A2 herd conversion strategies

The decision by Fonterra to work jointly with The a2 Milk Company (ATM) to produce A2 dairy products will have come as a shock to everyone outside the direct negotiation process. This change now throws into sharp relief the challenges for New Zealand dairy farmers in converting their dairy herds so as to produce A2 milk, this being milk free of A1 beta-casein.

The first decision farmers have to make is whether or not they do wish to start on the herd conversion journey. On the one hand, the Fonterra co-operative has been telling its farmer members for all of its 17-year existence that A2 is simply a marketing gimmick. So, for many farmers, the idea that Fonterra is now going to pay premiums for A2 milk will cause bewilderment.  Continue reading

Posted in A1 and A2 milk, Dairy, Fonterra, Synlait | 4 Comments

The High Country is a battle ground

There is an ongoing battle between conservationists and farmers over the future of high-country farming. Groups with recreation interests are also involved in the fight.

For much of the last 20 years, the rules of the battle have largely been determined by the Crown Pastoral Lands Act of 1998.  This has led to some win-win situations for all parties, but has also been mired in controversy.

I have written about some of those issues here and here, and in particular the importance of understanding the full extent of the perpetual land-use rights granted to runholders under the 1948 Land Act. Without an understanding of New Zealand land law, little else that has been happening in relation to high-country matters makes sense.

More recently, the battle ground and rules of the game have changed such that it is through the RMA (Resource Management Act) of 1991 and various subsequent amendments where disagreements are now fought out. District Plans and the Environment Court are the new theatres of war. Continue reading

Posted in Land and water, Outdoors with nature, The High Country, Water | Leave a comment

A2 plus Fonterra is a seismic shift

The joint venture agreement between Fonterra and The a2 Milk Company (A2M) to work together producing dairy products free of A1 beta-casein is a seismic shift for both the New Zealand and global dairy industries. Fonterra has consistently expressed strong negativity for close on 20 years about such products – known colloquially as ‘A2 milk’ – and as recently as 2016 the Fonterra CEO said it was just a ‘marketing concept’.

In essence, Fonterra has done a U-turn.  It won’t have been an easy decision. There will be some challenges explaining and defending the U-turn to its 10,000 farmer members, most of whom, having listened to Fonterra’s previous messaging, have yet to start converting their herds. Continue reading

Posted in A1 and A2 milk, Agribusiness, Canterbury Earthquake, Dairy, Fonterra, Synlait | 8 Comments

How leasehold values have influenced High-Country reform

Some 20 percent of the South Island is what is commonly called the ‘High Country’.  These are the pastoral lands that lie to the east of the alpine spine that runs the length of the island.

These are also the lands that the Government, following the 1948 Land Act, ‘alienated’ (to use the legal term for privatisation) via perpetual leases for pastoral purposes.

More recently, the Government has been buying back the leasehold rights to the higher country on some of these properties, and converting the leasehold tenure to freehold tenure on the more productive country.

High-country tenure reforms are important for all New Zealanders. This is because of the scale of this land and its importance, not only for pastoralism, but also for landscape values, tourism, recreation, conservation and also as a water resource.  In a democracy, we all need to have an understanding of what our Governments – past, present and future – are doing on our behalf. Continue reading

Posted in Land and water, The High Country | 1 Comment

High Country Tenure and Quiet Enjoyment

The New Zealand high country has been undergoing remarkable changes in land tenure over the last 20 years.  Much of the marginal pastoral land has moved into the conservation estate, and much of the better pastoral land has shifted from leasehold to freehold.  However, the process has been mired in controversy.

The argument against land tenure reform has been led by Dr Ann Brower, until recently from Lincoln University and now from Canterbury University. Dr Brower has argued that runholders have been granted superior land-tenure rights on the lower country that have led to inappropriate land-use developments, which in turn have led to major windfall benefits for private individuals. In particular, the runholders have been able to sell their new rights for huge capital gains. Continue reading

Posted in Land and water, Outdoors with nature, The High Country | 4 Comments

Mycoplasma bovis is unlikely to go away

It now seems likely that Mycoplasma bovis is in New Zealand to stay. Just like the rest of the world, we must learn how to live with it. We do not yet have to give up totally on hopes of eradication, but eradication is looking more and more unlikely.

The control program has suffered from incorrect information and poor communication, and there is much to be learned from that. These information flaws have affected farmer and public attitudes. In some cases, this has created additional and unnecessary stress, and unfair criticism of individuals.

However, the probability is that these flaws have not affected the success or failure of the eradication program. The chances are that Mycoplasma bovis has been here for some years, in which case eradication was always going to be impossible. Continue reading

Posted in Agribusiness, Dairy, Mycoplasma bovis | 6 Comments

Dairy on-farm debt leaves little headroom

The latest statistic for on-farm dairy debt held by banks was $40.9 billion at October 2017. This equates to $22 per kg milksolids.

Despite the major upturn in dairy prices of more than 50 percent that occurred between July and December 2016, and with those improved prices then holding through much of 2017, there were lags for the increase to flow through into farm incomes. Debt therefore continued to climb through to July 2017 reaching $41.2 billion. It then declined by $285 million in the four months through to October 2017. Looking back ten years, the dairy debt remains more than double the 2007 figure of $18.8 billion.

The recent decline in debt is surely a positive sign, but in the greater scheme of things the recent decline is modest. Key questions remain as to the long term financial stability of the dairy industry. Continue reading

Posted in Agribusiness, Dairy | 1 Comment