Emissions landscape not as clear-cut as tech firms good, farmers bad

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ExportNZ supports the goal to reduce our greenhouse gas emissions along with the rest of the world. But we are seriously concerned about the survival of our food-producing export sector and our energy-intensive firms that export.

That is because economic analysis done by NZIER for the Ministry for the Environment shows that to get to net carbon zero by 2050, the price of emissions needs to be about $272 a tonne, under the most optimistic scenario. It factors in innovation breakthroughs in energy and farm animal emission reductions, and access to international emission reduction credits.

Given that the price of carbon is currently about $25 a tonne, this is a huge price increase which will flow through into the cost of food and energy. If other countries don’t adopt similar constraints leading to similar prices, we will put our farmers and our energy-intensive companies out of business. This will not just be bad for our economy but bad for the environment as well.

That is because we are verifiably less emissions-intensive producers of food and energy than other countries and if we price ourselves out of the market, other countries will fill the gap we leave with increased greenhouse gas emissions for our planet.


This problem, which is called “carbon leakage”, is why tackling this global challenge is such a wicked problem.

An OECD agricultural expert was recently in New Zealand. I asked him whether other countries would put a price on emissions from farming and food production. He said New Zealand is leading the rest of the world in lower emission farming already, both the way we farm (grass-fed) and due to our 20 years of greenhouse gas research. He said no other country would be likely to include agriculture in emissions trading schemes, either because it was a small part of their economy, or they were developing countries.

According to some economists, by the time the price of emissions gets to around $75 a tonne, most of our livestock farms would be converted into forestry. In my opinion this would happen way before that price was achieved.

Sheep milk gelato goes global

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New Zealand sheep milk gelato makes it to finals of global dairy awards

Spring Sheep Milk's gelato is a finalist in the World Dairy Innovation Awards. It will soon be available in New Zealand ...

Spring Sheep Milk’s gelato is a finalist in the World Dairy Innovation Awards. It will soon be available in New Zealand stores.

Two New Zealand companies have made the finals of the World Dairy Innovation Awards, although neither managed to come away with a first prize.

Spring Sheep Milk, based near Lake Taupo, was a finalist in two categories: the best ice cream or frozen yoghurt, and best dairy packaging design.

Fonterra was a finalist for the best dairy ingredient.

Landcorp and marketer SLC have about 3000 milking ewes on a farm near Taupo.

Landcorp and marketer SLC have about 3000 milking ewes on a farm near Taupo.

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Spring Sheep Milk chief executive Scottie Chapman said it was a great achievement for the company to make the finals after just one year in operation.

“It shows the industry is looking at alternative dairy. There were so many categories, but if you asked me which one I’d like to win, it would certainly be the ice cream innovation. There is a lot of kudos within the industry with these awards,” Chapman said.

Most of the company’s first year’s production was turned into probiotic and prebiotic powders. About 98 per cent of products are for export, with Taiwan earmarked as the first market followed by South Korea and Malaysia.

Spring Sheep Milk would soon sell gelato, sheep milk latte and butter on the local market.

Chapman said consumers were looking for alternatives to traditional dairy.

“Sheep milk is richer and creamier than traditional cow’s milk. It has been used in Europe for centuries as a gastronomic indulgence, renowned for quality cheeses and is now a rapidly growing category worldwide.”

The creator of the gelato was Murray Taylor, formerly technical manager for Tip Top and at present a director of OOB Ice Cream. The nzicream website describes him as “Mister Ice Cream”.

“When you think of your favourite ice cream there’s a good chance Murray Taylor has been involved with creating it so we approached him to help us. He’s got over 40 years’ experience but this was the first time he’d worked with sheep milk,” Chapman said.

Taylor created a dark chocolate and a vanilla bean gelato and says he’s been impressed with sheep milk.

Spring Sheep Milk was established in June 2015 and is a partnership between Landcorp, and boutique sales and marketing company SLC.

The World Dairy Innovation Awards are in their tenth year and are designed to celebrate excellence and innovation across every category of the global dairy industry.





Stephen Winter of Nind Dairy Services in Invercargill

Dairy downturn hurts other businesses

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Source: The Southland Times

The flow-on effects of the dairy downturn is beginning to bite in Southland towns, with numerous companies reporting a downward trend in business.

Dairy support companies are feeling the pinch from the low milk price payouts and unrelated businesses have also noticed farmers putting the brakes on spending.

Southland regional manager for Farmlands, Harry Soper, said all Southland towns were rural service towns so the downturn was affecting everyone.

The most important thing was the health and wellbeing of those affected, he said.

Farmlands, which sells goods to farmers, was finding business “challenging”, but having a diverse range of other business interests was proving beneficial.

Invercargill’s Nind Dairy Services director Stephen Winter said the diary downturn had resulted in work and revenue for the company dropping significantly.
“It’s pretty obvious when the payout goes from $8 to under $4 it will have a huge impact, not only on dairy farmers but also on companies like us servicing them.”

Winter believed revenue for businesses servicing the dairy industry was down 25-30 per cent on last year.

However, he said it was not all doom and gloom.

Farming went in cycles and his business had been through such cycles during its 25 years of servicing the dairy industry.

Two years ago the company built 12 new dairy sheds but they only had four confirmed this year,with two pulling out since Christmas.

Winter said they had not replaced any of the tradesmen who had left in the last two years, meaning they had dropped from about 40 to 30 staff.

The longer the downturn continued the harder it would be, but Winter said his company would ride it out.

“It will bounce back at some stage, but we don’t know when that will be.”

Ewan Allan Honda owner Andrew Allan, based in Gore, said new motorbike sales had dropped off in the first three months of this year.

However, their workshops had been busier than normal, with many farmers getting motorbikes fixed instead of buying new ones.

Honda was also sourcing older model motorbikes to sell to farmers, which were cheaper than the new models.

“It’s time to give a bit back to farmers and that’s part of it,” Allan said.

Udy’s Grain and Feed Ltd owner Ross Norman said his Wyndham business, which sells calf feed to dairy farmers, was experiencing a downturn in sales.

“Two years ago we had a great year, last year it was down a good 20 per cent and I am worried about it going down again this year.”

Invercargill Licensing Trust general manager Greg Mulvey said dining numbers in its restaurants were down slightly on last year and forward accommodation bookings had softened, indicating rural sales reps were travelling less.

“Other than that we haven’t noticed anything that would be significant.”

H&J Smith chief executive John Green said one third of its clients in Southland were rural based and there was “definitely an air of caution” in their spending.

Sales had been partly affected in high ticket items such as furniture and hunting apparel, but overall Green was pleasantly surprised how business had stood up.

H&J was carefully monitoring the situation.

Invercargill Hunting and Fishing owner Gerald MacRae said its sales had not declined during the dairy downturn, with farmers still keen to get out hunting and fishing.

The rural community were positive and resilient people, he said.

“Even if things are a bit tough it’s good they get off the farm and do other activities.”


Fonterra Cuts Milk Price Forecast to 9-Year Low on Global Glut

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Source: AGWeb

Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, cut its milk price forecast to a fresh nine-year low as oversupply continues to depress the global market.

The Auckland-based company dropped its estimate for the 2015-16 season to NZ$3.90 ($2.64) a kilogram of milksolids from NZ$4.15, according to a statement Tuesday. It now expects to pay its 10,500 New Zealand farmers between NZ$4.25 to NZ$4.30 a kilogram of milksolids inclusive of dividends.

“This further reduction in the forecast farmgate milk price is the last thing farmers want to hear in what is proving to be a very challenging season,” Chairman John Wilson said.

Four out of five dairy farmers in New Zealand will operate at a loss this season as the global slump in milk prices enters its third year, hurting economic growth, according to the central bank. Fonterra’s announcement comes two days before Reserve Bank Governor Graeme Wheeler is due to decide whether to cut interest rates to a fresh record low.

Wheeler will keep the official cash rate unchanged at 2.5 percent on March 10, according to 15 of 17 economists surveyed by Bloomberg. Two expect a cut.

New Zealand’s dollar fell after the Fonterra statement. It bought 67.73 U.S. cents at 9:05 a.m. in Wellington, down from 68 cents.

Milk prices have been falling amid increased European production and weaker demand from Russia and China. Prices at GlobalDairyTrade auctions fell to a 12-year low in August and haven’t recovered significantly as the supply imbalance persists.

“The time frame for a rebalancing has moved out and largely depends on production reducing -– particularly in Europe — in response to these unsustainably low global dairy prices,” Chief Executive Officer Theo Spierings said in today’s statement. “Our forecast is based on no significant changes to either supply or demand globally before the end of the year. However, a reduction in the supply available for export before then could mean prices recover earlier than currently expected.”