DairyNZ: Strong payouts offset high farm costs
The dairy sector is in a relatively stable position, with strong milk price payout forecasts continuing to offset ongoing high farm costs, according to DairyNZ.
It has also put a price on the failure, OSPRI's latest annual report revealing a $16.6 million write-down in the agency's balance sheet.
The Informations Systems Strategic Programme (ISSP) was supposed to deliver an online portal for farmers, eventually integrating a replacement NAIT (National Animal Identification and Tracing) and other disease management programmes including bovine TB and Mycoplasma bovis, with the existing MyOSPRI portal.
The project has been scrapped following reviews that identified significant issues with its governance and technology management practices, complexity, and likely ongoing costs.
The reviews were requested by OSPRI shareholders Beef + Lamb New Zealand, DairyNZ, and Deer Industry New Zealand.
Retiring DairyNZ chari Jim van der Poel told the recent DairyNZ AGM that the shareholders had had concerns about the project for some time.
"We pushed hard to get that review done and even helped draft the terms of reference for it, and that highlighted the key issues."
Van der Poel said they took the issue very seriously because the project was a cost on "farmers' money".
"We also at the same time commissioned a governance review to make sure the governance structure and framework in reporting was fit for purpose because we had concerns about that as well," said van der Poel.
A new OSPRI governance structure has now been implemented including a new Shareholders and Funders Group made up of senior representatives from B+LNZ, DairyNZ, DINZ and MPI, with direct oversight of the OSPRI board's performance and director selection.
A Stakeholder Forum, replacing the old Stakeholders' Council, will meet at least every six months to facilitate deeper engagement between OSPRI and its stakeholders.
In changes to the OSPRI board, chair Dr Paul Reynolds has resigned and three new directors have been appointed, effective November 1. They are DairyNZ director Mark Todd, B+LNZ director Alex Guilleux, and Hugh Martyn, formerly a Board Observer.
Tony Cleland and Louise Cullen will replace two outgoing directors, James Parsons and Fenton Wilson, following the Annual General Meeting on November 22.
Wilson, who is interim chair until the AGM, says the changes to the governance structure mean there will now be more direct shareholder and funder oversight of OSPRI.
“These governance changes will ensure stronger leadership, greater accountability, and closer oversight of decision making, and financial performance.
Fenton says the $16.6 million write-down is a substantial amount.
“We sincerely apologise to our stakeholders for this.
“While this represents a financial setback, the $16.6 million impairment will not affect OSPRI’s operational cash flow.
“OSPRI remains financially stable and fully capable of delivering its services. The impairment is an accounting adjustment, and our core programmes, including TBfree and NAIT, will continue to operate effectively within their current funding agreements. No additional funding is required at this time.”
The ISSP would have added functionality to the existing MyOSPRI farmer’s portal, which has provided electronic Animal Status Declarations (eASDs) since 2022 and remains in place.
OSPRI’s new chief executive Sam McIvor says the hope had been to get a “one plus one plus one equals five” benefit of sharing data across all OSPRI’s programmes.
“What we have missed out on is the benefits promised from integration and NAIT’s replacement,” said McIvor.
“It’s gutting for our farmers, the third parties we work with and our own people.”
