Early Bird I Friday September 13th 2024

Energy costs spark rural industry exodus concerns, farmers’ voices heard in agricultural regulatory overhaul, and lamb shortage drives prices up amid NZ dollar decline. 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! Energy costs spark rural industry exodus concerns Rural New Zealand is on edge as high energy costs continue to threaten the viability of key industries. The recent closure of Winstone Pulp's central North Island mills has raised alarms about the wider impact on the agricultural sector. Regional Development Minister Shane Jones has voiced concern over the situation, saying that industry leaders, including those in the agricultural sector, have warned about the consequences of high industrial electricity prices. Jones says that major grain growers are hesitant to invest due to uncertainty surrounding energy costs for drying corn in early autumn. The minister also highlights a troubling trend where some industries now find it more cost-effective to import goods rather than produce them locally due to energy expenses. This shift could lead to a "hollowing-out" of rural industry, a prospect Jones describes as deeply concerning. The issue extends beyond the agricultural sector. Methanex, a major industrial player, is considering reducing operations or potentially closing down due to high energy costs. This development underscores the widespread nature of the challenge. Jones warns that the departure of these industries could result in a "disindustrialised" version of rural New Zealand, leading to lost export revenues and broader economic impacts. The government is taking steps to address the situation. Jones and Energy Minister Simeon Brown are working on a sector review. Jones stresses the need for an unbiased examination, stating that the review will not be influenced by industry insiders who might make excuses for poor performance. Farmers’ voices heard in agricultural regulatory overhaul The agricultural community has responded with enthusiasm to a government review aimed at streamlining regulations for farm and orchard products. The Ministry for Regulation has received an overwhelming response, with 80 detailed written submissions and meetings with over 50 industry groups. Regulation Minister David Seymour says that delays and complexity in the approval process are hindering access to innovative products already in use in other OECD countries. Seymour likens the current situation to waiting in a long queue, emphasising the need for change. The review seeks to accelerate the approval of safe, innovative products crucial for maintaining the competitiveness of New Zealand's agricultural sector. It aims to address the concerns of farmers and growers who have long called for a more efficient regulatory system. Environment Minister Penny Simmonds acknowledges the vital role of farmer input in this process. She stresses the importance of hearing directly from those most affected by these regulations, particularly regarding access to new tools for managing pests and diseases. Food Safety Minister Andrew Hoggard commends the agricultural sector's active participation in the review. He notes the delicate balance between meeting international food safety standards and creating a more efficient regulatory environment.  The Ministry is now analysing the wealth of information gathered from submissions and direct engagements. They plan to refine their recommendations through consultations with a sector reference group and targeted meetings with various stakeholders and government agencies. NZ Shareholders Association backs Synlait's controversial funding plan Synlait Milk is moving ahead with a critical capital raise, gaining unexpected backing from the New Zealand Shareholders Association. This development comes as the dairy company grapples with significant debt and aims to secure its financial future. Next week, Synlait shareholders will convene at the company's Dunsandel site to vote on a $217 million capital raise proposal. This move would see Bright Dairy, Synlait's largest shareholder, increase its stake to a controlling interest, while minority shareholders face dilution. The capital injection is crucial for Synlait, the country's third-largest dairy company, as it aims to reduce its debt load, which currently exceeds $550 million. Under the proposal, Bright Dairy would contribute $185 million at 60 cents per share, while a2 Milk Company would invest $32.8 million at 43 cents per share to maintain its 19.8% ownership. Initially, the NZ Shareholders Association (NZSA) had reservations about the plan, describing it as a "dead rat" for minority shareholders. However, the association has now decided to support the raise, albeit with some concerns. The NZSA's change of heart came after receiving assurances from Bright Dairy. The Chinese company stated its commitment to advocating for minority shareholder participation in future capital management initiatives as Synlait's financial position improves. Shortage drives prices up amid NZ dollar decline The New Zealand dollar has retreated to about 61.30 US cents, down around 0.8% in the latest commodity index update. This movement has directly influenced ASB's commodity price indices, which rose in New Zealand dollar terms last week while declining in US dollar and SDR terms. In the meat sector, lamb prices have increased 1.3% in New Zealand dollar terms, driven by a significant supply shortage. August saw lamb exports fall to just 12,900 tonnes, marking the second-lowest month since 2006 and 4,000 tonnes below the five-year average. This scarcity has prompted most processors nationwide to raise prices for finished lambs. The beef market is also showing strength, with prices up 1% in local currency. Demand for store cattle remains high, with some saleyards reporting new price records. However, the market for finished steers and heifers has remained steady. Dairy prices present a mixed picture. While the overall dairy index rose 0.2% in US dollar terms and 1% in New Zealand dollar terms last week, individual products varied. The latest Global Dairy Trade Pulse auction saw whole milk powder prices increase 0.7% to US$3,430 per metric tonne, while skim milk powder jumped 2.6% to US$2,800 per metric tonne. In the broader commodity landscape, oil prices have weakened considerably. Prices have dropped around US$10 per barrel from late August levels, reaching 2024 lows in recent days. This decline, driven by concerns over global demand, may potentially lead to lower prices at the pump for New Zealand consumers. Deadline nears for New Zealand Century Farm and Station Awards The New Zealand Century Farm and Station Awards are calling for applications from farming families with a long heritage on their land. As the November 30 deadline approaches, families who have farmed their land since 1924 or earlier are encouraged to submit their applications for this year's intake. NZCFSA chair Edward Fitzgerald says applications are already coming in strong, indicating another successful year for the awards. The 2023 event, held in Lawrence, Otago, was highly praised by visiting families, with the committee continuing to receive positive feedback from attendees. The awards process begins with gathering farming history and culminates in a reunion of extended family at the awards ceremony. This provides a unique opportunity for all generations to reflect on the challenges and achievements spanning over a century of farming. Fitzgerald emphasises that maintaining a farm or station within a family for generations, especially through challenging times, is a remarkable achievement worthy of recognition.  Eligible families are asked to submit narratives of their farm history, along with photographs and supporting documents. These records are then archived at the Alexander Turnbull Library in Wellington, ensuring they are preserved for future generations. Over the past 19 years, more than 630 families from across New Zealand have joined this exclusive group of centenarians and sesquicentenarians. The program operates on a first-come, first-served basis, with a cap of 40 families per year for each awards event. Fitzgerald advises interested families to submit their applications early to avoid disappointment. Further information and application forms can be found on the Century Farms website www.centuryfarms.co.nz  See omnystudio.com/listener for privacy information.