanghai and Suzhou.

Customers will be able to shop in-store using their mobile phones to browse and purchase or order online for a 30-minute delivery within a 3km radius.

Hema used the wealth of data it gathered to provide a tailored, personalised shopping experience for each customer.

Anchor UHT milk products and the Anchor Dairy Foods range of butter, cream and cheese items were also sold through Hema, Fonterra’s Greater China president Christine Zhu said.

The full strength fresh milk sold through Hema would be innovatively packaged with labels to match each day of the week to emphasise freshness, with stock being replenished overnight ready for each new day.

A Fonterra spokesperson said it was believed to be a first in fresh milk retailing around the world.

The labels would contain the Anchor symbol but no Fonterra or New Zealand identity.

Zhu said the new product range was aimed at the premiumisation of China’s consumer categories.

According to figures from McKinsey it is expected more than 75% of China’s urban consumers will earn RMB 60,000 to 229,000 (NZ$13,000 to $49,000) a year by 2022.

That would be up from just 4% in the year 2000, prompting a marked shift in consumer behaviour and buying power.

“No other multinational dairy company in China has a local milk pool to draw from so we are in an advantageous position,” Zhu said.

“This milestone with Hema is a sign of things to come and indicates that our push to shift more of our local milk into higher-yielding consumer and food service products is well and truly under way.”

12 Jan 2018

GDT lift boosts milk price forecast

A useful lift in whole milk powder prices from the latest GlobalDairyTrade auction has underpinned the New Zealand forecast farmgate milk price at $6.40/kg milksolids.

Whole milk powder (WMP) prices rose 4.2%, the biggest percentage rise since April.

Some increases for longer delivery periods (May and June) were up 5%, including a mark of US$3000/tonnes for Fonterra’s instant WMP.

The effects on milk production from lack of rain in major dairying regions had forced Fonterra to revise its seasonal collection expectation to 1480 million kg of milksolids (MS), and reduce the volumes of WMP offered on its GDT platform.

“Dry conditions are expected to continue, and even if the rain forecast early in 2018 eventuates, it will not be enough to bring production back to previously anticipated levels,” Fonterra said in a statement on December 29.

Despite rising milk production in Europe and the United States, and because NZ supplied more than half of world-traded WMP, the revised NZ production forecast boosted a flagging market.

Fonterra said it now expected the negative effect of weather conditions to result in 4% less milk this season, compared with the previous season.

Since the recent peak season of 1614m kg MS in 2014-15 Fonterra suffered three consecutive seasonal falls in milk collection, totalling 8.3%.

As a result it now had about 15% processing overcapacity at peak because it built more plants to cope with what was expected to be growing milk production, and its legislative obligation to process all milk that farmers produce.

Fonterra said better dairy product optimisation for added-value was the plus-side of overcapacity, but there must also be maintenance costs and capital expenditure loan interest payments.

The AgriHQ milk price forecast rose one cent to $6.10 after the auction, but movements in futures prices were mixed. They lifted a little for WMP but eased for skim milk powder, anhydrous milkfat and butter futures.

The AgriHQ snapshot price, based solely on the January 2 GDT results, lifted 6c to $5.71.

Senior AgriHQ dairy analyst Susan Kilsby said the lift in commodity prices at the first 2018 GDT was partly offset by a rise in the NZ dollar, now US71c.

“Our revised forecast at $6.10 remains well-shy of Fonterra’s $6.40, but the likelihood of reaching this forecast has improved given that WMP prices are tracking higher again.”

Demand for WMP remained steady, as China continued to use imported powder to make up the shortfall in its domestic milk production.

12 Jan 2018

Mycoplasma bovis on Ashburton farm

The bacterial cattle disease Mycoplasma bovis has been found on a farm in the Ashburton area.

Ministry for Primary Industries response incident controller David Yard said milk sampling done just before Christmas revealed a suspected positive result and MPI’s Animal Health Laboratory testing had just confirmed it.

“The affected farm and an associated property have been under controls since Christmas Eve as a precautionary measure.

“No animals or other risk goods such as used farm equipment have been allowed on or off the property during this time and these controls stand,” Yard said.

There has been no sign of any illness in any of the about 600 animals on the property.

Yard said MPI is now tracing animal movements on and off the farm to determine if there are links to other affected properties.

It will now check and test some 30 other farms that have had some association with the new affected property.

“Farmers in the area who have had some connection with the affected property will be contacted and those who do not hear from us in the next couple of weeks should consider they are under no increased risk from this most recent detection.

“However, if they have concerns or questions they can contact us on 0800 00 83 33 or by emailing”

MPI was also continuing tests on another Ashburton area farm that had previously returned inconclusive results. As yet, that farm is not regarded as positive though it is under controls just in case.

Planning was under way for two public meetings in Methven and Ashburton on Thursday January 11 to outline the situation.

The number of infected properties now stands at 14 – nine in South Canterbury, three in Southland, one at Ashburton and one in Hawke’s Bay.

12 Jan 2018

Westland completes its revamp

Westland Milk Products has made its final appointment to the team that will drive the company into the future.


Chief executive Toni Brendish has appointed Jeffrey Goodwin as sales general manager, the final position in her overhaul of the dairy co-operative’s executive leadership team.

Goodwin joins the Hokitika-based milk processor from his role as global operations vice president of James Farrell and Co, which represents United States manufacturers in the export of their ingredients and finished goods.

Brendish said Goodwin’s experience in food and ingredients sales was global in scale with a record of success in southeast Asia, Japan, China and the United States.

“He has a proven ability to grow sales, develop new markets and establish key business relationships.

“His experience is in keeping with Westland’s strategy to differentiate the company and products and form partnerships with key companies that can give Westland penetration into high-value market niches,” Brendish said.

“Using this new strategy we expect to be announcing some significant new deals this year and we’ll be looking to Jeffrey to identify, capture and deliver on more of these types of sales,” she said.

Since she joined Westland in 2016 Brendish has completely overhauled the dairy co-operative’s leadership team, bringing in a new chief financial officer, chief operations officer and Shanghai general manager.

She also elevated people and safety (human resources) to the executive leadership team and retained long-serving company secretary Mark Lockington.

“This is the team that will drive Westland forward,” Brendish said.

“We’ve already introduced efficiencies right across the board that are delivering more than $70 million in savings, giving us the confidence to predict a competitive payout to shareholders for this season with very real prospects of sustaining that sort of return well into the future.”

Westland fell behind its competitors in 2016-17 when it made a $17m loss and its payout, at $5.18, was the lowest of all the Kiwi dairy companies.

Under Brendish’s revitalisation and in just 18 months the co-operative was clearly closing the gap.

With an accomplished career with French food group Danone, Brendish was brought in as chief executive in September 2016.

At a special shareholders meeting in October far-reaching changes were introduced including a reduction of the number of directors from 11 to eight.

From the beginning Brendish said she didn’t have a problem with the company’s direction – for her, it was more about focus on execution or the lack of it.

She put an intense emphasis on cost-cutting and on growing revenue while continuing with the overall strategy of diversification that was in place before she arrived.

Her aim was to get people focused on the things that would drive revenue and cut costs.

That meant focusing on economies such as cutting photocopying costs through to treasury management and transport tendering.

The goal was to provide $78m of revenue upside and cost savings and at $77m that target was well on track and fast closing the gap with its competitors.

Westland has a forecast payout range of $6.40 to $6.80/kg for 2017-18.

While the company had signalled it would probably be at the lower end of that range it is looking significantly better than last year’s, which was well over a dollar short of Fonterra.

Westland’s forecast is within striking distance of Fonterra, which is for a milk price of $6.40/kg, topped with a likely dividend of about 28 cents a share.

The company’s UHT plant at Rolleston was now running at 50% capacity.

In infant formula Westland had expanded its customer base and its nutritionals plant was running at two-thirds capacity, which was adding significant value in terms of payout.

Westland had more fingers in different pies including making infant formula with joint venture partner China-based Taiwanese Ausnutria under the brand name Puredo.

Skim milk powder, once the mainstay of the business, had become less important but could still be funnelled into nutritionals products if need be.

It expected to produce about 130,000 tonnes of products this year – about 20% of that would be in nutritionals or infant formula and a third in butter and fats.

12 Jan 2018

Fonterra’s rules upset dying farmer

Terminally ill Northland farmer Ian Lupton has accused Fonterra of non-compassionate and inflexible enforcement of the share standard, resulting in his debt to the dairy co-operative exceeding $50,000.

Lupton, a dairy farmer and sole New Zealand breeder of the Fleckvieh European dairy-beef cattle breed, has told the media of his circumstances and waived his right to privacy.

The Fonterra share compliance department responded and the Northland regional and area managers have visited him.

They said Lupton’s options were to cease supply immediately on compassionate grounds or share up via Enforced Compliance Trading (ECT).

Because of what he said were payouts below the cost of production over two years, Lupton last season opted to feed more calves with milk and advise Fonterra with a Material Change Application that he would supply just 10,000kg milksolids compared with 45000kg and 49,000kg in the previous two seasons.

He said the dual-purpose nature of the Fleckviehs enabled him to swing between milk and beef production and feed more milk to male calves.

But he sent in nearly 33,000kg.

This season Fonterra applied a modified three-year supply average calculation, giving Lupton some latitude.

It notified Lupton he needed 25,299 shares this season and therefore had to buy 8177 shares before the ECT deadline of January 12.

Lupton refused to share up and pay the $50,000-plus expense, saying his circumstances had changed and his priority now was to pay his mortgage and keep farm expenses to a minimum.

The Lupton family had employed a dairy worker to operate the Dargaville farm in Ian’s illness.

In addition, he was in hospital for treatment for leukaemia throughout December and not able to raise money for a share purchase.

Fonterra said it could not make exceptions to the share standard for suppliers with unusual circumstances, such as illness or financial stress.

To do so would transgress the constitution and the rules that every shareholder in the co-operative signed up to.

It might be possible to agree to an early cessation of supply on compassionate grounds but Lupton said that was no option for the family financially.

In communications with Fonterra, Lupton quoted the co-operative values of honesty, openness, social responsibility and caring for others.

“We have a responsibility to all other shareholders to enforce the share standard so that all shareholders are treated equally,” general manager of share compliance Christine Burr said.

ECT consisted of Craigs’ brokers buying shares in the NZX-run market on behalf of the farmer, then adding an administration fee of 0.65% and a fixed fee of $150.

The cost was to be reimbursed from the January (paid February) milk statement and any subsequent statements as necessary, while incurring 12.8% interest on the debt balance.

Burr said all shareholders were advised of their shareholding requirement in early June and had until December 1 to meet that standard.

Those who didn’t were given a “final opportunity to comply” letter.

12 Jan 2018

Farmers make tracing stock hard

Eradication of Mycoplasma bovis is still the Ministry for Primary Industry’s goal but farmers appear unconvinced it is achievable.

Another case confirmed on an Ashburton farm this week took the total to 14 but some of the more than 800 farmers who attended packed meetings with MPI officials in Methven and Ashburton last Thursday think that while admirable, eradication is unlikely and they might have to learn to live with the disease.

The ministry’s response incident controller David Yard announced plans to test three samples of milk from every dairy farm in the country from February, including milk entering the food chain as well as milk excluded from the vat in a bid to uncover any infection clusters.

One sample will be taken as part of regular bulk milk collection and farmers will be required to provide two samples from discarded milk. Yard said that would equate to about 36,000 samples nationally.

“Mycoplasma bovis is more easily identified in milk taken from otherwise sick animals, which makes testing of the discard milk a valuable surveillance tool,” Yard said.

Mid Canterbury dairy farmer Will Grayling was one of nearly 500 who attended the Ashburton meeting and he said while officials were determined to eradicate Mycoplasma bovis the feeling at the meeting was that would be a challenge.

But the experts must have concluded it was still achievable.

“They are the ones in the know so you have got to take their word for it.”

Grayling said those attending the Ashburton meeting were keen to listen but officials made farmers aware of the importance of recording stock movements, something many had not done and which had made tracking the disease more difficult.

“There was no shirking of responsibility but we have never had the need to have done this before but it has become apparent that we need to up our game.”

Farmer Willy Leferink said many at the Methven meeting questioned whether eradication was possible given the difficulties identifying and dealing with the disease and with new outbreaks well away from the source.

Leferink said MPI officials were told restrictions were disrupting normal business such as livestock trade and farm purchases.

“There are wider implications than the disease itself and the eradication of it.”

Leferink said there was also growing frustration among farmers that infected properties were not being identified, not to incriminate those farmers, but to offer support.

Infected farms and those farming adjacent properties were being ostracised and abandoned without any help from the local community because their plight was not known, Leferink said.

Farmers were also told sales of milk to calf rearers and calves drinking infected milk then being sold could spread the disease but fertiliser spreaders and contractors were a low risk.

The latest outbreak near Ashburton was different to the case MPI said it was investigating before Christmas with the infection discovered from bulk testing of milk samples and confirmed with blood and antibody tests.

MPI could not yet confirm if it was linked to the van Leeuwen property in South Canterbury where Mycoplasma was first detected.

MPI was tracing animal movements between the farm and other infected properties, which potentially could be an association to 30 other farms.

The goal of eradicating Mycoplasma was based on a recommendation from an international panel of experts convened to provide advice on the New Zealand outbreak, which concluded eradication was feasible and the right course of action.

“It is a huge benchmark to achieve but our aim at the present time.”

The 14 infected farms were nine in South Canterbury, three in Southland, one at Ashburton and one in Hawke’s Bay but the meetings were told more cases were being found because MPI was looking for them.

Yard said tracing stock movement had been an uphill battle because of incomplete records being kept by farmers who were not complying with the National Animal Identification and Tracing programme (NAIT).

“We are finding many are not NAIT-compliant which is making it 10 times harder for us.”

He urged farmers to practice onfarm biosecurity to reduce the risk of the infection spreading, such using fencing to stop from cattle being in contact with other herds over a boundary fence.

Yard estimated 65,000 blood, milk and swab tests had been done so far to track the outbreak and a team of up to 200 people were working on it..

03 Jan 2018

Lower supply outlook boosts dairy prices

Dairy product prices rose at the Global Dairy Trade auction, as whole milk powder increased on the outlook for reduced supply from Fonterra, the world’s top dairy exporter.

The GDT price index rose 2.2% from the previous auction two weeks ago to US$3124. Some 25,400 tonnes of product was sold, down from 29,592 tonnes two weeks ago.

Whole milk powder rallied 4.2% to US$2886 a tonne.

“Last week Fonterra announced that it now expects its milk intakes for the 2017-18 season to be about 4% lower than last season as dry conditions limit pasture production,” Amy Castleton, AgriHQ dairy analyst, said in a note. “It also advised that it had started to reduce the volume of whole milk powder (WMP) available on the GDT platform in response to the lower outlook for its milk supply.”

“The reduction in the volume of WMP available at this auction and subsequent GDT events led the market to believe a substantial lift in price would occur,” Castleton said, adding that the NZX Dairy Derivatives market had closed for the New Year holiday period before Fonterra advised the cut in its milk production forecast.

“The direction of the price movement was aligned with market expectations although the lift in the price of regular grade WMP for March delivery of 3.5% was well below the 6% anticipated by NZX Dairy Derivatives market participants,” according to Castleton.

At the latest GDT auction, skim milk powder gained 1.6% to US$1699 a tonne, while butter rose 0.6% to US$4501 a tonne.

Meanwhile, butter milk powder dropped 7.3% to US$1866 a tonne, while cheddar declined 2.1% to US$3317 a tonne.

Rennet casein fell 1.1% to US$4419 a tonne, while anhydrous milk fat slipped 0.2% to US$6405 a tonne.

No prices were available for lactose.

The New Zealand dollar last traded at 71.08 US cents as of 12.46pm in New York, compared with 71.05 US cents at the previous close in Wellington.

There were 112 winning bidders out of 158 participating at the 16-round auction. The number of qualified bidders rose to 516, up from 509 at the previous auction.

03 Jan 2018

Farm system study reveals benefits

Research into innovative dairy farms reveal milk production up to 25% more per cow at lower stocking rates can be achieved with lower carbon emissions and environmental effects.

Two years ago the Ministry for Primary Industries initiated the Farm Systems Change project, effectively using a triple bottom-line measurement of farm performance: environmental sustainability, animal welfare, and efficiency and profitability.

MPI senior analyst of sector policy, Jane Davidson, said external consultants had studied the records of 17 farms over five years and determined that while differing geographically and in farming systems used, there were similarities that enabled above-average performance.

“It primarily comes down to how efficiently they convert feed into milk, that the cows are looked after, they are well-fed, fit and healthy, and this was achieved across a range of dairy systems,” she said.

Farm systems were constantly evolving, and the MPI-funded study revealed some farmers were implementing sustainable farm practices that enabled them to achieve productivity increases within natural resource limits, often reducing the farm’s environmental footprint while maintaining financial performance and enhancing the resilience of the business.

Davidson said there were some common elements across the farms studied:

• the farmers paid attention to detail and were skilled at managing a whole-of-system approach while understanding the effect of changes to that system

• they understood and managed the relationship between feed efficiency, cow welfare and environment (feed waste was minimised by matching quality and supply to cows on a daily basis)

• the environment was integrated into farm management rather than seen as a compliance obligation, and

• farmers also made extensive use of advisers that they used as a team, again reflecting the whole-of-system approach.

Davidson said these farmers were hungry for information and to find ways to improve their business, and were constantly planning what changes to adopt next.

This focus resulted in farmers achieving up to 25% more milksolids per cow at lower stocking rates and with greater pasture utilisation than the industry norm, what she described as a significant result.

“That has potentially positive environmental outcomes, but that’s the sort of thinking that we want to test and refine.

“We think what we have got here is encouraging for the industry, but we want to test and refine these ideas with the industry.”

Two more farms would be studied, and then researchers would seek to understand what made these farmers successful and encourage that knowledge to be shared so others could improve profitability, reduce their environmental impact and be less exposed to milk price volatility.

“We want to share these examples, and the principles and learnings they highlight with the industry as a catalyst for a sector-wide conversation, highlighting the possibilities and potential opportunities for the industry,” Davidson said.

DairyNZ has been aware of the MPI-funded study and has participated.

03 Jan 2018

Decoding milk’s brain food power

The New Zealand pastoral sector is looking furtively over its shoulder at the threat posed by non-animal protein sources synthetic and plant-based milk and meat.

But the dairy sector was also gearing itself up to respond by gaining a better understanding of what makes milk such a valuable nutrient source, through the Smarter Lives: New opportunities for dairy products in the lifespan research project.

Fonterra was on board with the scientists as a commercial partner and research horsepower was boosted from the Riddet Institute, Auckland University’s Centre for Brain Research, Flinders University, University College Cork and Illinois University.

The researchers were looking forward to unravelling the most critical food source required by mammals.

“As a food source milk is unusual in terms of the role it plays, initially in infant protection and growth then through early brain, tissue and bone development, in fact, almost every aspect of early growth.

“And we are only now starting to understand the role it can potentially play at the other end of life in maintaining cognitive function and health,” AgResearch science group leader Dr Jolon Dyer said.

Researchers were starting from some earlier work that indicated milk’s components played a key role in helping with brain development and might play a role in being key ingredients in smart food products of the future.

Dyer was coy on what exactly the components were, with a longer-term research goal being to take the identified components, once their value had been proved scientifically, and apply them to commercial products.

In a world where the proportion of people aged over 60 was going to increase by 56% from 900 million to more than 1.4 billion in 2030 and outnumbering children aged 0-9 by 100m, milk components were going to play a role far beyond infant nurturing.

“As we get older we experience a decrease in cognitive function and it is thought milk has the potential to play a role in mitigating that.”

A key part of the researchers’ focus included the gut-brain axis, a relatively recent link discovered by researchers.

That new area of research discovered the gut contained neurons similar to those in the brain and through them there was communication linking emotional and cognitive centres of the brain with intestinal function.

Research in the area showed noticeable improvements in the ability of rats to cope with stressful activity when their gut was supplemented by specific microbiota.

Changes in the composition of gut microflora caused by drugs, disease and diet could correlate with changes in the brain’s protein levels and overall performance.

The researchers’ horsepower included science leader Dr Nicole Roy of AgResearch leading a multi-disciplinary team including AgResearch, the Riddet Institute, Plant & Food Research and the University of Auckland covering complementary expertise in food components, auto-immune diseases and gut health.

“Roy is regarded as a world leader in the area of gut health research, researching factors which affect nutrient gene interactions and food-host interactions,” Dyer said.

The brain-gut connection was often better understood by Asian consumers, with a culture used to linking mindfulness and mental wellness through foods and herbal remedies.

“They have this understanding of the value of functional foods, including, for example, wide acceptance of probiotics.”

However, that understanding was now also growing rapidly in Western markets as consumers better understood the effects of processed food consumption and sought purer foods delivering specific wellness outcomes.

“This work will be stepping beyond milk’s known nutritive benefits to provide scientifically validated research about its effect on the brain.”

Dyer said there was also a greater understanding about products like milk delivering their benefits as a more natural whole package rather than in component parts.

With global fresh milk consumption on the slide and alternative milk proteins raucously claiming their position in supermarket chillers, he also hoped the research would provide a powerful counter to the arguments those products made about benefits.

“Most foods were not designed specifically to have an impact on human brain development and maintenance, unlike milk, which we hypothesise, does have this specific function for the infant.”

Dyer saw the work typifying a new path of research in the NZ food sector to more premium, value-added outcomes that developed high-value, specific ingredients for use across a range of products.

“It is a very exciting area for researchers to be involved in, stepping well beyond the established work on milk’s nutritional value and into this new area that sees it become a truly functional food.”