Monthly Archives: October 2012

Greener pastures

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New Zealand has the potential to capture $1.3 trillion more in agricultural exports between now and 2050 if targeted actions are taken, according to a new report recently released by ANZ.

An ANZ Insight report Greener Pastures: The Global Soft Commodity Opportunity for Australia and New Zealand quantifies the size of the opportunity open to New Zealand and Australian agriculture as a result of the shift in global economic growth to Asia.

Key findings from the report are that rising incomes and changing diets in developing countries mean the world will demand at least 60 percent more agricultural output by 2050, compared with 2005-2007. New Zealand could stand to gain an additional $550 million, which could increase to $1.3 trillion with favourable conditions and targeted actions, the report says. However, intense competition from emerging players with countries like Brazil, Malaysia and Indonesia becoming major threats. It also determines that $340 million in additional capital is needed to drive production growth and support NZ farm turnover between now and 2050.

Capturing the opportunities offered to the potential “food bowl of Asia” will not happen of its own accord, says Graham Turley ANZ’s managing director commercial and agriculture. “Significant barriers exist that will have to be overcome at every step of the supply chain.”

Sourcing capital to find growth, attracting skilled labour, intensified focus on national agricultural R&D, improving supply chains and targeting key markets are among those barriers.

“The danger we face is that we are not alone in seeking to exploit the global soft commodity boom and countries, like Brazil with its highly successful soy industry, are leading the charge.”

“If we are serious about wanting to develop vibrant, globally dominant and highly profitable industries, we need all stakeholders in the industry to work together to bring about change.

“There are environmental issues and foreign and domestic investment comfort levels that New Zealanders also need to consider in making these choices. These are the choices facing policy makers as they strive to make New Zealand more economically successful,” says Turley.

 

 

Sheep and beef income down, while deer is stable

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Sheep and beef farmers can expect their income to be down six percent this season (2012/2013), compared to last year, while deer farmers are experiencing their third season of relatively stable prices, according to new figures issues by the Ministry of Primary Industries (MPI).

The 2012/2013 season is expected to be more subdued for pastoral farm businesses as product prices come off recent highs, MPI says.

The government departed has released the 2012 pastoral farm analyses as part of its annual Farm Monitoring Report series. The reports provide models and overviews of the financial performance of typical dairy, sheep and beef and deer farms, based on information gathered from a sample of farmers and industry stakeholders.

On sheep farms, lambing was up nearly 10 percent on last season. Improved prices for sheepmeat, beef and wool, combined with the higher productivity in 2011/2012, lifted net cash income for the sheep and beef farm model by 18 percent to $543,000.

For 2012/2013, sheep and beef income is expected to be down six percent due to lower returns for lambs and wool and farmers are cautious. However, while the profit before tax is forecast to fall around 15 percent, at $181,300 it is still the second-highest profit for the national sheep and beef farm model since 2000. Note that the 2011/2012 actual result was $213,841 profit before tax, which was an improvement of 44 percent on the previous season.

Deer farmers, meanwhile, experienced their third season of relative stability in product prices and good on-farm productivity in 2011/2012, which has enabled some capital expenditure and debt repayment and boosted confidence in their sector. Similar results are forecast for 2012/2013.

National dairy production was up nearly 10 percent on 2011/2012. However, this was offset by a declining payout so the farm income was similar to the previous year. In 2012/2013, however, total income from milksolids is expected to fall 20 percent for the national dairy farm model, resulting in a 57 percent drop in profit before tax.

MPI analysts have also noted some key developments for the pastoral sector, including the beginning of mandatory tagging of cattle under the National Animal Identification and Tracing (NAIT) programme, land-use change and succession for sheep and beef farmers, together with the need to reduce environmental impacts such as nutrient runoff into waterways and the Trading among farmers proposal for dairy farmers.

 

Offshore worries persist, says Alexander

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Some weekend reading for you. In his latest BNZ Weekly Overview (18 October 2012), written during a trip to Europe, Bank of New Zealand economist Tony Alexander says offshore worries persist.

In Europe, the tipping point at which the need to maintain social cohesion outweighs seemingly sensible and necessary economic policies “is the closest it has been since this crisis started.”

He notes various central banks around the world printing money (he doesn’t advocate it for NZ), the increasing media discussion of alternative economic models and rising support in the UK for leaving the EU. He points to soaring global food prices, social tension and international divisiveness resulting from weather-induced crop failures as “very concerning” and go a long way toward explaining why his view on prospects for NZ growth is relatively sanguine.

“We are not going to boom given that people are sensibly concentrating in keeping debt ratios down, there is restraint on some price-based companies from the high NZ dollar (which will remain high), we look fundamentally good to investors as they compare economies and falling food production overseas means higher demand for our commodities and the systems we use to produce them,” he writes.

According to Alexander, challenges include: to facilitate the adjustment of some sectors to a permanently high exchange rate which they cannot live with in the long-term; “get off our butts to take advantage of the demand for our agricultural expertise”; upgrading infrastructure; improving connections between NZ businesses and those overseas; addressing the Auckland housing crisis; and building up public financial reserves to assist during the next crisis.

In addition, Alexander has set up a Facebook page, specifically for discussing the NZ-China relationship and as a tool for disseminating information and “furthering my own still inadequate knowledge,” he says.

The Weekly Overview will be available at the BNZ website in due course, where you can also subscribe by email to receive regular copies.

 

Primary growth coupled with energy efficiencies

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Growth in the primary sector has been coupled with energy efficiencies, according to Statistics New Zealand.

Data from SNZ’s latest Energy Use Survey shows that overall energy use by the primary sector was almost 35,000 terajoules (TJ) in 2011 and one-third of businesses had energy saving technologies. Total energy use in this sector stayed steady in the last three years, while the sector’s contribution to gross domestic product rose nine percent.

The total energy used in the sector equates to enough diesel to make two million trips from Cape Reinga to Bluff in a medium-sized diesel car. “While this sounds like a lot, the primary sector actually uses a relatively small proportion of New Zealand’s total energy. It makes up less than 10 percent of total business energy use,” energy statistics manager Hamish Hill said.

Agriculture, the biggest industry in this sector, uses almost half the total energy. Diesel and electricity remain the main energy types. “Diesel is integral to our production of timber, livestock, and crops. This contrasts with the industrial and trade sector, which is more reliant on natural gas and other energy types, such as coal.”

This is the second time that energy use data has been collected for the primary sector. The New Zealand Energy Use Survey covers each of the primary, industrial and trade, and services sectors over a three-year period.

Sir Richard Hadlee lays down challenge for Movember

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One of our most recognisable Mo’s in New Zealand has adorned the respected upper lip of Sir Richard John Hadlee, MBE since his tour to Pakistan in 1976. The former New Zealand cricketer, who’s regarded as one of the greatest fast bowlers and all-rounders in cricketing history (and top bloke) has laid down the challenge to all Mo Bros to get involved with the campaign ahead and spread the hairy word! Watch his Mo-message below.

You can find out more about the Movember campaign and how to register here.

Meat export revenue down in June quarter, says MPI

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Lamb leads a drop in export meat revenue for the June 2012 quarter, according to the latest figures from the Ministry for Primary Industries (MPI).

The Ministry’s Primary Industries: Production and Trade report for the June 2012 quarter, says that this is mostly because of lower export prices from weaker international demand and a build up in meat stocks in New Zealand, particularly for lamb, which fell by 25.6 percent against the same period a year earlier. Venison also  recorded a fall of 15.1 percent for the quarter and beef and veal -2.9 percent. In total,  meat export revenue for the quarter, was down 14.4 percent to $1.6 billion. Lamb production, however, was up 5.9 percent in the year ended June 2012, with slaughter numbers up 2.4 percent and carcase weights up 2.5 percent on the previous year, says MPI.

“This reflects increased numbers of lambs born in late winter and early spring 2011 and a record average carcase weight of 18.48kg.”

Beef production fell by 1.8 percent in the quarter due to lower slaughter numbers, particularly for cows and heifers, reflecting lower beef cattle inventories at the end of the 2011 season and retentions for an expanding national dairy milking herd.

Offals seem to have had a healthy year with quarterly revenue increasing for ‘other meat’ of 8.5 percent and a year-on-year increase of 10.7 percent, to end June 2012.

Another significant highlight is that China became the number one market for frozen bone-in lamb cuts in the six months to end June, with the European Union now taking second spot, according to MPI. “However, average export prices of lamb sold to China re about half that received in the EU,” the report concedes.

All but one industry grouping experienced a decline in export revenues, the report says. Overall, primary sector revenue for the June quarter was down 5.8 percent, compared with the final quarter in 2011, to $8.8 million. However,  during the year ending June 2012 there was a production-driven revenue increase of 1.3 percent to just over $32 billion, due to favourable climatic conditions, MPI says.

Climate conditions for pasture growth for the year ended June 2012 were the best since 2002, MPI notes, with 51.4 days of soil moisture deficit compared to the 20-year average of 61.6  – resulting in record carcase weights for lambs, heifers and cows and record milk solids per cow.

The full report Primary Industries: Production and Trade is available for download at the MPI website (search under Publications).

 

 

 

 

It’s official: Firstlight Venison shareholders internationally recognised for sustainable excellence

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Congratulations to Central Hawke’s Bay deer farmers, Tim Aitken and Lucy Robertshawe, who have now been officially confirmed as the 2012 ‘Champion of Champions’ in the Marks & Spencer Farming for the Future Award.

Adding to comments made about the couple’s earlier International Producer category win Steve McLean, Head of Agriculture & Fisheries Sourcing at M&S, says: “Their efforts clearly resonated with our customers as well, as they secured the majority of our public votes, so we are delighted to crown them ‘Champion of Champions’!”

Tim and Lucy are key deer breeders for the Firstlight Venison Producer Group, farming 600 breeding hinds and their progeny at their property near Tikokino. Firstlight solely focuses on producing and marketing high quality young venison, and the 24 farmer-shareholders within the Producer Group work collaboratively to supply to the UK’s top retailers who prefer farm-assured product.

Gerard Hickey, managing director of Firstlight Venison says the company is proud to congratulate the pair. “This award is great news: it vindicates the investment Firstlight Venison has made in developing its UK retail market and we’re pleased to be able to support Marks & Spencer in raising their venison exposure and sales.”

Ministry for Primary Industries’ Strategy 2030

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The Ministry for Primary Industries (MPI) has set itself an ambitious strategy to 2030 with the subtitle ‘Growing and protecting New Zealand,’ writes Allan Barber.

In its introduction, the Ministry asks ‘Why this strategy?’ which it answers by saying a re-balancing of the economy towards more productive sources of growth is required and New Zealand must trade itself to greater growth and prosperity.

When one considers that 71 cents in every dollar of merchandise export earnings come from the primary sector, there are no prizes for guessing where most of this is expected to come from. The Government’s strategic growth agenda contains the goal of increasing the ratio of exports to GDP from 30 percent to 40 percent of GDP by 2025, so clearly agriculture will be expected to generate the majority of this increase.

MPI, which now incorporates the functions of MAF, as well as the Ministry of Fisheries and New Zealand Food Safety Authority, has a major role and responsibility for helping to achieve these goals. Having always believed that government agencies must provide the framework and environment within which business has to perform and achieve, it’s expecting too much of MPI and its strategy, if we believe that this will be easy.

Strategy 2030 contains two points of focus: first to ‘maximise export opportunities and improve sector productivity’ and second to ‘increase sustainable resource use, and protect from biological risk.’

Key strategies to achieve these are:

  • Partnering with the primary sectors to identify and seize opportunities for improved productivity and market returns;
  • Removing unnecessary barriers to trade and increasing our use of international standards to enhance value;
  • Encouraging and co-investing in industry innovation and adoption;
  • Identifying and managing risks to New Zealand’s natural resources;
  • Partnering innovative approaches to environmental challenges; and
  • Better understanding the challenges to sustainable use of New Zealand’s natural resources.

The Ministry’s approach will concentrate on enabling and partnering by cooperating, facilitating, providing information and tools, using a whole-of-government approach across the primary sector and connecting primary sectors with one another. A key aspect of this is to engage with Maori which MPI sees as a core obligation.

Before jumping to the conclusion that this obligation is yet another example of political correctness, which is tempting, one must realise that Maoridom has $10.6 billion invested in primary sector assets including 1.5 million hectares of land of which MPI says 80 percent is underutilised. This degree of underperformance certainly needs to be improved and will produce economic returns for both Maori and the country as a whole.

MPI’s structure to deliver its strategy consists of five branches across the whole operation: Policy, Standards, Verification and systems, Compliance and response, and Resource management and programmes. These five branches encapsulate the total range of activities which the Ministry undertakes. The ones with the highest profile are food safety, animal welfare and biosecurity, but these are just the tip of the iceberg.

MPI has responsibility for literally everything and everybody leaving and entering the country. It negotiates standards with the regulatory authorities of our trading partners; it establishes the systems and maintains surveillance to ensure compliance with these standards. It also develops and implements policies across the whole gamut of New Zealand’s agriculture, horticulture and aquaculture sectors.

It is staggering to reflect that in 1987 David Lange saw agriculture as a sunset industry with New Zealand’s future lying in becoming the Switzerland of the South Pacific.

Now more than ever, the primary sector is the engine of our economic growth. MPI’s core responsibilities of setting and applying systems and standards for food safety, animal welfare and biosecurity, while ensuring effective response to pest incursions and non-compliance, are absolutely fundamental to our future place in the world.

The Ministry has an enormous responsibility for ensuring the protection and security of our whole primary sector which is a critical part of our economic growth.

Provided it doesn’t lose its focus on the clearly defined essential outcomes listed in its strategy, this is how it will make its major contribution towards ensuring New Zealand’s future prosperity.

Allan is an agribusiness commentator with particular interest in the meat industry and has his own blog Barber’s Meaty Issues. This article also appears at interest.co.nz.

NZ venison producers win supreme M&S award

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Though it hasn’t been officially announced as yet, it seems that Hawke’s Bay deer farmers Tim Aitken and Lucy Robertshawe have taken out the Champion of Champions trophy in this year’s Marks and Spencer (M&S) Farming for the Future awards.

The Tikokino venison producers are said to have received a text from the gala dinner informing them and they are now awaiting the official confirmation of the “huge news”. They were earlier announced as the winners of the hard-fought  International Producer section in September, which pitched them into a public vote for the supreme Champion of Champions award against winners of the England, Scotland, Wales and Ireland producer categories.

“Having been judged by the company and its customers as the most sustainable farm of five finalists, representing Ireland, Scotland, Wales and England, is a huge endorsement of the farming systems and philosophies we have developed over the years” says a proud Tim Aitken.

Aitken and Robertshawe are members of the Firstlight Venison Producer Group, a select group of deer farmers who work together to supply a small number of global producers supplying high-end retail customers like M&S. The British retailer strongly values sustainable production of the products it stocks and requires all suppliers to meet a set of environmental sustainability, animal welfare and ethical criteria known as ‘Plan A’. The annual awards aim to promote best practice throughout the supply chain and recognise those farmers who are making improvements to the sustainability of their business.

Commenting on the international category award on the Firstlight Foods website, Steve McLean, M&S head of agriculture and fisheries sourcing said that there were more than 50 entries this year for the international category and the standard was really high. “Our international entries came from a diverse range of businesses including fruit, vegetable and meat producers, in countries as winde-ranging as Greece, Brazil, Argentina, Thailand and New Zealand.”

The M&S judges were particularly impressed with the Aitken/Robertshawe entry, McLean said: “For the work they have done on enhancing the natural environment and water quality on their farm, for their involvement in R&D to improve the New Zealand venison industry and for their approach to animal welfare. They were also impressed that Tim and Lucy were sharing their knowledge with the wider farming community and had no hesitation in presenting them with the International M&S Farming for the Future award.”

Federated Farmers president Bruce Willis says the couple are excellent examples of Kiwi farmers leading the way on sustainable farming.

“Having the technical aspects of their business being judged was one thing, but winning the champion of champions award shows these people and their business really won the hearts and minds of a discerning British public who supported them in the popular vote.”

Willis is urging all New Zealand farmers to follow their example, “lead the world in innovative animal welfare and environmental management and to enter awards to let the world see the great work we are doing.”

The couple have won numerous previous awards including the Silver Fern Farms Hawke’s Bay Farmers of the Year and a New Zealand Deer Farmers Association (NZDFA) award for environmental and sustainable management in 2010. Their property, ‘The Steyning’ in Central Hawke’s Bay, has featured in the Focus Farms programme and Aitken is a producer representative on the NZDFA board.

Many congratulations to them both!