Early Bird I Thursday August 22nd 2024

Global Dairy Trade auction sees biggest price jump in over 3 years, Synlait unveils recapitalization plan to bolster finances, and new report shows a veterinary workforce exodus looms. 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! Global Dairy Trade auction sees biggest price jump in over 3 years Dairy farmers are set to benefit from a significant surge in global dairy prices, with the latest Global Dairy Trade (GDT) auction delivering the most substantial percentage increase in over three years. At the latest auction, the GDT price index rose 5.5% to a robust $6,368 New Zealand dollars per metric tonne - the biggest jump since March 2021. This positive result comes after a 6.9% drop in prices just six weeks ago. The star performer was whole milk powder, which accounts for the largest portion of Fonterra's milk price. Whole milk powder prices jumped 7.2%. Skim milk powder, Fonterra's second key reference, saw a 4% increase. Other big gains included a 4.8% rise in anhydrous milk fat, and a 3.7% increase in butter. Even smaller product categories like lactose and mozzarella saw healthy price appreciation. The bullish sentiment would likely prompt dairy companies, including Fonterra and Synlait, to review their farmgate milk price forecasts for the current season. Fonterra's opening forecast range was $7.25 to $8.75 per kilogram of milk solids (kgMS), with a midpoint of $8/kgMS. Synlait, meanwhile, has a base forecast of $7.80/kgMS. Both companies have maintained these opening forecasts since May. As the new season ramps up, dairy production is on the rise. July figures from the Dairy Companies Association of New Zealand show a 9.2% increase in milk production to 27.4 million kgMS. This aligns with the typical seasonal pattern, as most herds are dried off for winter in June and July, before ramping up production with the onset Synlait unveils recapitalization plan to bolster finances Synlait has announced a significant recapitalization plan that involves raising nearly $218 million through share placements to its two largest shareholders. The move is part of a broader effort to refinance the company's bank facilities and secure its long-term future. Under the plan, Bright Dairy of China, currently owning a 39% stake in Synlait, will increase its shareholding to almost two-thirds of the listed company. Meanwhile, The a2 Milk Company (a2MC) will maintain its 19.83% stake. The capital raise will be conducted through a $185 million share issue to Bright Dairy at 60 cents per share, representing a 100% premium to Synlait's closing price on August 15th. Additionally, a $32.8 million share issue will be made to a2MC at 43 cents per share, a 43% premium. Synlait Chari George Adams, explained that the company thoroughly evaluated various options, seeking independent expert advice to navigate the challenges it currently faces. Adams acknowledged the strong support Synlait has received from its retail shareholders, particularly with the recent approval of a $130 million shareholder loan. However, the selected equity raise structure provides the greatest certainty of reducing the company's debt in the shortest timeframe and at a more favourable price than alternative structures. Synlait warns that if any of the resolutions for the share placements are not passed, the entire plan would not go through, and the company would likely need to cease trading and initiate a formal insolvency process. However, both Bright Dairy and a2MC have expressed their support for the recapitalization plan. An announcement on the future of the company's Pokeno site is expected in the next few months. Ministry seeks farmer feedback to cut red tape in ag regulations The Ministry for Regulation has published an Economic Analysis Issues paper as part of its ongoing review of agricultural and horticultural product regulations. The analysis supports the feedback process for the regulatory review, which aims to identify and eliminate unnecessary red tape, making things easier for growers and producers across New Zealand. The Ministry is seeking input from all stakeholders, particularly those directly involved in agriculture and horticulture, to share their experiences with burdensome regulations. These insights will be invaluable as the Ministry works to cut red tape and foster a more dynamic agricultural sector. The analysis paper explores a range of critical issues, including risks, market failure, problem definition, policy options, and costs and benefits. These insights are intended to help submitters consider the big-picture challenges affecting access to new products and identify ways to improve the regulatory system. The Ministry emphasises that this paper marks a crucial step in its commitment to streamlining access to new agricultural and horticultural products while maintaining sound safety and environmental protections. The goal is to build a regulatory environment that better serves farmers and growers, enhancing their competitiveness and productivity. Minister for Regulation David Seymour says that this review is important to define how the process can be sped up to get farmers and growers access to the safe, innovative products they need to remain competitive.  The Ministry's engagement hub is open for submissions until September 8th, and the Ministry encourages people to have their say.  New report shows a veterinary workforce exodus looms A global leader in animal health has launched research that reveals a concerning trend in New Zealand's veterinary profession. Boehringer Ingelheim has released a whitepaper  "Taking Animal Health Forward" which highlights critical challenges facing the sector, posing a significant risk to the country's future. The research, developed in partnership with the New Zealand Veterinary Association (NZVA) and the New Zealand Veterinary Nursing Association (NZVNA), surveyed over 600 veterinary professionals across the country. It found that only 40% of veterinarians and 26% of veterinary nurses expect to remain in the profession until retirement. Burnout and mental health pressures are driving many out of the field, and 43% of clinic decision-makers report difficulties in hiring skilled staff. The whitepaper suggests that a lack of public understanding about the value of the veterinary profession is a significant factor contributing to practitioners' stress and fatigue. 70% of animal health practitioners believe the true scope of their work is not well understood or appreciated, rising to 88% of veterinary nurses. The whitepaper also calls for legislation to enable allied veterinary professionals (AVPs) to take on more skilled work, a move that NZVNA President Laura Harvey believes could help relieve the ongoing staffing shortage. Other recommendations include increased government support for veterinary training, such as higher tuition subsidies and the establishment of apprenticeship models to attract new talent. Fitzpatrick also highlighted the importance of providing veterinary health professionals with increased support for ongoing education and professional development to boost wellbeing and create more sustainable businesses. Soil & Health Association warns against deregulation of genetic engineering  The Soil & Health Association of New Zealand is deeply concerned about the New Zealand government's recent decision to end the long-standing ban on genetic engineering (GE) and genetic modification (GM) in the country. The organisation warns that this move will undermine the country's robust and protective GE regulations. The association argues that GE techno-fixes, such as GE ryegrass, are not the solution to reducing greenhouse gas emissions in agriculture. They highlight that diverse, mixed-species pastures are a more effective and resilient approach. The group also expresses concerns about the commercial viability of GE products, noting that consumers are unlikely to want them. Emphasising New Zealand's unique advantages as an island nation in the South Pacific, the Soil & Health Association stresses the need to safeguard the country's environment and its reputation for producing "clean, safe, natural and uncontaminated" products. They warn that once GMOs are released, they cannot be contained, jeopardising this hard-earned brand. Instead, the organisation urges the government to focus on expanding organic, regenerative farming methods, which they say result in lower greenhouse gas emissions, cleaner waterways, reduced soil erosion, increased biodiversity, and more resilient ecosystems. They call for the establishment of research centres and farmer extension programs dedicated to organic, regenerative agriculture, empowering farmers to adopt these practices. See omnystudio.com/listener for privacy information.