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14 Feb 2018

Farmers fear banks’ tough line

Banks are believed to be taking an increasingly harder look at their farming clients’ debt and equity positions fuelling concerns that some dairy farmers won’t be able to enter the coming season without their backing.

There has been one receivership sale in Northland and a number of other property owners are working through their financial situation with their banks, Northland Rural Support Trust co-ordinator Julie Jonker said.

At least five operations were in that position.

They tended to be dairy farms and on Northland’s west coast, despite a good growing season throughout the region with plentiful summer rain.

“Their financially strained circumstances have been exacerbated by the two years of low dairy payouts,” she said.

In some instances farmers bought land 10 years ago at the peak of the market. While they had so far been able to keep up with interest payments, equity in their properties had dropped.

With one sharemilking client the bank involved withdrew its support even though they had done everything asked of them, she said.

“And there’s more than one in that situation.”

In other cases permission from banks to spend money on what their clients felt was essential farming outgoings had been denied.

“One bank wouldn’t support their clients putting on urea at the right time,” she said.

“That’s where you need someone who understands farming because that has an impact on the whole season.”

The trust has a number of facilitators, usually retired farmers, who act as a medium between banks and farmers.

“The facilitators act as a translator,” Jonker said.

Farmers are operating at a very emotional level when they meet with their banks in this situation so facilitators can offer not only support but help each side understand the other’s point of view.

She felt banks had been very careful through the 2015-16 downturn in dairy payouts knowing there was nothing to be gained by forcing farm sales.

“But now things have stabilised and some seem to be taking a hard look at their portfolios,” she said.

“It’s sad that these things happen.”

She believes in some instances banks will not provide finance for some clients for the coming dairy season even if Fonterra signals a considerably higher payout than the present $6.40 a kilogram of milksolids farmgate. But with some banks having different lending criteria it could be possible another bank would pick up that farmer, which had happened in the past.

If farmers felt they had been unfairly dealt with they could approach the Banking Ombudsman as well as the trust.

The trust held 15 wellbeing days at Farm Source stores late last year where over three weeks representatives spoke to more than 90 dairy farmers. Their major concerns were lack of trained farm labour and the amount of bureaucracy they had to deal with, both of which contributed to their stress load. And they were also feeling keenly the results of dirty dairying attacks made during the election campaign.

“In some cases their kids were bullied at school,” she said.

Countering that perception was not a job for the trust but lobby groups like Federated Farmers.

The Northland Trust is planning more wellbeing events in March and April then Welcome to the District functions in June in which it hopes to team up with local community groups to spread its message to the widest possible audience.

Bankers’ Association chief executive Karen Scott-Howman said the banking industry understands how important the primary sector is to New Zealand and its economy.

Banks work closely with their agri clients through good times and bad.

“The good relationship between farmers and their banks is reflected in Federated Farmers’ banking satisfaction survey which consistently finds high levels of satisfaction among farmers,” she said.

“Banks work very hard with customers who find themselves in financial difficulty.”

Farmers who are having trouble should speak to their bank as soon as possible to get advice on how to deal with their changed financial outlook.

“Before they do, they should, if possible, involve their accountant or financial adviser,” she said.

“Talking to your bank can be much more valuable if you have some financial information or a plan.”

The ability to adapt was critical to the success of any farming business.

Banks are responsible lenders and constantly assess the risk on their books, she said.

12 Feb 2018

Disease leaves pair with nothing

In early June last year all was looking rosy for South Canterbury contract milkers Mary and Sarel Potgieter.

By the end of July their lives had been turned upside down and their dairy business was on a rapid downward spiral because of their honesty over Mycoplasma bovis.

Now the self-described Mb founders are in two minds over the call they made to the Ministry for Primary Industries to report untreatable mastitis in their dairy herd.

“We first noticed a problem in early June. By the end of June we had 162 cows showing signs and the vet was flabbergasted,” Mary said.

“By mid-July we had tried everything. We had done tests and milk samples, nothing could be cultured – it was not normal mastitis.

“We were encouraged by the vet to notify MPI so we did.”

Mycoplasma bovis was identified and on July 22 the cattle disease, while in every country in the world expect Norway and, till then, New Zealand was identified by the ministry.

“Overnight life changed terribly.

“We had all these extra costs. We were fully staffed and working hours galore. We had to make staff redundant. That was devastating and more dollars out of the budget.

“It has all carried on downhill from there,” she said.

“Now we are out of business, have no income and are being blamed for notifying.

“We seriously do look back and question if making that call was the right thing to do.”

The Potgieters were in their third season contract milking with the van Leeuwen Dairy Group on the Tainui farm at Morven.

They were working towards four calvings a year with \year-round milking of the 1700-cow herd, 1200 milking at any one time.

“Already in June we were 83% ahead in production and on target for 722,000kg milksolids – if we had kept milking.”

Instead the couple heartbreakingly saw the entire herd culled.

“On December 2 all the cows were gone leaving us with lots of extra costs from the day we went under Restricted Place Notice in July, now no business, no income and no compensation.”

Then the letter they feared arrived.

“We have received notice from the van Leeuwens telling us they don’t need us on the farm any more,” Mary said.

With lost business, lost job, lost farm and no compensation, as yet, the Potgieters have been forced to sell up everything they own, including the kitchen chairs.

“We need the money to survive and we have nowhere to put anything if we could keep it.

“If we had been able to keep milking 95% of our debts would have been paid by April.

“We are feeling bitter about the whole situation.”

While most grateful for the help and support they have received from neighbouring farmers, their accountant, the Rural Support Trust and especially loyal staff, one who has stayed on unpaid until the absolute end – they are struggling to come to grips with the devastation.

“Mentally this is taking its toll and just how much longer we can stand up – I just don’t know anymore.

“The cows are like your family. Sarel was a real animal lover, he watched over as every cow went to slaughter, emotionally this has hit him very hard.

“We don’t know what to think any more. We just don’t know how to move forward.”

The couple are living in hope that each new day will shine some light, compensation will be paid and a suitable new job will come their way.

“They (MPI) always said we would be no worse off but I can tell you we are worse off – much worse off and still there’s no compensation and no idea when.

“No matter what happens we will always be worse off now.

“We notified it (Mb) and now we feel we are being punished for it. We just wish we had never found it.

“We just want this to go away so we can move on.”

While there had been a couple of job interviews, nothing was yet confirmed.

The Potgieters’ preference is to stay in NZ.

“We have been offered a job in Australia and if nothing else comes up very soon we will have to go but our first choice is to stay in NZ, even if that be a move to the North Island.”

Meantime. the long-awaited clearance from MPI has finally been given to sell their machinery and plant including tractors, silage wagons, feed mixer, mowers, calving equipment – “everything to run a dairy business”.

“Now we have the all-clear we can sell up, including all our household furniture. We will hopefully get something to pay off some debt and to live on.”

Meantime, the bulk of the farm is now growing maize.

12 Feb 2018

ALTERNATIVE VIEW: Beingmate shows up incompetence

I’ve been critical of the spin coming from the Fonterra hierarchy over the years but their effort on the Beingmate debacle overshadows everything else.


For a start, on October 3 last year you can read how Fonterra wasn’t regretful about Beingmate.

Chairman John Wilson told us the board has no regrets over the $700 million investment in troubled Chinese child nutrition trader Beingmate.

By contrast you can read a Credit Suisse report dated September 6 last year, almost a month before the Fonterra supportive statement, telling us Beingmate had recently come out of a trading halt and sales and earnings are significantly down on when Fonterra invested and have not delivered to date.

What I found interesting was the company position, expressed by Wilson, was at variance with the Credit Suisse position a month earlier.

Surely the co-op would have been aware of that.

That Credit Suisse report came ahead of another on September 6 that said the Fonterra updates on Beingmate since it invested have been limited.

They also said Beingmate has moved from a net cash position to a net debt position at the end of the 2016 financial year.

I found it incredibly surprising that in Farmers Weekly of October 2 last year we have the headline Beingmate ready to make money.

Not according to my research.

Fonterra chief executive Theo Spierings told us things were indeed rosy with Beingmate and its position in the Chinese infant formula market.

The further issue is that Fonterra proudly told us that it would receive $16m of dividends each year from its Beingmate shares.

An idle dream surely and so much for Beingmate being a cornerstone of Fonterra’s Chinese strategy and it being a game-changer in the Chinese market.

I was further surprised by the Fonterra chairman’s statement in the annual report that Beingmate’s troubles need to be interpreted in the context of overall milk markets in China.

“Beingmate’s performance, while very disappointing, is a reflection of China’s market conditions, which remain challenging for everyone in the infant formula market due to the impact of regulatory changes.”

I would also suggest it wasn’t the regulatory market that brought Beingmate down.

Then on January 22 we can read that Fonterra criticises Beingmate after extremely disappointing earnings downgrade.

Beingmate lost in the last calendar year somewhere between $171m and $214m.

“We are extremely disappointed by the announcement and the ongoing performance of the company,” Fonterra said in a statement.

That struck me from two sides.

The first was that the result, as I’ve pointed out, can hardly have been surprising to Fonterra. Credit Suisse was alluding to it months ago.

The second was the statement, Fonterra said.

That’s absolute rubbish. So now when days are dark we no longer have the chairman or chief executive making statements it is the co-operative.

Their spin is out of control.

So what are they going to do now?

They can’t sell their shares in Beingmate as they’re effectively worth nothing and who would buy them?

Trying to take the company over would be equally as disastrous.

Now Beingmate is blaming Fonterra for its losses in China, putting the co-op in an impossible position.

Fonterra hasn’t had a great run in China. It invested in 43% of Sanlu before the food contamination crisis.

It’s all on top of the $183m hit by Danone from the 2013 botulism scare, just from the Singapore case. The NZ litigation has yet to come.

I was intrigued to read a column asking who’s accountable for Fonterra’s multi-billion dollar mistakes.

It’s a fair question begging answers.

It tells us Fonterra was offered a 19.99% share in A2 Milk in 2013 that would have cost $60m.

On the current share price if the venture had gone ahead Fonterra shareholders would have had a capital gain of almost $1.4 billion.

Instead they wasted $755m on the dog that is Beingmate.

The is that Fonterra obviously didn’t do adequate due diligence on Beingmate.

So who is being held accountable?

The tragedy is that no-one is — be they management, board or the gold-plated rubber stamp, the Shareholders Council.

Instead, we have been subjected to what I would term dodgy spin over the Beingmate debacle which has been at variance with the views of respected economic commentators.

The Fonterra share price has tumbled from $6.66 to $6.29, a 6% drop in equity for all shareholders be they farmers or investors. Forsyth Barr has put a target on it of $6.20, lower than the current price.

Brokers I spoke to have suggested incompetent governance and management as a reason for not recommending shares.

Beingmate is proof of that incompetence at all levels.

Fonterra shareholders and indeed the country deserve better.

06 Feb 2018

Riparian fencing poses challenges

Northland dairy farmers Richard and Bev Dampney, farming at Otaua, west of Kaikohe, must urgently complete 10 to 11km of riparian fencing to continue supplying milk to Fonterra.

Within only a few farms nationwide still to comply, the Dampneys had argued riparian fencing was impractical on local rivers that flooded an average of six times a year.

Furthermore, cows had reticulated water in troughs and were effectively excluded from the water courses by steep, overgrown banks.

Hot tapes were used to break feed, and where cows might venture down to the waterways.

Richard Dampney said the Northland Regional Council acknowledged that impracticability by basing its new regional plan on effective livestock exclusion, not prescriptive waterway fencing.

That meant Fonterra was imposing a higher standard than the local authority, he said.

The confluence of four meandering rivers, and about 12km of banks on two dairy farms, makes the Dampney’s Ngamaia Rua Lands location in the Hokianga Harbour flood plain a challenging environment.

Banks were historically planted with willows, which had now fallen and spread, playing host to other problems like tobacco weed and gorse.

The Dampneys’ neighbours are mainly beef cattle farms and lifestyle blocks, which are not required to fence waterways or try to eradicate the profusion of woody weeds.

The inaugural Fonterra Sustainability Report published in December said collection of milk was suspended from 78 farms last season because of the non-completion of fencing to exclude livestock from waterways.

The report said 98.4% of all permanent waterways on Fonterra supply farms had been fenced at the end of May 2017. The Sustainable Dairying: Water Accord (SDWA) target was 100%.

Bridges or culverts had been installed for 99.8% of all waterway crossings.

It would have riparian management documents in place for all farms by the end of the 2019-20 season, although only 4% had them currently.

During 2016-17, 9821 supply farms were checked by independent assessors and 318 (3.2%) were referred to Fonterra’s own sustainable dairying advisers (SDAs) because of major or critical hazards.

These were where actual environmental damage was occurring or there was a significant risk of that happening.

The three most common faults were ponding and run-off from effluent irrigation, improper cleaning of sand traps, and effluent not being captured properly in to the management system.

SDAs worked with the farmers to develop action plans with target dates for completion.

Fonterra said during 2018 it would finalise the collaborative action plans for 50 catchments throughout the country, deliver 1000 farm environment plans (FEPs), and introduce pilot climate action plans on 100 farms.

By 2025 it would ensure all supply farms had FEPs and by 2030 all growth in dairy farming would be climate-neutral and Fonterra’s manufacturing operations would reduce greenhouse gas emissions by 30%.

FEPs would help farmers implement water quality limits now being drafted by regional councils.

Nutrient budgets now covered 95% of supply farms, and were used to generate estimates of farm nitrogen losses and efficiency, nitrous oxide emissions and farm performance in relation to other local farmers.

Water meters had been installed on 51% of significant water intakes, against a target of 85% by 2020.

A Fonterra spokesman said the Dampneys were among a few farmers nationwide who had applied for dispensations from the fencing requirements because of special circumstances.

Fonterra SDAs had worked with those farmers to achieve the requirements of the SDWA but that extension of time had now expired.

Dampney said he would erect one-wire power fences and have to repeatedly repair them after floods, at considerable initial and ongoing expense for no practical benefit.

06 Feb 2018

Show bombshell leaves big hole

The best young cow in country was banned from defending her 2017 national championship title in the North Island last week, leaving her owners tens of thousands of dollars out of pocket with little hope of compensation.

The Gilbert family from Ashburton learned only days out from the Feilding event that because of the cattle disease Mycoplasma bovis all South Island entries for the prestigious New Zealand Dairy Event (NZDE) had been cancelled.

Because of the Ministry for Primary Industries (MPI) disease response the last-minute call was made that no South Island cattle would be allowed to attend.

With no choice, the Gilbert family were forced to cancel all plans for their 11-strong team of breeding cattle set for the journey north to take part in the dairy industry’s pinnacle event.

This included their prize cow, Glenalla Hired Lorna, who won the supreme Jersey and then went on to be crowned champion all breeds at the 2017 NZDE.

As a two-year-old she was the first of her age to take out a supreme breed championship, traditionally won by an older cow.

Lorna is also reigning all breeds champion from the Canterbury A&P show, the next biggest cattle show in the country.

“It surely has been like the Olympics, you do all the hard work, spend all the money, you have the best performances, then you can’t compete at the pinnacle.

“We were gutted. One week from the show it was just devastating to get the phone call – it was shock and disbelief,” Nick and Michael Gilbert said.

The fifth generation dairy farming brothers work with their parents Peter and Anne milking 1100 cows across two Mid Canterbury farms, Glenalla and Snowfed.

Younger brother Luke, while working off-farm as a dairy sales technician, is very much a part of the family show team.

The Glenalla Jersey stud has been carefully bred over five generations of the farming family and the exclusion of the Glenalla Jerseys from the NZDE would impact on more than a century of breeding.

“Getting our breeding cows to this standard doesn’t happen overnight and we do plan years, decades out so this leaves a huge hole, not only in lost opportunity to showcase to the rest of the world but we also had a couple of breeding stock in the sale.

“This is the pinnacle for us, the highlight of every year that we work towards and now with one phone call we have lost all that opportunity and all the money that goes with it.

“The show preparation expenses alone are costly and already would be north of $10k,” Michael said.

Adding to that lost sales and potentially ongoing sales, the overall loss of not being allowed to attend the NZDE 2018 was realistically likely to be tens of thousands of dollars.

“We are trying to not to go there but it’s very hard not to when you are dealt a blow like this.

“What we have spent in preparation of the stock, ferry crossings, travel and accommodation most definitely is only the tip of the iceberg.”

This included for Lorna alone, being out of the milking herd for individual special care, treatment and an exclusive diet since November.

Her calving was planned early, ahead of the herd, to ensure it worked for her ongoing breeding programme that included embryo orders to Canada, which were all lost now, at least for another year.

The Gilberts also prepared stock for five local clients who had entries in the show.

“It was tough phoning them to tell them their stock, some we have had here for 12 months, weren’t going, so it’s cost them a lot too.”

As for compensation, the Gilberts were not holding out much hope.

“We talked to the organisers and they are putting it to DairyNZ and MPI but we are not holding out any hope.

“This is the biggest sale and show for breeding stock so pretty much nothing can compensate for not being there.”

The Gilberts expressed concern that even though the South Island entries were banned the event continued to be marketed internationally as a whole of NZ dairy event.

“We didn’t voluntarily withdraw, we were told we were not allowed to go and if we did the whole event would be cancelled.

“We were told you are not going,” Nick said.

The NZDE was a big deal in the dairy world, the international showcase and shop window for overseas judges, buyers and breeders from all over the world to see what NZ had to offer.

“But the international people don’t even know we exist because they understand what they are seeing is the whole of NZ – just minus the South Island.”

Michael said what hurt more was this year’s team was by far the best team the family had ever prepared.

But it was no point crying over spilt milk, so to speak, and the Gilberts were resigned to putting it behind them.

“We will plan to carry on and go back next year – if we are allowed.”

06 Feb 2018

Markets in danger

New Zealand is at risk of causing global market jitters if its biosecurity doesn’t stand up to international scrutiny, Anzco livestock and agribusiness general manager Grant Bunting says.

Lack of accountability, farmer confusion, inadequate animal traceability and too many pushing their own agendas were key factors contributing to a situation with potential to end in disaster for the meat industry.

Bunting called for accountability and was not alone.

“There are wider industry stakeholders and other processing facilities that share the same concern.”

While Mycoplasma bovis and the Ministry for Primary Industries response was clearly the topic of the moment, the National Animal Identification and Tracing (NAIT) programme had much to answer.

“It seems to be very silent and this is possibly concerning as we are constantly hearing it has not really worked and worse, that has come as no surprise to many.”

Responsibility and leadership were needed now.

“Those who are dealing with it (NAIT) on a day-to-day basis don’t share the same confidence as those who are administering it.

“From an industry perspective, where’s the leadership?”

Bunting said some parts of NAIT were preforming relatively efficiently such as farm-to-processor and farm-to-saleyards movements but farm-to-farm movements were not being recorded.

“For the good of the industry and the country this can’t be glossed over.

“Everyone needs to know a lot more and we all need to know it now so we can get on with business with some confidence and not risk losing international market confidence over a failing biosecurity programme – M bovis has highlighted this.

“It’s the absolute lack of leadership that concerns us. No one is stepping up to take responsibility.”

“At some point we have to concede defeat.

“The question of the matter is not about the focus on M bovis – it’s on NZ biosecurity for NZ’s reputation that in the extreme of an event we can manage it.

“If we could see evidence less concerned with the political implications and more concerned with the ramifications that some of us have to live with, we would be a lot happier – that’s the undertone.

“We are more than happy to be a part of the solution but right now it’s more about when and where we can engage.”

Sir Graeme Harrison said “Biosecurity is number one and market access is number two.

“If you have not got biosecurity sorted then you have not got market access – it’s as simple as that,” Harrison said.

The M bovis response had been a wake-up call for all and while it was not an extreme event because many countries had it, there were shortcomings where corrective action has to be taken.

“The point is something more extreme could be the next case.”

Harrison said a lot of market access was also dependent on animal health.

He cited blood products and animal tissue for human application such as heart valves and skin ailments.

“These are all dependent on animal health and there would be serious implications if NZ’s animal health status is not standing up.

“This particular M bovis incident is not going to make that difference but we can’t afford another even slight blip in the udder.”

Meat Industry Association chief executive Tim Ritchie said very clearly there was need to address NAIT shortcomings in readiness for an extreme event such as FMD.

“There’s no point in tracing if we are not producing the outcomes we need to handle an extreme such as FMD.

“The ability to track animals is very, very critical in nailing it down and the sooner we can do that the sooner we get the doors open and get back on track trading again.

“Certainly the learnings in the M bovis response have shown we wouldn’t have that ability right now.”

Ritchie likened the NAIT system to a three-legged stool.

“The processing leg appears to be working well as is the saleyards leg but the third leg, the farm-to-farm transactions is wanting. We need that third leg running.”

He hopes the steering committee reviewing NAIT is addressing the third leg.

The committee, chaired by Sir Henry van der Heyden, includes representatives from Beef + Lamb NZ, DairyNZ, DeerNZ, Federated Farmers, meat and dairy companies and technical experts.

The MIA was involved with the review but not privy to its findings.

“But certainly we will be ensuring that lessons learned are addressed and effectively taken on board without compromising the outcome,” Ritchie said.

“The perception of (NZ’s) biosecurity is critical to market access and it’s absolutely essential this is right.

“The opportunity is now to get our house in order,” Ritchie said.

Ospri chairman Jeff Grant said a review scheduled when NAIT was set up was now complete and would be released in a month or so.

It made a range of recommendations to enhance  NAIT.

While compliance of properties to slaughter was sitting at 98% and to saleyards at 94%, Grant acknowledged the area of concern was lack of recording for farm-to-farm movements.

“Effectively that creates the lack of compliance that gives the unknown figure of how many of those transactions are happening between farms and not getting recorded.

“That showed up again in the M bovis response and the review will tackle that now.”

Grant said the non-compliance was not a reflection of NAIT but more how the industry and farmers chose to use it.

“This is a debate we do need to have and the review looked at much better ways to achieving 100% compliance.”

The review report would go have wide industry consultation with MPI ultimately responsible for identifying the flaws and improving the programme.

Where there were enhancements required of NAIT Grant expected Ospri could make that happen “reasonable quickly” within six months.

If regulation was required then that would mean a much a longer timeframe as that was the responsibility of the Crown.

Grant said the end result will be a much more farmer-friendly programme.

He believes NZ’s tracing system is as advanced as anywhere in the world.

29 Jan 2018

M bovis webinar for farmers

Onfarm biosecurity has become vitally important for individual farming operations as the cattle disease Mycoplasma bovis continues to spread.

To help farmers protect their businesses DairyNZ has set up a Protecting Your Farm webinar session this week.

This will take place on Thursday, February 1 from 12.30pm-1.30pm.

DairyNZ’s readiness and response manager Chris Morley will discuss what farmers can do to help reduce the risk of diseases, weeds or pests entering, spreading or leaving their farm.

DairyNZ says the webinar will be an opportunity to get questions answered by an expert.

Register for the webinar or to receive the webinar recording via email.

29 Jan 2018

Farm likely to become houses

An historic Waikato dairy farm zoned residential is on the market and likely to be swallowed up for housing, Bayleys Waikato salesman Mike Fraser-Jones says.

The 79 hectare farm in Studholme Street was once part of a bigger block owned by Thomas Morrin, the forefather of the town that went on to bear his name.

But Morrinsville is set to expand considerably as a result of major zoning changes.

And with the farm now zoned as 41ha of residential and 38ha of rural residential suitable for lifestyle blocks it is most likely it will be subdivided, Fraser-Jones says.

“With the populations of many Waikato towns growing as residents from Hamilton move out of the city but not out of the province, towns like Cambridge, Matamata and Morrinsville have all seen their catchments increase.

“That has subsequently placed demands on the limited housing stock in those towns.

“However, for the most part, urban expansion in Waikato’s smaller towns has been piecemeal with just a few houses being added here and there because of respective zoning constraints.

“The rezoning of Studholme Street is Matamata-Piako District Council’s direct response to alleviating housing pressure in the town.

“The obvious appeal of this farm for large-scale residential subdivision developers is firstly its gentle rolling contour, which would make for easy residential subdivision and laying down of utilities and infrastructure.”

Multiple new access roads could be created by extending streets that end at the farm boundary.

The farm on Morrinsville’s northern fringe is run by a 50:50 sharemilker with 252 cows.

Continuing the sharemilking partnership on the farm would provide holding income while any large-scale redevelopment plans were drafted and submitted for council consent, he said.

And the council’s existing-use policy allows the dairying operation to continue.

Infrastructure includes a 20-aside herringbone milking shed, a modest three-bedroom home let as part of the sharemilking contract, a six-bay implement shed and a five-bay implement shed.

Water from a bore is pressure-fed through alkathene pipes around 40 paddocks. Effluent is stored in two clay-lined ponds.

The farm is for sale by tender closing on February 28.

29 Jan 2018

Farmers welcome 90-day work trial retention

Fears difficulties attracting staff to farming would be exacerbated by employment law changes appear to have subsided with the Government retaining the 90-day trial provisions for small businesses.

Federated Farmers employment spokesman Chris Lewis said allowing businesses employing less than 20 staff to retain the trial would give farmers renewed confidence to employ staff, given the main concern for dairy farmers was a lack of available, motivated workers.

“Many employ few staff, but because of the small size of the business, they simply can’t afford the situation or inconvenience when new staff aren’t suited for the job or can’t fit in,” he said.

Retaining the 90-day trial would give farmers confidence to employ staff.

“Farmers need the confidence to take a chance on a potential employee who may have no demonstrated experience, or who may have had previous social or addiction problems,” Lewis said.

Minister of Workplace Relations and Safety, Iain Lees-Galloway, said the new legislation would also change rules on unfair dismissal, and meal and rest breaks.

It proposes that reinstatement should be the primary remedy for an unfair dismissal, which Business New Zealand chief executive Kirk Hope said would place the onus on employers and employees to work positively following an employment relations breakdown.

Hope said the current system in which employers and employees mutually agreed when meal and rest breaks were taken would be changed to statutory breaks, although flexibility would be allowed in essential services.

“Business has appreciated the flexibility of the current system,” he said.

“Changing to a more regulated approach isn’t ideal for business agility – for example, in manufacturing operations.”

Other changes strengthened rights for collective bargaining and easier access to union representation.

The National Party questioned why the Government was changing a law that had contributed to the addition of 245,000 new jobs in the past two years.

The Opposition’s workplace relations spokeswomen, Amy Adams, said nearly 80% of NZ workers were in full-time jobs, and wages have been growing at twice the rate of inflation.

“These changes will only damage that track record, so why are they actually needed?

“New Zealanders will rightly suspect they are a random union wish list.

“People will be asking exactly how much influence these unions have in the current government,” she said.

Council of Trade Unions president Richard Wagstaff welcomed the changes as ending the erosion of employment rights under the previous government, but he said they didn’t go far enough and he would continue to push for the 90-day trial – or what he called “fire-at-will law” – to be repealed.

22 Jan 2018

Low milk supply fears give GDT price boost

Fears of New Zealand milk production falling because of dry weather gave a boost to the Global Dairy Trade auction market, which rose 4.9%, including a 5.1% average rise for whole milk powder.

The latest GDT market lift was the biggest at one event since late 2016. It included 8.8% for butter and 6.5% for skim milk powder.

Though milk supply might recover with repeated rain in dairying regions this month, Fonterra’s revised seasonal collection forecast of minus 3% had the effect of lifting commodity market prices.

A crazy combination of drought declarations and heavy downpours leading to floods was hard on NZ dairy farmers but stalling milk production was lifting product prices, ASB senior rural economist Nathan Penny said.

ASB now expects production to be 1% higher than last season, which underpinned its more optimistic payout forecast of $6.50/kg milksolids at the farmgate.

It thought Fonterra had overstated the production weakness.

“In particular, recent rain and a supportive milk price are likely to see production rebound later in the season.

“If we are right then firmer production later in the season may see dairy prices give back some of their gains,” Penny said.

Other commentators drew attention to the now-prevailing $US3000/tonne whole milk powder prices, providing the bedrock of a $6-plus payout.

After the GDT auction all WMP futures prices reset above $US3000, increasing an average of $150 or about 5%, AgriHQ dairy analyst Amy Castleton said.

The AgriHQ payout predictor gained 10c to $6.20 and the spot price rose 23c to $5.94.

A NZ dollar exchange rate of US73c was 2c higher than a fortnight earlier but Fonterra was assumed to have hedged the bulk of its 2018 sales at 71c, Castleton said.

Over the past two weeks the NZX Dairy Derivatives market price for 2018 milk futures rose 6c to $6.44 and milk futures for next season rose 10c to $5.90.

Slightly before the GDT event Fonterra said its NZ milk collection in December was down 6% compared with December 2016 and the total in the seven months of the season to December 31 was slightly lower than the previous corresponding period.

Conversely, its milk collection in Australia was up 27% in the six months to December 31.