Early Bird I Monday May 13th 2024

Fonterra farmers remain concerned about share price discrepancies, our government contemplates reintroducing live exports as Australia gets out of the trade and water allocation a major concern for growers across the country. 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 farmers remain concerned about share price discrepancies Fonterra chairman Peter McBride has acknowledged the significant disparity between the share prices of farmer shares and Fonterra Shareholders’ Fund units. The price of farmer-owned shares closed at $2.38 on the NZX on Friday, whereas the FSF units were priced at $3.58, the price of farmer shares was 35% below the FSF unit price, compared to an average discount of 17% since May 2021. John Stevenson, chairman of the Fonterra Co-operative Council, says that they are monitoring this price gap and seeking advice from auditors to ensure the robustness of Fonterra's asset valuation. Peter McBride avoided commenting directly on the share price disparity, citing Fonterra's ongoing share buyback program and the potential implications of commenting on future intentions or financial advice. He says that the lower share price was anticipated as a consequence of moving to a restricted market, with extensive consultation and support from farmers for the capital restructure.  McBride also noted that farmers' assessments of value are influenced by factors such as the cost of capital, liquidity discount in the restricted share market, and tight cashflows due to inflation on input costs. 2. Fonterra's new CFO announced  Meanwhile, Fonterra has appointed Andrew Murray as its new chief financial officer after initially joined Fonterra in February last year as the commercial director for Fonterra’s global markets business. Fonterra CEO Miles Hurrell has great confidence in Murray's capabilities, citing his extensive experience in senior finance leadership, particularly in driving profitable growth and overseeing large-scale business transformations. Before joining Fonterra, Murray served as the chief financial officer at Simplot Australia and held various senior finance roles at Mondelez over a span of more than 10 years. Hurrell has thanked Simon Till, who has been acting as the chief financial officer since October last year during the search for a permanent CFO.  Till will continue in the acting CFO role until August 1, 2024, after which he will transition into a strategic advisor role within the co-op.   3. Our government contemplates reintroducing live exports as Australia gets out of the trade The export of live sheep by sea from Australia will be phased out by May 2028, with a $117 million transition package to support the industry over the next five years.  Australia's Agriculture Minister Murray Watt says the legislation for this phase-out will be enacted during this term of parliament. Senator Watt emphasized that the comprehensive package aims to strengthen supply chains, develop market opportunities, and improve animal welfare in the industry.  However, the decision to phase out the live export trade over four years has sparked outrage among industry and farming groups. Mark Harvey-Sutton from the Australian Livestock Exporters' Council expressed industry's strong opposition to the decision and reiterated support for Western Australian producers. The move follows one of 28 recommendations made by an independent panel, with the report delivered to the government last October and released recently.  Australia's live sheep export industry has been shrinking over the years, with government figures showing a decline in its value from $455 million in 2002-03 to $84.5 million in 2022-23. Comparatively, New Zealand banned live exports by sea in April 2023 following concerns over animal welfare, highlighted by media investigations. Despite this ban, there are discussions around potentially reversing it while ensuring the highest standards of animal welfare. 4. Water allocation a major concern for horticulture growers across the country. Growers in the primary sector are encountering significant changes and new challenges, with water allocation emerging as a major concern based on HortNZ's recent discussions with growers nationwide.  Water resilience, particularly through availability and storage, is a key focus outlined in the Aotearoa Horticulture Action Plan.  While horticulture is efficient in water usage, growers require higher reliability due to their crops' sensitivity to water quality, and the El Niño weather pattern has exacerbated these challenges with drier conditions across many regions. HortNZ believes that current policies and attitudes regarding land and water use do not adequately support the growth of the horticulture sector and the industry relies on productive land and access to water for sustainable growth. HortNZ says it continues to advocate for policy settings that enable industry growth, including exploring water storage solutions.    5. Charity rugby game raises funds for East Coast The upcoming charity rugby game between Federated Farmers and Parliament, promises to be an entertaining and impactful event aimed at supporting farmers affected by Cyclone Gabrielle.  The event is about coming together to raise funds and show support for East Coast farmers who have faced significant challenges in the past year.  Federated Farmers originally aimed to raise $100,000 to $150,000 but has surpassed expectations, currently sitting at around $250,000 with a new target of $300,000. The funds raised will be used to purchase fencing equipment for farmers in Gisborne and Wairoa still recovering from Cyclone Gabrielle.  The game will also pay tribute to the late Parekura Horomia, a significant figure from the East Coast and is part of a great day of sporting fun at the Ngatapa Sports Club on May 25.See omnystudio.com/listener for privacy information.