This is our last news posting here.

We have moved to www.interest.co.nz/rural

where you will find all our regular stories, all our price comparison pages, and all our rural resources.

Click on this link to go there now

and remember to re-set your bookmarks.

We have moved and teamed-up with www.interest.co.nz because our research showed many of our readers were using both services, and it will be much more convenient for everyone to have access to the rich content streams of both services.

It will give us new ways to bring you an expanded service of the essential information farmers need to manage their business.

As always, we appreciate your feedback. And we also appreciate story or content ideas.

Our contact details are unchanged.

Tony Chaston

Editor, www.interest.co.nz/rural

tony.chaston@agridata.co.nz

 Yesterday Fonterra startled the industry and financial circles by following up a respectable opening forecast payout of $6.90-$7.10/kg milksolids for the season, which begins next week, with a longer range forecast of a possible $8-plus final season payout – if international dairy prices and foreign exchange rates hold at current levels.The opening forecast, which combines a milk price of $6.60 and a forecast distributable profit of 30-50c/kg, means around $650m more for the economy in the 2010-2011 year – but an $8-plus payout would mean a $2b economic bonanza, says Bank of New Zealand head of research Stephen Toplis.The $8 payout would mean a close to $1m income for a farmer producing the industry average of 120,000kg in the season. Out of this has to come the farm’s running costs, tax, labour, family costs and new Emissions Trading Scheme taxes reports Stuff.

Fonterra heavily stamped its new season forecasts announcement with cautions about market volatility, big swings in foreign currencies and economic turmoil overseas.The expectation in the industry is that farmers will keep their wallets firmly shut while they repair balance sheets battered by the global economic crisis and recent drought in some regions. They would reduce debt run up before the payout dropped like a stone overnight last year on the back of plummeting international market prices.Fonterra chairman Sir Henry van der Heyden said many farmers had suffered financial hardship and would use the higher payout to get their books in order. Mr Toplis said New Zealand farmers would be “wealthier” as a result of the payout hike, but it gave them a choice whether to invest more, save more or spend.”In the current environment one would assume they would probably save more than in past cycles.

“There is a golden opportunity now to get the dairy sector back on its feet, not just on its feet, but sustainably. The choice is in farmers’ hands now. Twelve months ago it was not in their hands because they were in dire straits.”Farmers would want to avoid a repeat of 2008-09 when the payout forecast went to a record $7.90, sparking speculation that it would end the season at $8.50 or $9 and prompting farmers to borrow accordingly, Mr Toplis said.The federation’s dairy chairman Lachlan McKenzie reminded farmers that this time last year the opening forecast was only $4.55.”I should add that current Ministry of Agriculture modelling shows that it costs a staggering $4.88 to produce one kilogram of milksolids …”

 Fonterra said it intended to retain 25 per cent to 35 per cent of the forecast 30c to 50c distributable profit.

Once dividends from profits are added, Fonterra could produce a payout of around NZ$7/kg. This would be the second highest payout in Fonterra’s history after the record NZ$7.62/kg paid out in 2007/08. Fonterra chairman Henry van der Heyden said it was possible the final payout could be over NZ$8/kg if the exchange rate and commodity prices stayed at their current levels. This would add up to NZ$2 billion to the economy from the NZ$2009/10 season, assuming the drought of the last few months does not hurt output too much reports interest.co.

Each extra dollar of payout adds around NZ$1.2 billion to the New Zealand economy and the forecast of a higher payout will boost the outlook for the economy overall and provincial economies such as Southland, Canterbury, Taranaki, Waikato, Manawatu, Bay of Plenty and Northland.

Fonterra also held its value of its shares at NZ$4.52 per share. Fonterra requires its farmer/shareholders to hold one share for each kilogram of milk solids it produces each season.

AHB chief executive William McCook said the prosecution showed the AHB would take action against farmers who fail to abide by livestock movement regulations. “It is clearly unacceptable that one man put his fellow farmers at risk for his own pecuniary gain. Selling cattle from a herd that is suspected or known to harbour bovine TB could have serious consequences for the national TB control programme. “We know a vast majority of the 73,000 cattle and deer farmers in New Zealand willingly comply with movement control restrictions and expect us to come down hard on those farmers who do not.

“This conviction sends a clear message to the farming community that the AHB will vigorously enforce the rules around the movement and sale of infected herds. “This complements the other methods we use to control the spread of TB such as monitoring compliance by checking animal identification and status declarations at sale yards and shows. “We also audit animal movements out of movement control areas, investigate overdue TB tests, act on complaints and, as with the Muir case, take action through the courts when necessary,” Mr McCook said.

About 50 people attended the field day, including dairy farmers, biological agriculture staff and Massey University staff. Mr Williams said he and his wife have 400 cows, of which half calve in spring and half in autumn. This autumn is the first season the Williams’ have kept their replacement heifers, and a few calves being raised for beef, on their mothers.

“It’s not new; our grandfathers used to leave calves on the cows. Why have we been rearing calves with all the extra work? Nature designed the cow to look after her calf. And, so far, it’s working really well. The cows and calves seem happier.” The calves were kept on the cow through until weaning, and the cows were also milked during that time.

The few beef calves that were kept were going to a beef rearer in a few days. They had been with their mothers for several days and the beef raisers were happy they were in better health as a result. The field day emphasised to farmers that keeping soil health good was vital for pasture growth.  “Farming biologically meant farming sustainably, both environmentally and economically,” Mr Williams said.  It meant farmers could shift from being “environmental sinners”, to “environmental saviours”, an Abron biological representative said.

Mr Williams said they changed from conventional dairy farming to biological farming two years ago. From five years ago, cow numbers have dropped by 80. “When we went to a biological system, we saw positive differences in six months, such as more even grazing (fewer clumps in paddocks), a complete reversal of mastitis, and last year we had no losses at calving.”

Mr Williams said the dairy industry had become too focused on increasing production, rather than increasing profit. He thought his costs were down by about $1 per kilogram of milk solids as a result of going to a biological system.

Dr Ledgard said the 1.9kg of CO2-equivalent produced for each 100g portion of lamb exported to Europe, was “broadly consistent with other international studies of products derived from farmed, ruminant livestock reports The ODT. His study found 57% of the sheep carbon footprint was generated by the natural process of animals utilising pasture and producing methane during digestion, but it was a figure that has been decreasing.

Our analyses showed that this component of the carbon footprint has decreased by over 20% during the past 15 years, as farmers have made large gains in efficiency of converting pasture to meat.” Dr Ledgard said in an interview the survey allocated emissions from a typical mixed sheep and beef farm and also took into account wool production. The study would help meat companies satisfy carbon footprint questions from customers, and provide a starting point for sheep farmers about to face an emissions trading scheme.

A recent report on the dairy industry concluded that total emissions from NZ dairy farms were substantially lower than those in Europe, and a Fonterra-commissioned report found the life-cycle carbon footprint of New Zealand ingredient and consumer dairy products was 940g for each litre of milk. Dr Ledgard was part of a team which compared the energy and greenhouse gas efficiency of NZ farming systems with those in Europe.

The team concluded that NZ was more efficient, even taking into account shipping products to Europe, which only contributed 10% of the total energy use.The study warned that intensification of dairy farming risked diminishing NZ’s comparative advantage. Dr Ledgard’s study showed that most gains from reducing emissions would come from the most complex task, that of changing the natural biology and behaviour of animals.

National dairy herd numbers reached a record high of 5.9 million at 30 June 2009, up 282,000 since 2008. The size of the North Island herd remained stable at 3.8 million. Factors contributing to the South Island growth include continued dairy conversions, a smaller number of dairy cows and heifers going to the beef herd, more older cows remaining in milking herds, and the sourcing of dairy heifers from the North Island. “In 2009, South Island dairy cattle numbers were almost seven times larger than 20 years ago when there were 312,000 dairy cattle,” said agricultural statistics manager Gary Dunnet.

“North Island numbers increased from 3.0 million to 3.8 million over the same period.”Between 2008 and 2009, sheep numbers fell to 32.4 million, deer numbers were down to 1.1 million, and beef numbers remained stable at 4.1 million.

However, the farmer-owned co-operative and NZ’s biggest company, which processes 92 per cent of the country’s raw milk, said national milk production for the 2009-10 season would still be “a fraction ahead” of last season’s collection of about 14 billion litres of milk – thanks to South Island production. Drought in the upper North Island – Northland and Waikato – had cut daily milk production for this time of the year back 45 to 55 per cent on last season, Mr Deane said.

Daily milk production in the lower North Island was 12 to 13 per cent behind last season. Production in the Nelson and Southland dairying areas was starting to lag behind last year but Canterbury milk output was booming, about 10 per cent ahead of last season. Other parts of the central South Island were still producing ahead of last year. Drought has cramped the hopes – and balance sheets – of many of Fonterra’s 10,000 shareholders in a year in which the co-operative is offering one of its biggest payouts of $6.10 a kilogram of milksolids.

 Meat and Fibre chairman William Grigg said the demand for both beef and lamb was up on last year in international markets. Mr Grigg said Australia and the United States were in a herd-rebuilding phase and a looming shortage of beef, domestic and imported, had seen prices soar in recent weeks.

Lamb product prices had been reasonably stable and demand for lamb in Britain was up on the same time last year, but despite good market prices, the strong NZ dollar had eroded farmer return. Venison prices had taken a dive. They were currently $6.90 a kilogram for a 45kg to 85kg animal, down 26 per cent on the same time last year. He said prices for store stock had decreased as the year and dry conditions progressed.

Mr Grigg said crossbred wool prices had improved a little over the past year, but remained sluggish. Mid-micron prices were better, especially for 24 to 26 micron, which was up 25 per cent on this time last year. Merino prices had recovered, but not to a sustainable economic level. He hoped the coming season would see more activity from European countries, who were noticeably absent this season.

Dairy chairman Bruce Richmond said it had been a “rollercoaster” year for the dairy industry. The early pay forecast was “unacceptable” and early advances were well below break-even level at the start of the season, which caused widespread overdraft blowouts as farmers tried to deal with the most expensive part of the season with little income. The payout improved, but many farmers were still playing catch-up and dealing with huge increases in expenses, especially in electricity and fuel, said Mr Richmond. Marlborough Tbfree Committee: Marlborough Tbfree Committee chairman Chris Bowron said infection in the region was holding at two herds, both in the Upper Awatere.

Stock control officers were called and they recognised the bull as one they had been called out to twice four days earlier. The owner could not be found so the bull was shot because of public safety fears. A Dacre woman who narrowly escaped serious injury after hitting a cow near Woodlands last month said she wanted farmers to take more care with fences. The woman said she had little time to react when the black cow loomed up in her headlights while travelling home one night.”It’s not good enough – the farmer should have the boundary fence hotwired. Cattle have no respect for ordinary fences.” Mr Price said officers were amazed she had walked away without injury. The next motorist hitting wandering stock might not be so lucky, he said.

Police are threatening to prosecute repeat offenders who fail to improve boundary fences, while the Southland District Council is considering impounding animals found wandering. Mr Price said cattle were not easily frightened so they did not flee like horse, deer or sheep did, and they were slow-moving. Cattle numbers in Southland had also increased dramatically. “We’ve probably been a little remiss over the years in not identifying the recidivist farmers that have crook fences. Now the tolerance has gone – anything to do with stock, particularly large cattle, we’re going to take a hardline approach.” Charges could be laid against those allowing road safety to be endangered, he said.