Federated Farmers - January 2010

Dairy Alert

The bi-monthly newsletter from Federated Farmers Dairy Section

Chairperson's commentary

Federated Farmers Dairy chairperson, Lachlan McKenzie

Happy New Year to you all! I hope you all managed some time with family and friends over the festive season.

It looks like another big year ahead for Federated Farmers. First off we have a round of meetings with Fonterra-supplying sharemilkers to discuss the implications of the new share structure on their businesses. Following that are more proposed changes from Fonterra such as trading among farmers.

Government is currently looking at the Dairy Industry Restructuring Act (the DIRA) as well as issues like National Animal Identification and Tracing (NAIT) and the implementation of an ETS. Remember, all these issues have the potential to reduce your profit.

It is also going to be a big year with regional councils. Besides the current plan changes such as Horizons' One Plan and Environment Waikato's Variation 6, many councils are developing new regional policy statements. These set the objectives and methods used by regional councils for the next 10 years and there are many local Federated Farmers Dairy members very active in this area.

The power of Federated Farmers lies with its unity of purpose. We all have to speak with one voice while protecting our rights in property. Some times it may be more effective to have representation direct to Government than to local council. Such a decision can only be planned and implemented if provincial and national representatives are all fully informed. Please keep the communication lines open with staff, your local team and other regions.

Regards,

Lachlan McKenzie
Chairperson
Federated Farmers Dairy
Phone: 07 332 3440
Mobile: 021 382 442
Email: lmckenzie@fedfarm.org.nz

Industry news

COUNCIL MEETING

Federated Farmers Dairy will join with the Sharemilkers' Section, to hold the next council meeting in Wellington on Wednesday, 17 and Thursday,18 February, at the Brentwood Hotel.

The meeting will include:

A workshop on negotiation.
A session on co-operatives, with presentations by:
Harry Bayliss, ex Director, Fonterra
Ramsey Margolis, Executive Director, New Zealand Cooperatives Association
Matt O'Regan, Chairman of the Board of Westland Milk Products.
A session on the environment, including a presentation by Kevin Hackwell, Advocacy Manager, Forest & Bird and a presentation on smart effluent systems.
A session on growing the industry, including presentations by:
George Troup, Director, Europe Division, Ministry for Foreign Affairs & Trade
Guy Beatson, Deputy Secretary, Ministry for the Environment
Mark Steel, Deputy Secretary, Ministry of Economic Development

Registration forms for the council meeting can be found by clicking here and should be returned as soon as possible. An agenda will posted on the Federated Farmers website closer to the date.

SHAREMILKERS AND FONTERRA’S CAPITAL RESTRUCTURE

Chris Moore, Federated Farmers Rotorua/Taupo Sharemilkers' Section chairperson - Federated Farmers Rotorua/Taupo Sharemilkers' Section recently organised a meeting, in conjunction with Fonterra, for sharemilkers. The meeting focussed on the implications for sharemilkers following the capital structure changes of Fonterra. Key speakers included Malcolm Bailey, Fonterra Director, Christine Burr, Fonterra GM Payments and Shares Registry and Chris Spargo, Lawyer, BlackmanSpargo Rural and Commercial Lawyers, Rotorua.

Key points of discussion were:

Sharemilkers with existing contracts are legally entitled to continue receiving the equivalent portion of the payout they currently receive on all payments from Fonterra. This includes the dividend portion. For example a 50:50 sharemilker currently receiving 50 percent of all payments from Fonterra shall continue to receive 50 percent of all payments from Fonterra.
Fonterra is legally required to pay the dividend to the shareholder and cannot split the dividend. A new payment system has been devised which, in brief, takes the equivalent of the amount that would be due to the sharemilker if the dividend was split at the terms originally advised to Fonterra, out of the shareholders' milk price portion. This will ensure the payment terms agreed to at the start of the sharemilker's contract are honoured. This payment scheme is called the Dividend Related Payment Adjustment (DRPA).
Some owners and sharemilkers may come up with their own solutions to ensure payments are balanced back to the terms originally agreed in the contract. Remember at all times during negotiation though, that as a sharemilker you are legally entitled to the equivalent payments you have been receiving prior to the changes for your current contract.

The big message in all this is that you should start communicating to find the most suitable solution for your own situations. Further meetings are planned around the country, click here to download the schedule.

VARIABLE ORDER AGREEMENT

The review of the Variable Order Sharemilking Agreement (2001) has now been completed and the revised agreement is now with the Department of Labour, who are assessing the changes. When they are satisfied that it complies with the Sharemilking Agreements Act (1937), protects sharemilkers and is able to stand up to legal scrutiny, they will pass it on to Cabinet to complete the legislative process. Federated Farmers is hopeful that this will be completed within the first quarter of the year, but this will depend on Parliament's workload.

The majority of the changes involve the dispute resolution and arbitration clauses, making it easy for all parties to come to a resolution if difficulties arise. The rest are mainly clarification of responsibilities.

In the meantime, all those on the current Variable Order Sharemilking Agreement (2001) can be assured you will not be disadvantaged and will be covered by the new one when it comes out. Those wanting to sign up to new positions can still do so confidently using the current agreement and are urged to order theirs, by clicking here.

Herd owners, you can also purchase the Herd Owning Sharemilking Agreement (50/50), by clicking here.

RECORD ENTRIES IN NEW ZEALAND DAIRY INDUSTRY AWARDS

Federated Farmers is thrilled to hear that a record number of 506 entries have been received in the 2010 New Zealand Dairy Industry Awards, up from 399 received for the 2009 awards. Organisers are overwhelmed with the interest in the awards' three competitions. The response to the dairy trainee contest has been particularly pleasing, with nearly 230 entries received, up from 150 received in 2009. The trainee entry numbers bode well for the future of the awards, as we hope that these entrants enjoy the contest and consider entering one of the other competitions as they move up in the industry. Nearly 150 people have entered the farm manager contest and there was a total of 131 entries received in the more prestigious category of Sharemilker of the Year when entries closed on Christmas Eve last year.

All 12 regions will be running the three competitions with the first regional winners to be announced from Hawkes Bay/Wairarapa on Tuesday, 23 February and the Taranaki winners to be announced on Friday, 26 February.

Federated Farmers is proud to be a sponsor of these Awards. For further information on the awards, please click here.

PRE-1990 FORESTRY AND THE ETS

Emissions trading legislation imposes requirements on the owners of the pre-1990 forests that need to be understood if any trees have been cleared. Federated Farmers has previously fought against these rules coming into place, but they remain in place after the legislation was amended late year.

Do you:

Own a forest that was planted before 1 January 1990
OR
Own a forest that was planted after 31 December 1989 on land that was previously forested with exotic or native tree species?

Have you:

Cleared an area of exotic tree species greater than 2ha since 1 January 2008?

If you answered YES to both questions, then you MUST:

Notify MAF that you have cleared pre-1990 forest land by 31 January 2010
AND
File an emissions return detailing the scale of the deforestation by 31 March 2010
AND
Surrender emissions units against the deforestation by 31 May 2010.

Please click here to view the member advisory explaining the obligations and requirements on you as an owner of pre-1990 forest. If you do nothing, it will cost you money!

WOMEN, BOARDS AND AGRICULTURE

Noeline Holt, Executive Officer of Rural Women New Zealand, notes that agricultural boards are poorly represented when it comes to having female board members.

While New Zealand women make up 46 percent of the workforce they are not well represented at the board table. Of the top 100 companies in the New Zealand Stock Exchange, only 45 women hold 54 directorships out of a total of 624 positions.

However, according to Ministry of Women's Affairs, research shows that:

Women on the board can be good for the bottom line.
Companies with female board members outperform those with no women.
Teams with a mix of men and women generally work better.
Groups with more diverse skills, knowledge and experience are likely to consider a greater range of perspectives and make higher-quality decisions.
Women may help businesses manage and solve problems more effectively. For example, having women on boards can assist companies to manage key constituencies including shareholders and employees.
The presence of women at board level strengthens the company's customer base and connections to markets.

The Ministry of Women's Affairs is funded to support women to get onto State Sector Boards through their nominations service. You can find out more and register your interest, by clicking here. In addition to the Ministry's nominations service, the Human Rights Commission, in partnership with the Equal Employment Opportunities (EEO) Trust, launched last October ‘A Place at the Table' (APATT). The aims of APATT are to improve the diversity of boards of directors in New Zealand including boosting the numbers of women and others in governance positions.

Opinion

CONSENT TO FARM

Andrew Hoggard, Executive member Federated Farmers Dairy, Manawatu - Many will have heard of moves across the country to regulate farming as a way of addressing the issue of nitrogen leaching from farms into waterways. In Taupo this is already a reality and in the Horizons region, we are getting close to knowing whether it will become a reality through the proposed One Plan. Farmers all around the country should be rightly concerned about the One Plan, with many other councils taking a ‘wait and see' approach to it, while many others will try to copy it if it happens.

These consents to farm will impose large costs on farmers, not only with reducing N leaching, but with administration, monitoring, and ongoing compliance issues. There will be more information on the Horizons One Plan, in particular, in the next National Farming Review, or you can email me, by clicking here. I am more than happy to give you more Information.

I will suggest one thing to farmers in other regions. Don't sit back and wait for councils to bring this to you. Identify for yourselves what you believe the issues are and start addressing them in a manner that's practical for your farm.

TALK TO EACH OTHER

Ciarán Tully, Sharemilkers' Section vice-chairperson - The recent change to the method of payment from Fonterra will require good levels of communication between farm owners and sharemilkers to ensure the continuation of a fair business relationship. This should also serve as a reminder to all of us involved in business relationships that communication is important.

The most successful businesses are run by the best communicators. Do you have a vision of what your business will look like in the next two, five and 10 years? Do your staff know it? Often a shared vision can enable people to pull together as one, rather than pulling in different directions. How well is this vision communicated to your spouse, your farm team, rural professionals etc?

A well known example was the success of Team New Zealand in The Americas Cup of the late ‘90's. A simple vision ‘to win the cup' was augmented by the question; will it make the boat go faster? This simple qualifier eliminated all distractions and led to a successful result.

Fast forward, unclear campaigns and a lack of communication led to the cup going offshore.

A simple business plan, communicated well should minimise surprises. As many farmers look to source new sharemilkers, managers and farm staff around this time of year, why not consider a simple one page document to share your vision and communicate your goals to participants. By doing this people can see if they agree with the ethics and direction you are planning to go in from the outset. Once you are underway, any disagreements can be sorted easier, as you can refer back to the original blueprint.

Good communication should of course be two way. Questions could include:

How can I help my team?
Who do I need to help me?

Staff appraisals should also include employer appraisals. Finally, we have two ears and one mouth, so use them accordingly!

Advice

DAIRYNZ COMPLIANCE TOOLKIT

The DairyNZ Compliance Toolkit website is now home to a new animal health and welfare section. Designed to help dairy farmers meet compliance requirements around health and safety and employment, the Compliance Toolkit now includes an animal health and welfare section. The new section provides essential information on the Animal Welfare Act 1999, codes of welfare, responsibilities under the Agricultural Compounds & Veterinary Medicines (ACVM) Act 1997 and good practice animal husbandry. To see the new animal health and welfare section, please click here.

Notices

FONTERRA'S CAPITAL STRUCTURE AND SHAREMILKERS

Federated Farmers will be holding meetings across New Zealand on how Fonterra's capital restructure affects sharemilkers and the sharemilking industry. The meetings will address the concerns felt amongst sharemilkers as to how the recently approved and proposed future Fonterra capital structure changes may affect sharemilkers' businesses. The meetings are open to all sharemilkers, lower order and herd owners. To RSVP for an event, please contact your local organiser. To download the full meeting schedule, please click here. Farm owners are also more than welcome.

INTERNATIONAL DAIRY FEDERATION COMES TO AUCKLAND

Willy Leferink and other members of the New Zealand contingent of International Dairy Federation (IDF) committee are finalising the Dairy Farmers Conference. The conference is part of the IDF conference to be held in Auckland at the Skycity complex from Thursday, 4 to Thursday, 11 November. The Dairy Farmers Conference focuses on finding and presenting solutions for the environmental impact dairy farmers are having on, for instance, climate change. If you want to rub shoulders with about 300 to 400 dairy farmers and other dairy leaders coming from all corners of the globe, please click here.

AGRECOVERY

Federated Farmers is a proud trustee of Agrecovery and is pleased to advise that the programme to recycle plastic and minimise waste is going well. The latest Agrecovery newsletter can be found by clicking here.

Training and education

INDUSTRY TRAINING FOR YOU AND YOUR TEAM

Improve productivity with training and development for you and your staff. Industry-funded Agriculture ITO training means fewer mistakes, greater efficiency and increased motivation. Federated Farmers members also receive a fantastic discount. Contact your local Agriculture ITO advisor on 0800 691 111, to discuss a training plan for your business.

Member benefits

MEMBER BENEFITS AND OFFERS

To view special discounts exclusive to Federated Farmers members, please call 0800 327 646 or click here to log onto our members only area.

Our shop

CONTRACTS, AGREEMENTS AND LEASES

These include land, stock, contractor, sales and purchase, agreement to grow, log books, access pads, Over Dimension Certificates and employment. Remember, it's a legal requirement to have an employment contract for EVERY employee so if you don't have a current employment agreement, then order one now. Contracts, agreements and leases are available in both electronic and hard copy formats for your convenience. To purchase, call 0800 FARMING or click here.

Contacts

Please remember that if you have any issues or queries you would like to discuss, please feel free to contact Federated Farmers on 0800 FARMING (327 646) or contact your local Federated Farmers Dairy representative or one of the Executive team as listed below.

Federated Farmers of New Zealand
PO Box 715
Wellington 6140
Tel: 04 473 7269
Fax: 04 473 1081
www.fedfarm.org.nz