Mycoplasma communication team needs to play with a straight bat

MPI is currently reporting a positive story about Mycoplasma bovis eradication. There is indeed good news to report. But in cricket terminology, the communication team needs to play with a straight bat.

I found myself to be a topic in MPI’s latest announcements. According to an anonymous MPI spokeswoman, I have made claims questioning the time of arrival that I have declined to back up, despite multiple requests. That is a falsehood. The MPI bat is not straight. I will return to that topic further down, but first the big picture.

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The sun must never set on New Zealand’s agriculture

These are increasingly troubled times for New Zealand agriculture.  A significant proportion of the population has turned against farmers for environmental reasons relating to nutrient leaching and water quality. There is also a loud political narrative about methane from ruminant animals and the need to reduce livestock numbers.

There is also a group of agricultural doomsayers who state that new plant-based foods and even totally artificial foods can mimic meat, and that they will do so at much cheaper cost than the real thing. And finally, there is an increasing group of consumers who are committed to vegan diets for perceived health reasons or relating to personal ethical perspectives.

A2 becomes a global dairy disruptor

A2 dairy products are now mainstreaming on a global platform.  In marketing parlance, A2 is becoming an industry disruptor.

A2 dairy products are characterised by being free of A1 beta-casein.  Instead, all of the beta-casein is of the A2 type.  In contrast, most milk contains a mix of A1 and A2 beta-casein, and this milk is loosely referred to as A1 milk.

It is only among cattle with European antecedents that A1 beta-casein is found. It is very common mutation in these cattle. No other mammal species, including humans, goats or sheep, produce A1 beta-casein. All can be considered A2.

The big driver of A2 industry growth is increasing acceptance of health benefits relative to A1.

Mycoplasma bovis compensation mired in delays as plot thickens

The messages coming from MPI, and also mirrored by Prime Minister Jacinda Ardern’s recent comments, are that good progress is being made with Mycoplasma bovis eradication and that MPI is getting on top of its problems. The reality from where I stand is somewhat different.

As of 12 October, official data shows there have been 400 claims lodged for compensation, starting back in the late 2017. Of these, 183 have been either partially or totally paid, leaving 217 waiting in the system. Of those that have been paid, MPI provides no data as to how many are partially paid and how many are total.

Fonterra has three alternatives for its China Farms and none are attractive

This is the second part of a two-part series putting Fonterra’s China Farms under scrutiny. The first part is here

In the preceding article I traced the internal thinking within Fonterra as to why Fonterra decided to produce milk in China. The underlying belief was that Fonterra had the necessary expertise but could not play the desired role within China without having in-country production systems.  By late 2009, having lost its key China partner San Lu from the melamine disaster, Fonterra decided to go it alone with an expansion that would become known as the Yutian hub. From there, additional hubs would be developed.

Fonterra decided it would work towards a supply of one billion litres of China-produced milk per annum and this would require about 80,000 cows milking at any one time. There was an assumption that high-quality milk from these farms would sell at a premium to other China-produced milk. Whether or not Fonterra would also undertake processing operations was seen as a question for the future, but with a likelihood this would occur.

Fonterra’s China Farms are a target for asset sales

This is the first of a two-part series putting Fonterra’s China Farms under scrutiny. In this first part, the focus is on the origins of how Fonterra managed to entrap itself in its loss-making China Farms project.

Fonterra’s new leadership team of Chair John Monaghan, CEO Miles Hurrell and CFO Marc Rivers has made it clear in recent farmer meetings that debt reduction is a priority.  All options are supposedly on the table. However, the only way to achieve rapid debt reduction is by selling non-strategic assets. In that context, Fonterra’s China Farms must surely be lined up in the cross wires.

Dairy co-operatives struggle without retained earnings

Currently there are three dairy co-operatives in New Zealand – Fonterra, Westland and Tatua.  The first two are struggling for capital, whereas the third, the tiny Tatua, has been an ongoing success story of prosperity.

The essence of the difference lies in retained earnings and their productive use.

Comparative statistics for the three co-operatives are available for the six years from 2010/11 through to 2016/17. In that time Fonterra retained a total of 70c of capital per kg milksolids, Westland retained 84c, and Tatua retained $4.85. Those numbers spell it out in spades.