Early Bird Tuesday August 27th 2024

Horticulture NZ welcomes news CEO with extensive agribusiness experience, Synlait loses major supplier as Pāmu withdraws North Island milk, and Frankton saleyards deal boosts Allied Farmers’ annual earnings. 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! Horticulture NZ welcomes news CEO with extensive agribusiness experience Horticulture New Zealand (HortNZ) has appointed Kate Scott as its new chief executive officer, bringing two decades of agribusiness experience to the role. Scott, set to start on October 17, comes with a strong background in resource management, environmental policy, and stakeholder engagement. Scott's impressive resume includes her current position as executive director of environmental consultancy Landpro. She also chairs the New Zealand Rural Leadership Trust and serves as deputy chair of Thriving Southland. Her accolades include being a 2018 Nuffield scholar and recipient of the Rabobank Australasian Emerging Leader award in 2023. Scott's educational background includes a Bachelor of Arts from Victoria University, complemented by leadership programs at Harvard Business School and the Institute of Directors Governance Development Programme. The incoming CEO will be formally introduced at a networking event tomorrow, following her attendance at the HortNZ conference in Mount Maunganui this week. In the interim, Michelle Sands, HortNZ general manager of strategy and policy, will serve as acting chief executive. Synlait loses major supplier as Pāmu withdraws North Island milk New Zealand's largest farmer, Pāmu, has dealt a blow to the struggling dairy processor Synlait Milk by giving notice to withdraw its milk supply from the company's North Island plant. This move by the state-owned enterprise, which trades as Landcorp, reflects growing uncertainty in the dairy sector and adds to Synlait's mounting challenges. Pāmu CEO Mark Leslie has confirmed that five of the company's North Island dairy farms currently supplying Synlait have submitted cessation notices. Leslie emphasised that Pāmu shares the same concerns as other Synlait suppliers about the processor's future direction and strategy. The decision to withdraw was described as a precautionary measure to keep options open, given the uncertain outlook for Synlait's North Island operations. This development comes as Synlait faces significant financial pressures, with a majority of its North Island suppliers reportedly submitting similar notices. Pāmu's withdrawal is particularly impactful given its size and status as a state-owned entity. While Pāmu's South Island farms supplying Synlait were not included in the notice, the move signals a broader shift in the dairy landscape. Industry speculation suggests that Open Country Dairy may be poised to acquire Synlait's North Island supply, though this remains unconfirmed. Against this backdrop of industry upheaval, Pāmu itself has reported mixed financial results for the year ended June 30. The company's net operating profit fell to $20 million from $33 million the previous year, with an after-tax loss of $26 million. Despite these challenges, Pāmu has seen improvements in farming productivity across its operations. Synlait's rescue plan leaves minority shareholders out in the cold Meanwhile the New Zealand Shareholders' Association (NZSA) has strongly criticised Synlait Milk's recapitalisation plan, describing it as a 'dead rat' for minority shareholders. The plan, which involves major shareholders Bright Dairy and a2 Milk injecting $217 million into the company, effectively sidelines retail investors from future growth opportunities. Under the proposed deal, China's Bright Dairy will increase its ownership from 39% to 65.25%, while a2 Milk will maintain its 19.8% stake. This leaves retail shareholders with a diminished share of just 15%, down from around 41%. NZSA chief executive Oliver Mander says that while the capital raise is necessary for Synlait's financial recovery, it comes at the cost of excluding retail shareholders from potential future gains. The association views this as an "unholy trade-off" where minorities will see better value on their existing holdings but are locked out of future upside. The recapitalisation plan aims to address Synlait's stressed balance sheet, with most of the cash infusion earmarked to pay off $180 million in bonds due in December. However, the NZSA argues that this financial resurrection offers no room for retail shareholders. Mander points to several factors contributing to Synlait's woes, including ill-judged investments in a new plant at Pōkeno and the company's unique governance structure. The association also highlights the lack of stability in Synlait's boardroom as a potential factor in weakening minority shareholder standing. While acknowledging the limited options available to Synlait's current chair George Adams, the NZSA suggests that Bright Dairy could commit to selling down its incremental 15% stake to the local market within three years. This would help restore minority shareholder interest and provide some liquidity. Frankton saleyards deal boosts Allied Farmers’ annual earnings Allied Farmers Limited has announced a significant increase in its annual profits, despite facing a challenging year in the rural sector. The company reported an audited net profit after tax of $5.2 million for the year ending June 30, marking a substantial 56% rise from the previous year. This impressive growth was largely driven by a one-off gain of $4.2 million from the sale and lease-back of New Zealand Farmers Livestock Limited's interest in the Frankton saleyards. Of this, $2.8 million was attributable to Allied Farmers' shareholders. NZ Farmers Livestock, which is majority-owned by Allied Farmers, navigated a difficult 2023/24 year but still managed to deliver solid operating earnings. Both the veal operation and livestock agency contributed positively, although their performance was down compared to the previous year due to cost inflation and a slight dip in agency revenues. The livestock sector faced mixed fortunes, with poor sheep prices reflecting current market challenges. However, cattle pricing and numbers remained relatively strong. The dairy herd forward sales performance was noteworthy and continues to be a key focus for the company. Looking ahead, recent improvements in sheep pricing and strengthening cattle prices are providing encouraging signs for the current year. In response to cost pressures, the company has been focusing on enhancing productivity, streamlining cost structures, and driving capital efficiency. They're also developing their digital platform to better position themselves in an improving agribusiness environment. The livestock financing arm of the business, supported by Heartland Bank and the company's own lending offerings, continued to grow as forecasted. This growth has increased its contribution to the core business. Former MPI advisor takes helm of NZPork's policy programme NZPork has announced a significant addition to its team with the appointment of Mike MacKay as its new policy manager. This move comes at a critical juncture for New Zealand's pig farming industry. MacKay brings a wealth of experience to the role, with 15 years in both public and private sectors. His background spans agricultural policy development, applied science, innovation, and rural stakeholder engagement. Prior to joining NZPork, MacKay held senior positions at several key organisations including AgResearch, Lincoln University, and DairyNZ. Most recently, he served as a senior policy advisor in the policy and trade branch at the Ministry for Primary Industries. NZPork CEO Brent Kleiss emphasised the importance of this appointment, citing current industry challenges. These include the draft code of welfare and the National Policy Statement on Highly Productive Land. A major concern for the sector is the influx of imported pork produced to lower standards. Kleiss stressed the need for appropriate policy settings to ensure the sustainability and success of New Zealand's pig industry in this competitive environment. MacKay's role will involve leading NZPork's policy and issues work programme. He'll be tasked with advising on and advocating for policies that support local pig farmers' sustainability and success. His expertise in assessing the impacts of policy and regulatory proposals on agricultural businesses and rural communities will be particularly valuable. This skill set is crucial as the industry navigates current challenges and future opportunities. For New Zealand's farming community, especially those in the pork sector, this appointment signals a commitment to strong advocacy and informed policy development. MacKay's diverse experience and academic background, including a PhD and Master of Applied Science from Lincoln University, position him well to address the complex issues facing the industry. See omnystudio.com/listener for privacy information.