The search for new agri-food markets

The proposed 12-nation Trans Pacific Partnership (TPP) is now well and truly dead.  The question is where do we go from here?

We are hearing talk from various sources about possibilities for a ‘TPP minus Mr Trump’s USA’. But that too is highly unlikely to happen. Getting Japan, in particular, to agree to something without the USA being involved is wishful thinking. And simply waiting for another four years and hoping the USA might came back into negotiations is also likely to prove wishful.  Both major American political parties know that supporting a new version of the TPP is a sure way to lose the next presidential election in 2020. Continue reading

Posted in Agribusiness, China, Dairy, TPP - Trans Pacific Partnership | 3 Comments

How do we get a rational debate about water?

Recently I dipped my toes gently into the debate about how to use water fairly for all New Zealanders.  I did so knowing that to say anything about water is like stirring up a nest of angry wasps.

Both environmental and economic development protagonists are typically convinced their cause is ‘noble’.  Accordingly, many protagonists organise the ‘facts’ to support their prior-determined position. The term for this is ‘noble cause corruption’’, where ends justify means. Continue reading

Posted in Agribusiness, Water | 1 Comment

Developing wealth from water

Current controversies about exporting water, be that in bottles or in bulk tankers, draw attention to New Zealand’s key resource.  Yes, that resource is indeed water. In a world that is chronically short of water, we in New Zealand are greatly blessed.

It is because we are so blessed that until recently we have taken the presence of water for granted. Essentially it has been a free resource.  As a consequence, water law in New Zealand is real messy. And that leads to major impediments to water being used efficiently, and in ways which the different groups in society can agree on as being ‘fair’.  Continue reading

Posted in Agribusiness, China, Dairy, Water | 7 Comments

Bellamy’s organic infant formula derails in China

For the last two years, Bellamy’s organic infant formula out of Australia has been one of the two rising stars of the Chinese infant formula market. The other has been ‘a2 Platinum’ produced here in New Zealand by Synlait for The a2 Milk Company (ATM).

In recent weeks, the Bellamy’s business has run badly off the tracks.  This has sent jitters more widely through the infant formula industry. Continue reading

Posted in Agribusiness, China, Dairy, Fonterra | 4 Comments

Fonterra provides encouragement for non-seasonal milk

Fonterra has recently announced new price premiums for winter milk as from the winter of 2017.  It has done this quietly, without any press release, in an email to all of its farmer suppliers.

Fonterra says it has ‘taken a fresh look at winter milk’ given increased demand caused by the success of its international value-add and food service businesses. These markets need to be serviced 12 months a year. Continue reading

Posted in Dairy, Fonterra | 3 Comments

Dairy volatility has not gone away

Fonterra’s recent upgraded estimate of $6 per kg milksolids (fat plus protein) for the 2016/7 milk price has been welcomed by everyone in the industry. Given that it is only six months since Fonterra’s initial for this season of $4.25, the current estimate should also remind us of the impossibility of predicting milk prices with any accuracy.

This level of inaccuracy is typical of the last three years, where Fonterra’s initial estimates compared to the final price were out by $1.40 in 2014, $2.60 in 2015 and $1.35 in 2016.

Currently, we are about half way through the milk season in terms of production, and most companies will have sold about half of their total seasonal production. With some forward selling, they may even be ahead of this.  It is about this stage of the season that I bring in my price-range estimate to about $1.80 (i.e. plus or minus 90c around a mid-point).   Continue reading

Posted in Agribusiness, China, Dairy, Fonterra | 3 Comments

China’s infant formula market continues to evolve

Chinese infant formula imports are now worth more than twice the value of whole milk powder (WMP) imports. According to Italian information analysis company CLAL, infant formula imports to China for the first nine months of this year had a landed value of US $2.1 billion, whereas WMP imports were valued at only $US 0.87 billion.  This was despite the WMP volumes being more than double those of infant formula.  On a per kilo basis, the infant formula had a landed value of US $12.63 whereas the WMP was valued at US $2.52.

New Zealand is the dominant supplier of China’s imported WMP, with more than 90% market share. However, New Zealand is only a small player in the infant formula market, with 11% of Chinese imports. Continue reading

Posted in Agribusiness, China, Dairy, Fonterra | Tagged | 7 Comments