Insight
FEBRUARY 2015 //
FROM THE GROUP CEO
Mixed prospects for new year Fonterra’s $4.70/kg milk solids payout revision in mid-December could be likened to the smoke we can smell from a fire whose heat we can’t quite feel yet. Up until October last year dairy farmers were enjoying some significant retrospective payments that buffered the constant flow of bad news from the country’s largest dairy processor. But heading into autumn now and the last third of the season, these payments are well gone with income sourced only from the meagre $3.85/kg milk solids advance payment. To put some firmer numbers around what it means at the farm gate, an average sized Canterbury dairy unit with 800 cows will take a hit of $1.0 million off last year’s income. Expanded across the entire Canterbury region, and allowing for similar declines in Fonterra’ competitor’s payout, there will be $1.0 billion less to spend across the region this year.
with dairying, and given the volatility of global markets, will be there again. Back in 2008-09 the payout slumped from $7.59/kg MS to $4.75, bouncing back up to $6.10/kgMS in 2009-10. Memories are short, but we saw few farms go broke then, and given the level of debt repayment last season, probably even fewer this time. Canterbury’s adaptive farming environment also means this region enjoys greater variety than most areas in terms of income source. This means the hit from dairy will not be as all-encompassing as it will be for regions like Taranaki and Waikato. Dairy’s dark clouds are not banished, but are at least pushed a bit further onto the horizon with good news coming out of the sheep and beef sector. Global supply dynamics mean the world demand for beef is proving increasingly hard to meet as Asian markets get a taste for westernised food as their incomes and number of urban dwellers rise. China alone has experienced phenomenal growth in both sheep meat and beef demand in the last two years, both which NZ has benefitted from.
Uncertainty over what the 2015–16 season brings will see farmers sit tighter for longer on farm expenditure until well into the 2016 calendar year, and even then only if prospects on global markets have lifted.
By the middle of last year total sheepmeat sales to China totalled 160,000t for the year, a massive six fold increase in only five years. Similarly while it is a smaller volume, beef has also experienced a surge to both the Chinese and more traditional United States market.
The upside to look for in this rather gloomy prospect is that we have been here before
Late last year Meat Industry Association Chief Executive Tim Ritchie said demand
for quality meat in China was such NZ would struggle to keep up. China is now NZ’s largest sheepmeat market, and second largest beef market. Indications are this growth will remain, and lamb prices held firmer for longer well into the usual pre-Christmas slide period, and the $100-plus return will do much to deliver a $100,000-plus profit again to sheep and beef operators this farming year. Overall Beef + Lamb NZ is optimistic about the effect this will have on farmer’s incomes, with sheep and beef incomes expected to average $129,600, up from $116,000 last season. Grain farmer prospects will be swinging to some extent on dairy fortunes, with farmers holding back on additional grain supplement where possible. Crop areas are expected to be the same as last year, but big demand reductions are anticipated, with slides of $20-$30/t for barley and wheat and contract prices sitting $30-$35/t lower for both. Lower price parity for imports of grain from Australia to the North Island mean a surplus of available grain is quite likely. However as in 2012, growers may again be happy to sit on their grain supplies to keep prices firmly over $400/t, rather than see the bottom fall out of the market in the current season.
The Ruralco Mobilcard allows you to fuel an entire fleet of vehicles • 12¢* per litre discount off the fuel pump price at over 380 stations nationwide with the most extensive network of fuel outlets in New Zealand; • The ability to monitor fuel spend by vehicle and set spending limits if required;
• Control over purchases by selecting petrol only, diesel only, or all purchases; • Pin security; • All purchases listed by individual cards on one monthly account.
Don’t have a Ruralco Mobilcard? Contact us on 0800 RURALNZ (787 256) to order now. RURALCO NZ LTD
PO Box 433 Ashburton 7740
Tel 0800 787 256 Fax 03 307 6721
ruralco@ruralco.co.nz www.ruralco.co.nz
*Terms and conditions apply.
Your partner in business growth
RURALCO NEWS
NEW SUPPLIERS
Direct Debit
ALEXANDRA Tyreland
For those suppliers who have Ruralco accounts, these are due for payment on the 20th of the month following the date of invoice. You can take the hassle out of paying your account by utilising our direct debit facility. If you require a direct debit form call 0800 RURALNZ (787 256).
Discounts at Point Of Sale Part of what sets Ruralco apart from its competitors is the level of discount we secure from your business for Ruralco Cardholders. To ensure we continue to maintain this point of difference it is important the discount remains meaningful to cardholders and that it is applied consistently. If this occurs, it will encourage a greater level of loyalty from cardholders and promotes repeat business. It is your responsibility to deduct the correct discount as listed in your contract at the point of sale. We also ask you to ensure your staffs are fully briefed about the Ruralco Card and the level of discount offered by your business. One way you can do this is by including information on Ruralco as part of your new employee induction or orientation processes. Please contact your representative if you would like further assistance to improve your staff’s knowledge about your partnership with Ruralco.
RURALCO CALENDAR
February 2 February 4 February 6 February 9 February 14
Nelson Anniversary
March 2 March 4 March 9 March 13–14 March 23 March 25–27
April Real Farmer advertising deadline
April 3 April 6 April 7 April 7 April 10 April 27
January Invoices due by 4pm Waitangi Day April Real Farmer advertising booking deadline Valentine’s Day
February Invoices due by 4pm Taranaki Anniversary Wanaka A&P Show Otago Anniversary South Island Agricultural Field Days Good Friday Easter Monday Southland Anniversary March Invoices due by 4pm June Real Farmer advertising booking deadline
OAMARU Banks Auto Electrical Dunne’s Flooring First Tyreland
ASHBURTON Ashburton MSA Liquor Centre Hedway
RANFURLY Ranfurly Four Square
BALCLUTHA Balclutha Hammer Hardware Tyreland BLENHEIM Automotive Solutions Lugano Motorlodge Mayflower Studio Florist Wadsco Commercial Vehicle Centre Ltd CHRISTCHURCH Copthorne Hotel Commodore Christchurch Airport EMNZ (Naturefarm) Laser Vision Oil Changers Papanui DUNEDIN Tyreland GORE Gas and Tool Direct Lily Jackson Flower Company Shooters World Swanson Saw and Mower INVERCARGILL Framed on Windsor Tyreland Windsor Florist
TIMARU Action Sports (NZ) Ltd Economy Glass Finlay Boats NZ Ltd The Garden Centre Timaru Timaru Plumbing and Gas Centre Timaru Wholesale Plants UPPER MOUTERE Russell Lawrence Fencing & More WAIANIWA Ezi Computing South Ltd WANAKA Tyreland
LEESTON Ellesmere Drapery Tapper Industries Ltd
WINTON Southbuild ITM
MOTUEKA Nautilus Lodge Motel Payless Electrical NELSON Caché (Formerly House of Gifts)
Anzac Day
RICHMOND Allflow Equipment Brightwater Views Bed and Breakfast Captivation Lingerie & Swimwear Specialists Christies Jewellery Ellis Street Auto Repairs Ltd HQ Café & Bar Brightwater Parkside Motel Queen Street Pharmacy Smart Engineering Steve Burton Electrical The Loggers Shop Tilley Plumbing & Drainlaying
RESIGNED SUPPLIER Challenge, Darfield Fruit Direct, Richmond Revive on Oakview, Ashburton RX Refinishing, Leeston
YOUR PARTNERSHIP SERVICES TEAM Contact your representative to discuss marketing your business through Ruralco. Lester Chambers
Jason McKenzie
Richard Potter
Don Joseph
National Sales Manager Mob 027 707 8120 lester.chambers@ruralco.co.nz
Lower Central South Island Tel 03 307 5178 Mob 027 722 7070 jason.mckenzie@ruralco.co.nz
Otago/Southland Mob 027 479 8351 richard.potter@ruralco.co.nz
Fuel Account Manager Mob 027 839 7351 don.joseph@ruralco.co.nz
Chris Montgomery
Sales Support Tel 03 307 5121 nerada.molloy@ruralco.co.nz
Angela Cotton Nelson/Marlborough Mob 027 839 7215 angela.cotton@ruralco.co.nz
Mary-Anne Martin Mid Canterbury Tel 03 307 5182 Mob 027 706 7085 mary-anne.martin@ruralco.co.nz
Upper Central South Island Mob 027 839 7487 chris.montgomery@ruralco.co.nz
Sarah Paton Mid Canterbury Tel 03 307 5167 Mob 027 702 6774 sarah.paton@ruralco.co.nz
Nerada Molloy