Federated Farmers - November 2010

The Rambull

The bi-monthly newsletter from Federated Farmers Meat & Fibre industry group

Chairperson's commentary

BRUCE WILLS - CHAIRPERSON FEDERATED FARMERS MEAT & FIBRE

Let me be clear, what I am not about to do is to tell you where to sell your wool. That is your decision. But what I would like to do is to make certain you have looked long and hard at an opportunity that, in my view, is the most exciting initiative the wool industry has seen in a very long time.

Few in this industry would debate the need for more consolidation and unity. Few would debate the need for growers to take control of their destiny beyond the farm gate. We have been price takers for too long.

Wool is a fabulous product and has an exciting future. I believe the Wool Partners Cooperative (WPC) proposal ticks all the boxes.

Sure we can get all tangled up in wool's chequered past and we can cry poor and say we haven't got any money. I don't know whether WPC is going to be a roaring success, but what I do know is that the last few years as a wool grower hasn't been much fun, I know that doing nothing is not an option and I know that change isn't easy. I know that investing in a new company is often a leap of faith and I also know that the profitability of meat and fibre farmers must improve.

The WPC proposal offers a compelling commercial opportunity to achieve the step change in wool that is so badly needed. We sheep farmers have let too many opportunities go by. Let's not make that same mistake again.

Bruce Wills
Chairperson
Federated Farmers Meat & Fibre
Mobile: 027 234 1516
Phone: 06 834 9704
Email: bwills@fedfarm.org.nz

2010 Meat & Fibre council meeting

TUESDAY, 26 AND WEDNESDAY, 27 OCTOBER 2010

This event was held at the Mercure Hotel, The Terrace, Wellington on Tuesday, 26 and Wednesday, 27 October 2010.

Six very good guest speakers delivered interesting addresses on key issues affecting farmers.

JOHN ALLEN

Secretary of Foreign Affairs and Trade, John Allen, spoke on MFAT'S outlook for the meat and fibre sector. He provided much food for thought for those who, by virtue of our production of very high quality food and strong export base, take the existence of our markets for granted. He emphasised that:

Attitudinally, New Zealand is still focused on the domestic market rather than the international marketplace and how we can position ourselves to take advantage of it. Such complacency is a risk. To succeed, we need to work harder than other countries that are just as well positioned for international success.
The primary sector is at the heart of our current and future success. The sector needs to create more sustainable wealth from its assets and international success is based on an understanding of international markets and consumers and how we can meet their changing needs.

He then discussed several aspects of what he saw as a prescription for future success:

Securing the potential of our pastoral industry by developing a strategic plan or framework and by working more collaboratively, to develop a ‘New Zealand Inc.' brand.
Understanding that attitude matters. Attitude towards business success, acceptance of risk and the critical importance of growth.
Understand the critical importance of ‘brands' in the marketplace.
The need for farmers to look outside the farm-gate and focus on meeting market-led activities rather than raw-material based, production driven systems.
Understand that industry advocacy matters and that members must be kept informed about international markets.

JEFF GRANT

Wool Grower Holdings Chairman, Jeff Grant, spoke on What's happening with wool, with a focus on aspects of the recent Wool Partners Cooperative launch.

Points made included:

The premise is that the wool industry requires a fundamental change from the way it now operates.
The goal is to help ensure the sustainability of New Zealand sheep farms by increasing wool returns to farmers.
The initiative involves the formation of a grower owned cooperative.
To subscribe, growers pay $1.00 per share, per kg of strong greasy wool, payable in five, $0.20 instalments.
The closing date is 30 November 2010.

ROB DAVISON

Beef + Lamb New Zealand's Economic Service Executive Director, Rob Davison, spoke on Sheep and beef outlook drivers and provided an overview on the many factors that impacted on the sector.

On the down side:

Land use changes - a projected 19 percent decrease in land used for sheep/beef/deer/goat farming between 1990 and 2012
A large (45 percent) decrease in the number of finishing breeding farms between 1990 and 2012 (and a 27 percent decrease by farm area) meaning there is less land to finish sheep and cattle on.
A decrease in stock numbers. Sheep and beef numbers have both decreased over the 1990 - 2012 (projected) period, by 43 percent and 10 percent respectively. In contrast, dairy numbers are expected to increase by 78 percent over the same period.
The recent bad weather during lambing is expected to have a severe impact, with lamb numbers likely to reduce by 1 million.
Exchange rate movements have a significant impact on farm gate prices, with (e.g.) a 10 percent appreciation (depreciation) decreasing (increasing) farm gate lamb prices by 17 percent (14 percent).

The good news is that:

In our pasture based production systems, we have a real advantage over oil based production systems.
Lamb meat remains a high cost protein, supply scarcity has helped keep prices up.

DR SCOTT CHAMPION

CEO of Beef + Lamb New Zealand, Dr Scott Champion, spoke on A new direction for Beef + Lamb New Zealand, updating members on the organisation's strategic plan, the suite of programmes it is operating and how it will deliver results for farmers. Points covered included:

The programme groupings (farm, market, people and information) and the strategic objectives.
The scope of their work, from on-farm, through processing, to in-market.
Examples of how they will deliver the results that farmers need.

The second day of the council meeting began with a discussion of NAIT and the SFF/PGP FarmIQ.

HON DAVID CARTER

Minister of Agriculture, Biosecurity and Forestry, the Hon David Carter, spoke on The future of sheep and beef farming. He covered a number of issues, including:

Wool:

Work on the wool front stemmed from the ‘No' vote on wool in last year's CLA Referendum.
The Minister established the Taskforce that recommended a number of things, including the need to increase demand in order to get better returns from wool, the need for unity in the New Zealand wool industry and the need to find a mechanism for demonstrating transparency to woolgrowers about the past use of levy funds.
Work in the transparency issue has been carried out by KPMG and their report is due to be released this year.
More recently, the work of the Taskforce is being progressed by the Wool Group.
More recently still, the Minister had the privilege of meeting HRH Prince Charles, who is the patron of the ‘Campaign for Wool' launched this year in England and who is passionate about the future of wool.

Meat and Fibre outlook:

Farmers have come through a ‘winter from hell' but the response from Federated Farmers has been widely viewed as credible.
Government is focused on lifting New Zealand's economic performance and agricultural production growth is essential to this.
A visit to the recent APEC Agricultural Minister's conference in Japan highlighted the focus on food, with food security an important issue on the agenda.
New Zealand's agricultural future is in positioning our agricultural products so they are highly regarded by people who can afford to buy the best food the world has to offer.
‘Brand NZ' is very important, with three key aspects around food integrity:

Food safety
Changing - increasing animal welfare expectations
Environmental sustainability - including, climate change.

Meat industry consolidation:

While Government believes that some controlled rationalisation of the cooperative processors will deliver benefits, this is a decision for industry to make.
In the current environment, a groundswell from shareholders is needed to drive consolidation.

WILLIAM MCCOOK

Animal Health Board Chief Executive, William McCook, presented on AHB - an update, briefing the council on the history of bovine TB in New Zealand, what the AHB has achieved to date and where the organisation is headed. Points made included:

The TB control programme making the progress expected of it.
How a new strategy has been proposed that would shift the focus from the number of herds infected, to demonstrating that TB can be eradicated from both domestic, and, wild animal populations in a range of environments.
There are benefits in joining NAIT to the TB scheme.
Some new research areas were discussed.

OTHER COUNCIL DISCUSSION POINTS

The meeting held by the Federated Farmers Southland, North Otago and Otago Meat & Fibre provincial chairpersons with the chairpersons of Silver Fern Farms and Alliance Group.
The wool sector.
NAIT.
The ETS.

MATTERS FOR EXECUTIVE ACTION

A meeting was held on Wednesday 17 November with Bruce Wills, some of the Meat & Fibre executive and NAIT management to impress upon them the need to get information out to farmers in a timely manner so they can make appropriate business decisions.
NAIT responded by committing to look into releasing information very soon on tagging timelines, but made it clear that information to farmers on broader requirements and obligations would need to wait until early 2011- after the draft regulations were out for consultation.
To investigate the scale of ‘Sunday night trading' in the sheepmeat industry.
To investigate how emerging animal welfare issues may impact on the industry and what actions can be taken to manage such matters.

The draft minutes from the meeting are currently being finalised, but will be distributed to council members and then placed on the Meat & Fibre section of the Federated Farmers website when completed. If you wish to obtain a copy of the presentations by Jeff Grant, Rob Davison, Scott Champion and/or William McCook, please contact Meat & Fibre Policy Advisor, David Burt, at dburt@fedfarm.org.nz.

Industry news

WOOL PARTNERS COOPERATIVE PROPOSAL

Wool Partners Cooperative (WPC) has published a Prospectus and Investment Statement for the creation of a new, grower owned strong wool company. The purpose of the Cooperative is to provide a pathway for growers to take control of the selling and marketing of New Zealand strong wool, with the goal of delivering improved prices to growers. As part of the launch, the directors of WPC are holding a series of roadshows throughout the country during November to discuss the details its offer with growers. Details of when and where the meetings are to be held can be found online by clicking here. A reminder also, that the closing date for subscriptions is 30 November 2010.

RED MEAT SECTOR STRATEGY - PROGRESS

The first stage of the red meat sector strategy was the Deloitte facilitated survey of farmers and other sector stakeholders. This has now closed and there were more than 550 online submissions received. Thanks to everyone who took the time to participate.

The next stage in the process will be for Deloitte to discuss and debate their thinking with the sector to develop a view on the best way forward using the information and ideas that have been presented to them. They will provide some initial thoughts to stakeholders before Christmas and these will be debated and refined at a series of public meetings to take place around the country in the New Year.

THE WOOL GROUP

The group, which includes Bruce Wills as the growers' representative, continues its work to develop a cohesive, single industry voice under the chairmanship of Colin Harvey. The Group's focus is on the progression of the eight recommendations from the Wool Task Force to improve industry profitability.

GOVERNMENT INDUSTRY AGREEMENTS

In relation to future policy for incursion response and preparedness, MAF is currently pushing ahead with consulting on Government Industry Agreements (GIA). This policy would ensure that industry groups share the cost of an incursion, surveillance and ultimately compensation with Government. Federated Farmers, along with other industry groups, is pushing back on this policy as it is flawed.

Fundamental to the industry's concerns about GIA, is that we believe that biosecurity is a public good. Industry does not accept MAF's interpretation of public versus private benefit, which in no way takes account of the iconic nature of livestock production in New Zealand, the role in environmental stewardship played by farmers or the huge tax revenue from the rural sector. In addition, insufficient regard has been paid to the impacts of exotic diseases on animal welfare, non-commercial producers and the wellbeing of rural communities.

Despite the hard-line and nonsensical interpretations of ‘public good' and ‘private good' that underpin GIA, MAF has made public assurances that this initiative is not about reducing Government spending on biosecurity or the proportion of that spend that will be directed towards primary production focussed programmes. Unsurprisingly, the livestock industries keenly await further details on how these assurances will be demonstrated and supported going forward. If there is to be additional revenue from the livestock sector, industry is interested in how these additional funds might be used to further improve the nation's biosecurity. MAF has not described the additional activities which industry contributions would fund nor demonstrated the need for such additional funding.

INLAND REVENUE ASSISTANCE

The recent events of the earthquake in Canterbury and the Southland and South Otago storms have caused financial issues for farmers and are likely to affect income for the 2011 year in particular, but also in some cases later years. For farmers who have been materially affected, the Income Tax Act 2007 contains discretions for the Commissioner of Inland Revenue to permit later deposits and early withdrawals to and from the Income Equalisation Scheme.

For more information on income equalisation and deposits, please refer to Inland Revenue's Standard Practice Statement 05/09 on income equalisation deposits and refunds which can be found by clicking here.

In addition, Inland Revenue's emergency helpline, 0800 473 566, is available if you wish to discuss specific circumstances.

Training and education

GET AN UNDERSTANDING OF RESOURCE MANAGEMENT LAW

Open Polytechnic's Certificate in Environmental Management will teach you about resource management law, other resource use and conservation statutes and the principles of environmental monitoring and management. Remember, Federated Farmers members get a 20 percent discount. Click here to download an enrolment form.

NATIONAL CERTIFICATE IN AGRICULTURE, PRODUCTION MANAGEMENT

Increase your knowledge and advance your career in agribusiness with Agriculture ITO's National Certificate in Agriculture, Production Management (Level 5). This course is ideal for managers, or those aiming for a position managing agricultural production. This qualification will help you enhance the productivity and profitability of your farm and take your career in agribusiness to the next level. Learn how to develop production management action plans and analyse results, manage a feed budget to meet agribusiness production targets and identify and analyse high performance in agribusiness productivity. To find out more, contact your local Agriculture ITO training advisor on 0800 691 111 or visit www.agricultureito.ac.nz.

Member benefits

OUT THERE SOUTH: A 4WD ADVENTURE IN NEW ZEALAND'S SOUTH ISLAND

This book, Out there South: A 4WD adventure in New Zealand's South Island is a fantastic gift choice for any 4WD owner and an extraordinary record of a 4WD adventure through some of the most spectacular country to be found in the South Island, undertaken by leading photographers Chris Morton and Tony Bridge. Federated Farmers members can purchase this beautiful book at the great price of $39.99 (RRP $49.99), as well as free postage. To purchase your copy, contact Pauline at Craig Publishing on 03 548 9009 or at pauline@cpp.co.nz.

RAVENSDOWN FLYSAFE®

Trust Ravensdown to protect your sheep from flystrike with new Flysafe® Liquid and Flysafe® Spray-On. Call 0800 100 123 for more information.

GET A FREE MASPORT BBQ OR LAWNMOWER WITH VERSATILE

Buy any Versatile fully-constructed double garage (or bigger) and get either a Masport BBQ or Masport lawnmower for free. Hurry this amazing deal ends Tuesday, 30 November. Some terms and conditions apply, so see www.versatile.co.nz for details.

AT WINESONLINE THIS WEEK

For a great selection of award winning Marlborough Sauvignon Blancs, then you must visit www.winesonline.co.nz.

MORE 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.

Contacts

Federated Farmers Meat & Fibre

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 Meat & Fibre representative or one of the executive team as listed below.