Chinese strategy
OPINION: Fonterra may have sold its dairy farms in China but the appetite for collaboration with the country remains strong.
Fonterra's decision to drop its 2011-12 forecast payout by 15c/kgMS demonstrates the trade exposed nature of our primary industries, says Federated Farmers Dairy chairman Willy Leferink.
With the current global economic outlook, this may not be the only revision for the 2011/12 season, he says.
"I don't think there are many farmers who were not expecting a downwards revision. We had indications from the globalDairyTrade auction that prices have been drifting south.
"Most economic forecasters also expect commodity prices will ease over 2012. It's fair to say the international picture is more than a little choppy, especially with China revising its Gross Domestic Product forecast downwards.
"This is the reality New Zealand's primary exporters have to deal with. We're completely trade exposed and it's a fact of life for us. Times can be good, but we also know from the 2008-9 season, they can be pretty hard too.
"Farming returns can sometimes resemble an oscillograph. This is why corporate investors looking for predictable returns tend to find farming difficult."
Leferink says while the primary industries are generally growing, overall sector debt levels aren't.
Many farmers have heeded our advice to run conservative budgets focused on reducing debt, he says.
"That said, we're increasingly anxious over how the Kiwi dollar is defying gravity. While soft commodities are correcting our dollar ought to be doing the same but isn't.
"While good growing conditions have helped us put in a blinder of a season, a high dollar could well skim the cream."
A governance group has been formed, following extensive sector consultation, to implement the recommendations from the Industry Working Group's (IWG) final report and is said to be forming a 'road map' for improving New Zealand's animal genetic gain system.
Free workshops focused on managing risk in sharefarming got underway last week.
Annual farmer gathering, the South Island Dairy Event (SIDE), is set to make history as it heads to Timaru for the first time.
Installing 400 solar panels at their Taranaki piggery and cropping operation will have significant environmental, financial and animal welfare benefits for the Stanley family.
WoolWorks, New Zealand’s largest wool-scouring company, has partnered with the Lions Club of Riverton to help raise money for much-needed repairs to the Southland town’s swimming pool.
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