$150B farm succession challenge looms for NZ agriculture
Within the next 10 years, New Zealand agriculture will need to manage its largest-ever intergenerational transfer of wealth, conservatively valued at $150 billion in farming assets.
DAIRY PRICES are stabilising, but climbing off the market floor may take some time, says Rabobank.
Bank analyst Tim Hunt says low prices were required to help clear a market still dealing with exceptionally strong supply growth, a rising US dollar, a weak economic environment and reduced buying from China and Russia.
China has continued to buy far less from the international market than this time last year – with incoming shipments down almost 50% in October year on year as the country continues to work its way through excess inventory.
Meanwhile, Russia's enforced ban on imports from key suppliers has meant that globally prices have had to fall by 30-50% from their peak, to encourage buying from second-and-third-tier importers, such as South-East Asia, the Middle East and North Africa, to clear the market.
While these markets have taken advantage of discount products, helping to avoid the accumulation of supply-side stocks, the challenge of avoiding stock accumulation will likely become greater in coming months. Much depends on how quickly the world's dairy suppliers respond to recent price cuts.
Low prices, compounded in the EU by the risk of superlevy payments, should see producers in many export regions hit the brakes in early 2015, says Hunt.
"Together with some improvement in consumption in the US, and to a lesser extent the EU, this will reduce the amount available on the international market in the first half of 2015.
"However, this is unlikely to prove sufficient to generate any meaningful price recovery as demand looks set to continue at weak levels due to Chinese purchases tracking below the prior year and a continuing Russian trade ban.
Rabobank expects the market to gradually tighten in late 2015. However, it may take a weak southern hemisphere production peak in 2015 to finally tip the balance.
This week the Global Dairy Trade auction index rose 2.4%.
Flagship whole milk powder prices rose 1.4% to US$2,270/MT.
Profitability issues facing arable farmers are the same across the world, says New Zealand's special agricultural trade envoy Hamish Marr.
Over 85% of Fonterra farmer suppliers will be eligible for customer funding up to $1,500 for solutions designed to drive on-farm efficiency gains and reduce emissions intensity.
Tighter beef and lamb production globally have worked to the advantage of NZ, according to the Meat Industry Association (MIA).
Groundswell is ramping up its 'Quit Paris' campaign with signs going up all over the country.
Some farmers in the Nelson region are facing up to five years of hard work to repair their damaged properties caused by the recent devastating floods.
Federated Farmers is joining major industry-good bodies in not advocating for the Government to withdraw from the Paris Agreement.
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