Early Bird I Friday May 17th 2024

Fonterra drops strategic change bombshell, Government inquiry into the rural banking sector could be weeks away, and tutor departures leave wool handling education up in the air. Welcome to Proud Country's Early Bird - The top things you need to know that impact rural New Zealand delivered to you by 5am, because who doesn’t need better chat beyond the weather! 1. Fonterra drops strategic change bombshell Fonterra is set to sell off its global consumer business, including well-known brands like Anchor, Fresh'n Fruity, Mainland, and others in a move aimed to refocus the company on its core function of milk collection and processing. The consumer division, which includes operations in Oceania and Sri Lanka, contributed 19 percent of Fonterra's earnings in the first half of the financial year, amounting to $190 million.  Despite recent improvements in performance, Fonterra's CEO Miles Hurrell says that owning these consumer businesses is not essential to the cooperative's core mission. Already, Fonterra has received unsolicited interest in its consumer division and anticipates the sales process to span between 12 to 18 months. A divestment of this scale would require shareholder support. This strategic shift underscores Fonterra's commitment to prioritising its ingredients and food service divisions, which utilise 93 percent of the milk solids collected from dairy farmers and generate the majority of the cooperative's earnings. The sale would encompass 17 Fonterra-owned manufacturing sites globally, including three in New Zealand. 2. EPA greenlights GMO use in protein production The Environmental Protection Authority (EPA) has granted approval to Daisy Lab Limited for producing dairy-identical proteins using genetically modified organisms (GMOs) in a secure laboratory environment. This decision enables Daisy Lab to scale up their existing work on genetically modifying yeast for protein production. Dr. Chris Hill, EPA’s General Manager Hazardous Substances and New Organisms, is praising the potential benefits of precision fermentation, including significant savings in land use, water use, and carbon footprint reduction. Under this approval, Daisy Lab will implement strict controls to contain the genetically modified yeast within their facility. The harvested proteins, such as whey or casein, will undergo purification to remove all GMOs before use. Precision fermentation involves cultivating genetically modified microorganisms (yeast) in bioreactors to produce desired proteins. The yeast is modified to include genes for specific proteins, which are then harvested and purified post-fermentation to ensure they are GMO-free. International efforts in similar fields have informed the EPA's confidence that this work poses no risk to human health. This approval marks an important step in advancing sustainable protein production using innovative biotechnological methods. 3. Government inquiry into the rural banking sector could be weeks away Federated Farmers has urged parliamentarians to launch an inquiry into the rural banking sector, highlighting the emotional toll faced by farmers due to increased pressure from banks. In its submission to Parliament’s Primary Production Select Committee, Federated Farmers expressed concern over a significant decline in communication, service quality, and willingness to lend to farmers over the past five years.  According to their twice-yearly banking survey, one in four members reported facing "undue pressure" from banks, compared to just one in 10 a decade ago. This trend, Federated Farmers warned, is taking a severe mental health toll on farmers. The lobby group emphasised that older farmers risked losing everything after being compelled by banks to sell their farms, while younger farmers faced changing and unrealistic expectations that impacted their mental well-being.  While acknowledging the necessity for capital buffers in agricultural lending, Federated Farmers questioned whether the Reserve Bank's measures were excessive. The submission raised concerns about banks potentially using capital increases to justify higher interest margins, referencing comments from a senior Reserve Bank official on the return on capital made by New Zealand banks. ACT MP Mark Cameron, chair of the Primary Production Select Committee, indicated that a decision on proceeding with a full inquiry into the rural banking sector would be made in the coming weeks. 4. Almost four hundred roles to be axed at MPI in July The Ministry for Primary Industries (MPI) has confirmed plans to cut 391 roles, slightly more than the initially proposed 384, with changes taking effect from July 1.  Of these roles, 65 have already left due to natural attrition or early redundancy, while 193 were vacant positions and 133 were current roles directly affected by final decisions, according to director-general Ray Smith. The workforce reduction, amounting to around 10% of MPI's total staff, is part of an effort to streamline operations. Smith emphasised that frontline services, including veterinarians, animal welfare officers, fishery and food compliance officers, and biosecurity teams at the border, will not be impacted. However, the Public Service Association (PSA) is criticising the cuts as "reckless short-term thinking," expressing concerns that reducing the workforce could weaken MPI's ability to respond effectively to crises like Mycoplasma bovis and natural disasters.  Assistant secretary Fleur Fitzsimons questioned the government's decision to mandate spending cuts at MPI, highlighting the potential strain on remaining staff and the loss of experienced specialists. The PSA remains opposed to job losses, emphasising the complexity of MPI's responsibilities and the essential nature of its work in supporting primary industries such as farming, forestry, fishing, wine, and food production.  5. Tutor departures leave wool handling education up in the air. The future of wool classing education is in question as the Southern Institute of Technology faces the departure of its last two tutors next month, leaving vacancies yet to be filled ahead of the upcoming semester in early July. The institute hosts a critical two-year Certificate of Wool Technology and Classing program, which is essential for training wool classers responsible for approving fine wool and mid-micron wool bales in shearing sheds. However, doubts persist regarding the continuity of this tertiary course. Tracy Paterson, Chairperson of the New Zealand Wool Classers Association, is concerned about the potential implications for New Zealand's esteemed wool reputation. Paterson says the importance of quality assurance in maintaining the country's legacy of exceptional wool, highlighting the integral role of the wool classing certificate in upholding these standards. The Wool Classers organization stands ready to support efforts to ensure the continuity of the wool classer course. Currently, about 60 students are enrolled in the two-year certificate program, with the departing tutors offering their assistance to ensure students receive ongoing education and pastoral care until the completion of their block courses. The situation reflects the urgent need for the institute to address the tutor vacancies to safeguard the future of wool classing education and maintain New Zealand's renowned wool quality. See omnystudio.com/listener for privacy information.