Coutts appointed chair-elect of Mainland Group
Fonterra has named Elizabeth (Liz) Coutts the chair of Mainland Group, the proposed divestment entity of the co-operative’s consumer business.
DAIRY FARM running costs haven’t abated after increasing a lot in 2007-08 and they are now out of kilter with the consumer price index, LIC chairman Murray King says.
“As we all know the milk price is under pressure and farmers are looking closely and scrutinising their costs,” King told the annual meeting.
Farming systems have changed much over the last 10 years with about one million cows moving out of low cost farming systems to feed intense systems.
However breeding and herd improvement is a very small contribution to the overall costs in most farming businesses. “The value we give you through herd improvement is significant,” King said. “Genetic merit in the industry equates to about $400m per year of annualised gains. With our market we contribute over $300m of that.”
Lifting in-calf performance could bring gains of $35m-$40m in the dairy industry. Identifying the poorest cows – important during a low milk price period so they can be culled – could also bring gains of about $40m.
King said 2013-14 was a great season for dairy with a high demand for LIC’s herd testing and artificial breeding services and an increase in farmers investing in technology which drives efficiency gains onfarm notwithstanding the drought last summer in Northland and Waikato.
Annual results showed revenue in the financial year to May 31, 2014 was $211m. The dividend was $11.17m, down from $16.75m last year but similar to 2012, with 8.65c per cooperative control share and 35.90c per investment share.
The annual dividend payment over the last few years have averaged $12m per year, King said. “As we are closely linked to the fortunes of the highly volatile dairy industry these payments tend to fluctuate. Nevertheless a respectable dividend yield has been achieved – now coming under pressure as the share price rose significantly over the years and we invested more heavily in growing the business.”
There were 10,236 shareholders as at May 31 – up 123 from previous years.
“We intend the business to be significantly bigger. It will involve core products and services in genetics, information and hardware onfarm and more in the international market… because that’s where our competitors potentially come from. We also get the opportunity to learn a lot from what’s happening in the world.”
Some of the growth will be from the current core business, some from innovation we are developing now and in the future. Some will be from IT offerings from farm hardware, diagnostic testing.
Federated Farmers supports a review of the current genetic technology legislation but insists that a farmer’s right to either choose or reject it must be protected.
New Zealand’s top business leaders are urging the US Administration to review “unjustified and discriminatory tariffs” imposed on Kiwi exporters.
New tariffs imposed by President Donald Trump signal an uncertain future, but New Zealand farmers know how to adapt to changing conditions, says Auriga Martin, chief executive of Farm Focus.
A global trade war beckons, which is bad news for a small open economy like New Zealand, warns Mark Smith ASB senior economist.
Carterton's Awakare Farm has long stood as a place where family, tradition and innovation intersect.
Fonterra says the US continues to be an important market for New Zealand dairy and the co-op.
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