Farmer King Country
Thursday, June 6, 2024
Mooving Day
The migration of dairy herds around June 1 (moving day) can pose some risks. Story page 2. Plus Paul Charman checks out the plight of the wool industry pages 6-7.
Moving day biosecurity risk
The cows, the kids, the cats – and biosecurity
As if there weren’t enough stressors on dairy farmers and contractors on June 1 (moving day) the Waikato Regional Council has added a biosecurity warning.
“It’s a time of huge biosecurity risk,” Waikato Regional Council pest plants team leader, Darion Embling said. “While there are many really dedicated farmers and contractors who rigorously clean their gear to protect the next property they’re moving to, not everyone is as committed.
“Any form of plant or soil contamination has a real potential of harbouring pests or weeds. Machinery movements in particular pose a persistent high risk in pest spread, with at least 80 pest species known to be typically moved by unclean machinery.”
The recent discovery of the highly invasive velvetleaf on two new properties in the region was a wake up call for the ag sector, Embling said.
“It spreads easily through unclean
machinery and we are really keen to stop it in its tracks.
“Weed infestations can lead to financial loss for farmers and horticultural producers, and seriously harm our natural environment, so stopping new infestations taking hold is often the most economic strategy.”
The standard was no visible soil or plant matter which might spread pests or weeds, and this was on diggers, harvesting equipment, ploughs and undersowers, Embling said.
“It’s important these biosecurity practices are adopted by all farmers, and that landowners insist only clean machinery enters their farm gate.”
Moving Day occurs in the week leading up to and immediately following 1 June each year.
It involves the mass transporting of cows and machinery around the country’s roads as farm contractors relocate themselves and their stock in time for the new season.
New farm changes herd environment
Teat care afficiaados FIL says farmers moving on June 1 should contact them early in the process because a new farm could present the herd with a change of water quality, plant type or farm environment that could mean a change in dairy hygiene and teat care programme is required.
Milk samples from farms across New Zealand are analysed at Farm Medix’s in-house laboratory at the Waikato Innovation Park, the only facility in New Zealand solely dedicated to mastitis testing and prevention.
The laboratory partners with FIL to create targeted strategies, effectively lowering somatic cell counts and reducing clinical mastitis.
The approach delivers bespoke solutions said to be unmatched in accuracy and efficacy.
“Over the past six years, FIL and Farm Medix have recognised and addressed the challenges farmers in New Zealand face with managing mastitis within their herds,” says Colin May, FIL’s National Sales Manager.
Moving day was also a good time to start preparing for early lactation, he said.
FIL has a 10-step milking plan for handling freshly calved cows and to help prevent early mastitis in the spring.
As part of the 10-step plan, have good RMT (rapid mastitis test) procedures in place and RMT all cows before
transitioning to the supply vat.
Talk to us if you need further assistance in this area.”
Reducing mastitis, in addition to improving animal welfare, also helped the dairy industry reduce emissions, he said.
Healthy herds increased milk production and reduced the overall footprint of dairy farming.
A healthier cow translated to increased efficiency, decreased antibiotic usage, and less use of resources.
This shift towards proactive health management enhanced farm profitability and mitigates on-farm emissions, aligning with New Zealand’s emission reduction goals.
“Dairy companies are realising that preventing mastitis, not just treating it, results in more milk in the vat,” May said.
“Lowering somatic cell counts and reducing antibiotic usage helps reduce emissions and hit targets.
It also has a positive impact on the industry.
“We’ve truly shifted farmer thinking about mastitis through our dedication to innovation and environmental responsibility.
“Through evidence-based interventions, we are improving milk quality, increasing herd productivity, and supporting sustainable agricultural practices, both within New Zealand and globally,” he said.
On a wing and a prayer
Paul Charman
Highly pathogenic avian influenza H5N1 has spread globally since December 2021 –but not detected in New Zealand.
There have been nearly 900 human cases of the virus, also called HPAI, or bird flu, globally since 2003, according to the World Health Organization.
The virus has decimated bird populations around the world and jumped the species gap then adapted to spread between cows in the United States earlier this year.
By late May there were 58 known infected dairy herds across the US.
Two human infections had been docu-
“We have seen with Mycoplasma bovis the implications of what can happen when a serious bio-hazard gets established in this country,” Federated Farmers Waikato Meat and Wool Chair Reon Verry said.
“If bird flu were to get here and cause an outbreak in sheep, cattle or deer herds, which then had to be destroyed it could get very expensive very quickly.
“That kind of scenario would be devastating for families working in the rural sector,” he added.
flocks of starlings and potentially large groups of waterfowl in urban areas.
“It’s about ensuring that vulnerable humans are not in contact with (infected) fetal matter from these animals.”
Rusell said vaccinations of birds were being trialled internationally.
“We’re watching this as a zoo and aquarium industry and looking at whether that (vaccinating native birds) is an option for us further down the track.
“The key really is that our monitoring continues so that if it becomes an issue in New Zealand, we’re onto it really quickly and that the public know what to do if they see animals that are distressed and unwell.”
Biosecurity NZ, a branch within the Ministry for Primary Industries (MPI), says it is monitoring the global situation closely, and the risk may increase as the disease spreads to regions where it has
not previously been identified.
“New Zealand is lucky to be isolated from other land masses, does not have migratory waterfowl pathways, and we have good border biosecurity which will reduce the risk of arrival of HPAI,” a DOC spokesperson said.
“Biosecurity New Zealand has systems in place to prevent HPAI entering New Zealand through human activity and to ensure early detection if it does arrive.”
Can our wool survive?
Paul Charman
Years of poor returns could push strong wool beyond a point of no return.
That’s the message from fourth generation wool farmer, Matthew Scott, of Ōpārau, who sees popularisation of shedding sheep breeds and sheep farmers expanding their beef operations as a flashing red light.
“I suppose if I had an option I wouldn’t be a wool farmer.
“I would rather go to Wiltshires or one of the shedding breeds,” he said.
“Still, as a generational producer I’d
like to think there’s some hope for a comeback, as the price has lifted marginally.”
Scott and his wife Hayley farm 1300 ha, comprising about 2000 ewes and 360 cows plus trading stock.
Sons James and Cooper are working on the farm and daughter Bree – in her third year of sports science degree – helps out when she can.
James is a semi-professional motocross, enduro and cross country rider, while Cooper will be attending Lincoln College next year.
“So they’re fifth generation, and I guess said. See stories pages 6-7
In the United States 58 dairy herds have reported bird flu infection.
Ōtorohanga Kiwi House general manager Jo Russell.
From dairy to beef
The top 10 tips for producing valuable dairy beef calves:
1. The supply of dairy beef calves is greater than the current demand for them (by around two million calves). In order to increase demand, we need to make dairy beef more land-use competitive.
This means the quality of dairy beef calves on offer needs to improve.
2. Growth rate is the number one trait bringing value to beef finishers. Age at weaning (driven by pre-weaning growth) is the number one trait bringing value to calf-rearers. You need to select proven beef sires that will produce high growth calves.
3. The best beef sires, that are proven, are only available via artificial insemination (AI) and ranked through the Dairy Beef Progeny Test (DBPT). These beef sires will reliably generate the most valuable dairy beef calves. Look for ways to incorporate more AI into your mating plan.
4. Cow monitoring technology will bring a range of benefits to your herd, including automated heat detection, which makes whole season AI an option.
This creates space for proven beef bulls in the mating programme.
5. A planned mating programme allows you to generate replacements from your best dairy genetics and beef genetics from other cows.
How many daughters do you want from your bottom 25 per cent of cows anyway? Use a planned programme to drive genetic gain and produce quality beef calves.
6. If you have smaller cows, selec-
tion of a high performing beef sire is essential to ensure your beef calves have value to a finisher.
7. A high-performing beef sire is one that is proven high growth through the DBPT. Breed alone (or even acceptance into the DBPT) is not an indicator of performance.
Look up their growth performance in the DBPT.
8. The growth potential of a calf is not obvious from looking at it (a white face isn’t a guarantee), so you will need to promote the value of your calves to buyers based on facts.
9. Develop a marketing plan for your beef-sired calves by:
• Promoting the value proposition to the purchasers of your calves.
• Establish a business connection with beef finisher(s) who will likely purchase to specification and greatly appreciate the value afforded with high genetic merit calves.
• Consider that you may need to link through to the beef finisher via a professional calf rearer who will rear the calves to 100kg liveweight.
• Remember that beef finishers will prefer to buy dairy beef weaners in the autumn at ~200kg liveweight and not in the spring at 100kg liveweight. Can you help them with that requirement?
10. Improving the quality of dairy beef calves will increase the uptake of these calves by finishers, rather than increase the price paid. Increasing uptake is important to the dairy industry.
Source – Beef and Lamb NZ
How dairy can
Chris Gardner
Beef and dairy farmers don’t typically work together, but that will soon change if Bob Thomson gets his way.
Thomson, an Agfirst agribusiness consultant of 50 years’ experience, is leading a project he hopes will unleash
dairy beef potential through partnerships between two quite different segments of the agricultural sector.
One is geared towards producing beef, the other milk.
“We’re proposing to put up a project to demonstrate how partnerships between dairy farmers and beef farmers can
Dairy cows can provide a boost for the meat industry.
beef up the meat industry
work,” Thomson said following a May 28 workshop at Owl Farm, Cambridge.
Owl Farm is a joint venture between St Peter’s School and Lincoln University that aims to demonstrate excellence in farm performance, share knowledge and provide opportunities for students.
Owl Farm cows are in the top three precent when it comes to breeding worth.
“They don’t need to mate all of their cows to a dairy sire to generate the next crop of replacement calves, so they have cows available to mate to something else. Their calves could just be surplus, or they could be generated for a useful purpose,” Thomson said.
That purpose is joining the national beef herd.
“The timing is right for this, and the reason is we’ve now identified beef bulls that provide a real value proposition, a real good reason to establish a relationship that you can get these calves of these top sires back onto your farm for finishing as a beef breeder,” he said.
“Dairy farmers have got surplus calves. It’s not such a big deal now we can bobby a number.
“In the future we’re having to think about that might not be an option. So, if we can start working on solutions now, that would be a great thing.”
The project is relying on a decade’s worth of dairy beef progeny data collected from two 800 cow herds at Limestone Downs, Port Waikato, and
Wairakei, Taupo.
Typically, beef farmers don’t collect the depth of data on their animals that dairy farmers do.
But this dairy beef progeny data set changes all that, including crucial birth weight, calving ease, gestation length and days to weaning data.
“Information has not been collected and available like this before,” Thomson said.
“This was a first.
“We’ve actually learned that not one breed has got a monopoly on good performance.
“There are a number of different breeds that have that.”
Thomson described it as a “win win situation” for both dairy and beef segments of the agricultural sector, one focused on milk solids production, the other on carcass weight.
“It’s real data giving them the confidence that they’re not dealing with estimations. They’re dealing with actual information.”
“With cattle from dairy farms making up fifty percent of all beef-finishing cattle in New Zealand it is imperative that we seek breeding solutions that meet dairy farmers objective of short gestation and easing calving and provide a high growth, excellent quality animal for the beef industry,” Owl Farm demonstration manager Jo Sheridan said:
“With the advances in technology to mate cows and the data coming from superior beef sires - we have the ability
to improve productivity for both dairy and beef farmers by creating a high-
quality dairy beef calf that adds value to everyone along the supply chain.”
Agfirst agribusiness consultant Bob Thomson, Fonterra Farm Source’s Dr Rebecca Hickson, Owl Farm demonstration manager Jo Sheridan, farmer Jeremy Lee, WormWise programme manager Ginny Dodunski, Beef and Lamb director Phil Weir at the Owl Farm workshop.
Nearing the tipping point
Fourth generation sheep farmer Matthew Scott fears for the future of the industry – he shared his concerns with Paul Charman.
Matthew Scott began farming in the 1990s when a shearer could earn enough money in a few years to put a deposit on a farm.
“We’d shear lambs before Christmas which doesn’t get done now because of the state of the wool industry, I remember my grandfather talking about the first block (647 ha) he bought off the BNZ bank.”
It was paid for in full by the wool cheque he received in his second year.
Thrity-plus years on the recent improvement from the rock bottom returns of 80c a kg to the current $2.50$2.60 had been appreciated - but not so much when one considered the assessment of farm adviser Trevor Cook.
Cook told Scott that a return of $10 a kg should be considered the break-even to cover costs of crutching, dipping, animal health, growth rates, viral pneumonia and other factors.
“So you can see how dire things are,” Scott said.
“Right now we’re on a very fine line of a tipping point where we risk not having a labour industry to remove the wool off the animal because so many farmers have already moved to shedding sheep to remove that cost.”
Initially, even before the wool price crashed, an increase in labour costs took a big chunk of farmers’ profits, but Scott doesn’t complain about that.
“I believe quite possibly the shearers,
rousies and pressers aren’t paid enough. Its a pretty demanding job and all credit to those people who put their hands up to do it.”
What needs to happen?
“I would like to see wool be utilised more and recognised worldwide for its qualities. There’s still little understanding of where it comes from and how its processed.
“Some out there still think the animals are killed to get the wool, or they perceive shearing as a form of cruelty, or whatever.”
He is mystified that environmental pundits like those in the Green Party do not shout the benefits of wool from the roof tops.
“Wool is superior to sythetics now getting the blame for shedding microfibres which have gotten into the food chain.
“It almost feels like people don’t want to recognise wool because its coming out of farming.
“There seems to be a stigma that farmers are to be regarded as environmental criminals. Potentially this has perception has held wool back.
“We need the whole of Parliament to get behind wool, not just one party. It’s probably the premium product coming out of our contry with most going for it environmentally.
“Somebody is always cooking up with a new idea, like the use of strong wool in nappy liners, and they seem promising but it never seems to get off the ground.
“We always on the verge of a breakthrough through technology and that’s great. But for wool to survive the famer is going to have to be paid more now.”
Fourth generation wool farmer, Matthew Scott and his wife Hayley at their Ōpārau property. PHOTO: PAUL CHARMAN
Six month turnaround - MP
Paul Charman
Associate Minister of Agriculture Mark Patterson has given himself six months to begin turning around the fortunes of wool.
“I agree that the situation is dire, but there’s so much going on behind the scenes which farmers should know about,” he said.
“We’ve got six months to make a coherent plan for recovery, because that is the time we have between now and when farmers begin to purchase their genetics for next year.”
Patterson agreed with Matthew Scott’s comments on $10 being the break-even price for wool.
“While we won’t be seeing the wool price rise to $10 a kg in six months, we want farmers to see the pathway to get there.”
The coalition Government was aware of the situation and he had been tasked with, “getting under the bonnet and making a real change”.
But counterintuitive as it sounded, he said the issue was less about wool than the profitability of hill country sheep and beef farming and its ability to be a sustainable land use, particularly in competition with forestry.
“If we don’t have wool contributing to farmers’ bottom line in a meaningful manner, that whole model is in jeopardy.
“Then pastureland will be lost to pines with disastrous consequences for rural
communities. Wool couldn’t be a higher priority in terms of recognising this issue.”
With Agriculture Minister Todd McClay and fellow Associate Minister, Andrew Hoggard, Patterson has been explaining the Government’s thinking at a series of 30 shearing shed meetings across the country.
“The situation is bad and many wool farmers are making what is to them a logical move in the short term to shedding sheep.”
He described the situation as a burning platform.
“But there is only one way to turn this around; we need demand exceeding supply (with wool) going into end uses that can support a much higher farm gate price.
He said in the last two or three years $38m had been invested in 30 technology projects.
“Also, we have co-funded Wool Impact, which has been tasked with looking at ways which we can lift returns for strong wool.
“We’re seeing things like 3D printed acoustic panels and wool going into medical grade bandaging, nappies and sanitary pads.”
Wool Source NZ had deconstructed wool into powders dyes and pigments.
“A lot of those initiatives are at a point where they are ready to up-scale and go
commercial.
“The big opportunity we have is that there is a real move back to natural fibres and a growing awareness of issues like micro plastics.
“It’s also good news that following a $50m rebuild, the cyclone damaged wool scourer at Awatoto, near Napier, is back up and running.”
He said pathways to take wool to market should be improved.
“We have to look at the likes of Zespri and Fonterra; we’re not going to be able to replicate them, but there could well be a more direct link between the growers and the end market.
That’s not the big prize but it’s certainly part of the puzzle.”
Down to the last
A long-term drop in the total area of grassland is, unsurprisingly, being blamed for a drop in livestock numbers.
Agricultural statistics senior manager at Statistics NZ, Stuart Jones said the national sheep flock was 24.4 million for the year ended June 2023 – a three per cent (773,000) drop.
In the same period, total beef cattle numbers fell four per cent (167,000) to 3.7 million and dairy cattle by 1 percent (45,000) to 5.9 million.
The total area in grassland, excluding tussock, fell 12 per cent (942,000 hectares) from 2011 to 2023. Over that period sheep numbers fell 22 per cent (6.8 million) and beef cattle numbers by five per cent.
The area was about 15 times the size of Lake Taupō. The area in pine and other exotic forest grew 11 per cent(179,000 hectares) in that period.
Dairy cattle numbers peaked in 2014, and have since fallen by 12 percent (813,000). The exception to that fall is Canterbury where numbers rose 27,000 – two per cent.
The use of fertiliser usage also fell – by 54,000 tonnes, 11 per cent in the period.
24.4 million
Agriculture continues to be a mainstay of New Zealand’s export industry. Of New Zealand’s total $69 billion exports for the year to 31 March 2024, the top four export products by value were dairy products ($19.6 billion), meat and edible offal ($8.7 billion), timber ($4.9 billion) and fruit ($3.7 billion).
The country’s sheep population has dropped by almost seven million since 2011.
Mark Patterson.
Secrets of an award winning farm
Sigrid Christiansen talks to
Group General Manager
Anaru Smiler about how Ahuwhenua award winners Wairarapa Moana ki Pouakani
Incorporation’s policies have led to its success.
“Looking after people:” that’s the short answer. “Research and evaluation,” might be a slightly longer one. In the calving season’s peak, WMI workers are provided with food drops. They don’t have to find time for supermarket visits during what is always an intense time of year on any dairy farm, however well managed.
It’s just one part suite of strategies aimed at keeping a healthy, happy, workforce.
There’s recognition: an annual awards night in Taupō. And there’s implementation of the Healthy Homes scheme to ensure staff housing is a cut above the norm for dairy farming.
The farming roster is designed to support worker’ wellbeing in an industry notorious for long hours.
“There’s a 7 on, 2 off, 7 on 2 off, 7 on 3 off roster – so workers get the usual two day breaks, plus every third weekend is a long weekend,” Smiler said.
On some farms, things are done because that’s how they’ve always been done. Not here.
“Evaluation is a big part of what we do.” We have a responsibility to our shareholders, so we don’t invest in products or systems unless we’ve used our processes to determine whether they will be right for our farms.”
The evaluation process works by trialling initiatives on just one of the group’s farms, and rolling it out to the others. Cow collars are one such example; they’re currently being tested just on one block, before a bigger investment.
After all, with 12,000 cows across the board, that’s a substantial dollar cost.
The overall goal is keeping the farm productive with an increasing focus on environmental goals.
“We have been lowering inputs such as feed supplementation and nitrogen, while maintaining our production.”
According to Kim Turner, the manager of Farm 4 – the dairy unit that won the Ahuwhenua Trophy – that low input model is one of the things that sets the farm apart from others. It is the farm’s biggest challenge, but one of its biggest assets.
Kim said the almost all female team was another: she found her workforce reliable, as well as respectful of each other, the cows, and the farm equipment.
GM Anaru Smiler said herd genetics were also central.
“One of the ways we’ve done this is through understanding our genetics –so we increase the number of high BW (breeding worth) cows in our herd, as an example.”
Wairarapa Moana Ki Pouakani (WMI) currently consists of 12 dairy units across 4,300ha, three dairy support units comprising 1,900 ha and two forestry blocks totalling 6,100ha.
The dairy side of the operation aims to produce five million milksolids from its 12,000 cow herd and is the largest supplier to milk processor Miraka Ltd,
CALF MILK PUMP
of which WMI is a cornerstone shareholder.
WMI coperates under the stewardship of the mokopuna of the original 230 owners, Kingi Smiler (Chair), Te Horipo Karaitiana (Deputy Chair), Anne Carter, Sonya Rimene and Brad Tatere. The Committee’s aspiration is to continue to nurture their taonga for future generations guided by the overarching philosophy of kaitiakitanga. With a strong focus on optimising both economic and environmental performance, WMI has comprehensive
business and environmental plans, aimed at building a sustainable and resilient business.
WMI also provides cultural and social investment to support the well-being of their tipuna marae, owners and wider whānau, as well as the community in Mangakino.
It will be another three years before the Ahuwhenua trophy is again awarded to a dairy farm.
It rotates its process of recognition between horticulture, sheep and beef, and dairy – and 2024 was dairy’s turn.
Wairarapa Moana leaders Sonya Rimene, Anaru Smiler, Lyn Whata and Kingi Smiler. PHOTO: ALPHAPIX
Market change for red meat
Strengthening red meat demand from the United States has overtaken a diminishing China market, Meat Industry Association chief executive Sirma Karapeeva says (pictured).
Exports to China were down 37 per cent to $231 million, compared to April 2023, as meat importers continued to draw down on frozen inventory built up over Covid. China has consistently been New Zealand’s largest market since July 2018, with the exception of February 2020 when there was a significant drop at the start of the Covid pandemic.
to the UK rose 62 per cent to $43 million and by 38 per cent to the US, to $57 million. China accounted for 26 per cent of sheepmeat exports by value for the month, compared to 40 per cent last April.
Sheepmeat exports to the EU were worth $89 million, down from $104 million - still the second highest April figure for exports to the EU since 2018.
Beef exports remained steady year-on-year, with overall exports up two per cent by volume and value to 45,174 tonnes and $403 million.
Saving the way
Self-interested participants in the energy sector who make money from selling as much power as possible are quick to say New Zealand needs to generate more power but do not push reducing overall energy demand, Ecobulb managing director Chris Mardon said.
Exports to the US rose 19 per cent to $261 million in April, making it the largest market for the month, and there was also a large increase in exports to Canada, up 105 per cent to $32 million. Livestock numbers in both the US and Canada have been declining following widespread drought.
The sector exported red meat worth $922 million during the month, down four per cent from last April. Sheep meat exports were down two per cent on last April, at 37,057 tonnes. The value was down 10 per cent to $345 million.
Exports to China were down 27 per cent to 16,081 tonnes and the value down 44 per cent to $88 million. Exports
The US was the largest market for the month, up five per cent by volume to 17,678 tonnes and 15 per cent by value to $176 million.
Exports to China were down 21 per cent by volume to 14,347 tonnes and 34 per cent by value to $98 million.
There was a significant increase in exports to Japan compared to last April, up 170 per cent by volume to 3,833 tonnes and 161 per cent by value to $36 million attributed to Japan’s significant growth in tourist numbers this year, particularly in the food service sector. The country recorded a record 3.1 million foreign visitors in March.
Exports to Canada were up 239 per cent by volume to 2,045 tonnes and 235 per cent by value to $19 million.
He says the impact of energy efficient appliances is ignored because it reduces power consumption and therefore their growth in profits.
Ecobulb developed a software platform in the King Country in 2021 to undertake in-home and on-line energy assessments.
It says in less than a year it combined its software platform with commercial, human and process innovations to deliver 2289 energy assessments and $1.34 million a year in savings on power bills to King Country homes.
“All too frequently we hear talk that New Zealand’s power system cannot keep up with demand and needs to burn thousands of tonnes of carbon-belching Indonesian coal, that blackouts are possible, and spot prices are at sky-high
levels,” Mardon said.
“What’s missing is the larger energy efficiency and carbon dioxide emission reduction potential from the widespread rollout of efficient lighting, hot water heating and electric motors in New Zealand homes and buildings.”
Ecobulb has recommended to ministers and the Climate Change Commission that the government recommence and scale up its co-investment for energy efficiency programmes that deliver electricity savings at a lower cost than new electricity generation – and oblige and incentivise lines companies and electricity retailers to improve energy efficiency.
He noted a Concept Consulting evaluation found that replacing all 29 million inefficient light bulbs in New Zealand homes with LEDs would deliver 3.9 million tonnes of avoided carbon dioxide emissions through to 2040.
The country was warned last month to reduce their electricity use amid potential tightness in supply as spot prices hit $5,000 per MWh.
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The way through a cold winter is energy efficiency, says Ecobulb.
Record turnout for price hedging
Chris Gardner
A record number of dairy farmers and rural professionals have turned out for a milk price hedging workshop.
Thirty-two people showed up for the workshop at Fonterra Farm Source, Cambridge, a larger turnout than previous workshops in the Waikato, Taranaki, and the South Island.
“Farmers are becoming more interested, which is really positive, interest
has been growing pretty rapidly over the past three” said NZX derivatives sales manager James Atkinson said.
More than 20 per cent of New Zealand milk produced by just under five million dairy cows in more than 11,000 dairy herds is being managed via milk hedging tools.
Milk price makes up more than half of an average dairy farm’s risk profile when looking at different costs and revenue streams on farm from season
to season.
Fonterra dairy farmers have been able to use fixed milk price tools since 2019. Futures and Options have been available since 2017, however, they have seen more uptake from farmers over the past few years.
Milk price hedging uses financial instruments such as futures contracts and options or processor fixed contracts to hedge against fluctuations in milk price driven by climactic, economic, and political factors.
Futures can be used to lock in a milk price for a future season.
“Farmers pay an initial margin upfront which generally decreases over the life of the future position as volatility reduces and the milk price becomes more known,” Atkinson said.
“The variation margin is marked daily to the futures market price.”
Options are like insurance, Farmer pays a premium up front, to protect them from a falling milk price.
“Options protect against downside risk in milk price and can be an effective tool for farmers who want to set a price floor,” he said.
“There are a number of strategies farmers can use with Options.”
“The ’24 season milk price futures dropped to as low as $6.70 per kilogram of milk solids then peaked above $10.30 throughout the life of the contract. Every season can be volatile.”
Fonterra’s May 29 forecast was between $7.70 and $7.90 per kilogrammes of milk solids.
“Fixed milk price is a handy way to get farmers started in the education. They can build from that to other prod-
ucts and tools.”
“A lot of other businesses use these sorts of tools to lock in the margin and lock in profit.”
“Farmers use the tools for hedging purposes, which means to manage their price risk and manage their business more effectively.
“So, if you can lock in margins above costs on farm that can build resilience within a business. It’s for managing milk price risk.”
NZX derivatives sales manager James Atkinson.
Pushback on carbon forest claims
Independent forest ecologist Adam Forbes says the notion carbon credit pine plantations can reliably be transitioned into permanent native forests at large scales is false.
New Zealand Carbon Farming claims pines can be managed for use as a nursery to established native forests over periods of up to 100 years.
Forbes thinks this is highly unlikely. Having researched the subject for 12 years he concluded the intensive management required to achieve it would probably render such a venture unprofitable.
Instead, he predicts many of the carbon forests now planted across the North Island, including those in the King Country, will be subject to wildfires and become infested with plant and animal pests.
“The scale of the land under pine forests in the Central North Island – which now cover many thousands of hectares – means that controlling browsing animals such as goats and deer to the level required (for native regeneration) would be near impossible.
These will wipe out the native plants needed to establish a permanent native forest,” Forbes
said.
“Add to this the fact that these forests are likely to become unstable as many of the trees have been planted on very thin skeletal soils.
“This means that once they begin to windthrow they will continue to windthrow.”
He measured the diversity of natives that grow in pine forests and concluded that it was generally far too low to sustain the growth of a native canopy that would eventually enable a permanent self-sustaining forest.
Outside of a few “hot spot areas” in the King Country, such as near the Pureora Forest, it is not feasible to envisage that sufficient native seeds will be available to grow a sustainable native forest over time, he said.
But this image is being projected by NZ Carbon Farming. Its website has an animation portraying the progress over the next 100 years of a property slowly turning into native forest after being planted in pines.
Light wells are created, while planting long-lived totara and rewarewa.
And at about 100 years this property is a bio diversity rich permanent native forest.
“I think there is more uncertainty than certainty over what they are saying,” says Forbes.
“If those stands don’t achieve what they are claiming the likely outcome is that they will harbour pests, both browsing animals (deer and goats) and plant pests.
“There will be a wildfire risk and the stands could be unstable as pines are planted on skeletal soils, like those in many parts of the King Country, where pines are shallow rooted.
“Why would you expect carbon investors to reinvest so heavily in forest management when they are faced with costs to deal with all these issues.”
NZ Carbon Farming was given an opportunuity to comment.
Dr Adam Forbes has specialist expertise in forest ecology and restoration and operates primarily as a consultant ecologist based in Havelock North.
He holds a PhD in Forestry and is a Research Associate with the University of Canterbury (UC) School of Forestry.
In 2019 he was appointed as the UC Restoration Ambassador, is a role in which he provides expert restoration advice to landowners across New Zealand.
FARM PROFESSIONALS
University of Canterbury professor Adam Forbes.
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