Pay bonanza for dairy farmers

Dairy farmers are in line for a bumper payout from Fonterra this year.

The cooperative has been telling farmers to expect a payout of more than $7 a kilogram for milksolids for the 2007-08 season, despite an easing of dairy prices and the strong Kiwi dollar. The 2006-07 payout was $4.46.

In December, Fonterra forecast a payout of $6.90 a kg this year - but at its latest round of farmer meetings, which finish today, it has been telling farmers to expect more. Its official forecast is expected early next month.

The payout has been boosted to record levels as increased world demand for dairy products has pushed prices up.

Westpac agri-economist Doug Steel said the bank was sticking to its payout forecast of $7.20.

Fonterra has also been telling farmers to plan for a reduced 2008-09 payout - thought to be in the $5.50 to $6.50 range, still well above recent years.


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Dairy farmers still unhappy with state subsidies

Bulgaria's dairy producers are unsatisfied with the new agreement signed with the Agriculture and Food Ministry on the state subsidies for quality milk, industry representatives told a news conference on March 12 2008.

The agreement was signed after numerous protests by the dairy producers, who demanded bigger state subsidies. According to the Cabinet, the subsidies hike was impossible, because their amount was co-ordinated with the European Commission.

But on March 7, Agriculture Minister Nihat Kabil and representatives of the National Milk Board and National Association of Milk Producers signed an agreement for bigger subsidies. The subsidy will be of 0.2 leva for a litre of cow and goat’s milk and of 0.25 leva per litre of sheep and buffalo’s milk.

But at least some dairy producers believe the board was not authorised to sign the agreement, especially since it was done without the knowledge of most farmers, producers claimed.

Adrian Tsakonski, the initiator of one of the numerous dairy branch protests, which featured a cattle rally, said that there was no date of signing and no deadlines for paying off the subsidies in the agreement. According to Atanas Kutsov, head of the dairy producers’ regional organisation in Plovdiv, Finance Minister Plamen Oresharski and Prime Minister Sergei Stanishev should have signed the agreement, but their signatures were missing. Despite all the protests, what we see is complete indifference among the officials, Kutsov said.

Another problem for the dairy producers was that the dairy farms processing their milk were decreasing the prices they paid to producers. The prices in north-western Bulgaria had already dropped to 0.5 leva per litre. “It turns out that half a litre of mineral water is more expensive than a litre of quality milk”, the producers said, threatening to protest against the dairy farms. It was not right for some 200 or 300 registered dairy processors to decide the fate of 100 000 producers. An organisation, independent from the processors, should exist to regulate the prices, they said.

They also complained that the subsidies for fodder were late. The animals get ill more easily if they do not receive enough fodder. We demand that subsidies, small as they are, be paid on time, they said.

Tsakonski said that the authorities were concealing the fact that the number of cattle and farm animals was decreasing. On a mass scale the farmers were cutting down the number of animals they breed, he said. “Absolutely everything is working against the producer” in Bulgaria, he said.

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'Chance for united dairy sector blown away' as merger of First Milk and Milk Link fails

THE merger between First Milk and Milk Link, which would have created the biggest farmer-owned dairy company in the UK, has collapsed.
A joint statement issued yesterday said: "Despite extensive discussions, it has not been possible to agree terms for a merger that either party could recommend to their membership at the present time. Both boards believe that strong farmer-owned businesses are vital to the long-term future of the dairy industry."

Richard Greenhalgh, chairman of First Milk, which has about 2,700 members in Scotland, England and Wales, vented his disappointment in a letter to his members. He said: "We got a long way down the road to doing this merger, but in the latter stages there were a number of important issues to resolve – the critical issue being the valuation of the two businesses."

Due diligence is always an integral part of any proposed merger or takeover, and that is where the deal fell through, despite the fact that First Milk commissioned an independent valuation.

Greenhalgh said: "The expert stated that the value of the First Milk business was considerably in excess of Milk Link. This included discounting our valuation premium and presenting a mechanism that not only rewarded capital, but would also put the new operation on a very sound financial footing."

The real issue, apart from personality problems, is that Milk Link could not accept the fact that First Milk's holding in Robert Wiseman Dairies, which was bought in 2004 for £28 million, is now reckoned to be worth at least £60m – and almost certainly substantially more. The fear on the Milk Link board appears to have been that the merger could become a takeover.

Jim McLaren, president of NFU Scotland, who runs a dairy farm near Crieff, said: "I am not interested in hearing who is to blame for the talks collapsing: the fact is that a real chance to create a united, rather than a fragmented dairy sector, has been blown away, certainly in the short term.

"What is more frustra
ting is that, after a decade, we had finally got the competition authorities to back off.

"They had really taken a progressive approach to the merger and given the industry a chance to create a solid future."

The outcome is likely to be a new level of pressure on farmers, with the supermarkets and other major buyers seizing on the fact that the dairy industry remains dangerously divided. Milk prices have risen substantially in recent months, but there are already whispers in the trade that they may be planning to pay their suppliers less.

Greenhalgh remains the perennial optimist. He said: "In contrast to many commentators, we are positive about the future markets for our members' milk. Milk volumes in the market remain extremely tight and our sales teams continue to highlight farm input cost increases and push for further rises in all sectors in which we operate."


http://business.scotsman.com/fooddrinkagriculture/39Chance-for--united-dairy.3746839.jp

Drought cutting into dairy production

Fonterra's budget for a 3 percent rise in milk production this season has withered in the face of the La Nina drought now hitting even dairying regions such as the Waikato, and Southland.

Fonterra -- the world's biggest exporter of dairy products -- warned today that the big "dry" was not only eroding New Zealand's milk production but might restrict new export orders.

"At this stage, we are ... confident we can meet all our customers' contracted orders but supply is tight," said Fonterra chief executive Andrew Ferrier.

"We now find ourselves effectively booked up for the season. This is forcing us to advise customers that we may not be in a position to take all new orders for New Zealand supply."

The company had budgeted on a 3 percent rise in production this year to about 14.8 billion litres, but now expects the drought to cost its 10,000 farmers as much as $500 million by the time the season ends in May.

"The dry spell has already cost farmers about $60 million in milk payout, and on-farm losses would continue to mount unless there is significant rainfall," said company chairman Henry van der Heyden.

"Every day without rain is hurting farmers, and will have a flow-on impact for local communities and the broader economy."

"This has really taken the shine off what should have been a fantastic season for our farmers, with a record payout."

Fonterra said in December it was lifting its forecast for this season's milk payout to a record $6.90/kg milksolids -- a windfall which will pump a massive $3.25 billion into farmer incomes.

Mr van der Heyden said Fonterra was holding to its $6.90 payout forecast even though it was now facing "something of a double whammy" with a drop in milk production and exchange rate close to US80c.

"The record dry summer over much of the country means season-to-date milk production is now falling below last year," he said.

Fonterra last year collected 14.34 billion litres of milk.

Mr van der Heyden said the widespread dry spell was hitting farmers hard in most parts of the country.

On a daily basis compared to the past year, Waikato production was down 27 percent, Bay of Plenty milkflows were down 21 percent, Taranaki was down 9 percent, and Southland was down 1.5 percent.

The Waikato and the Bay of Plenty, together account for about 40 percent of the national dairy herd.

He said farmers in dry regions were facing up to challenges in terms of lost cash flows and also in managing their farms with very little feed available.

Fonterra had been looking at supplementary feed options and how it could support farmers, "but the stark reality is that there is a real feed shortage both in New Zealand and overseas."

In many parts of the country, January rainfalls were the lowest or second lowest on record, temperatures have been hotter than usual and soil moisture levels are falling.

The lack of feed was causing sheep farmers to sell stock early and dairy farmers were recording lower production as many were forced to dry-off their milking herds.

Waikato was yesterday declared a drought zone after its driest January in more than 100 years.

A combination of low rainfall, near record high temperatures, extremely dry soils and falling river levels prompted what is reported to be the region's first drought declaration.

"People can't count on the rain coming anytime soon ... with drought conditions predicted to continue to the end of autumn, Waikato regional council chairman Peter Buckley warned.

Even if rain fell it was unlikely to put enough moisture into the soil to boost pasture growth to normal levels.

Agriculture Minister Jim Anderton -- who will stage a national drought meeting of government officials and sector leaders at 4.30pm on Tuesday at 4.30pm -- said if the dry weather persisted, the situation would become very serious in some areas.

* In the capital, Wellington regional council chairwoman Fran Wilde warned that low levels in storage lakes mean urban residents are likely to face a sprinkler ban and possibly more severe water restrictions.

High water demand and continuing sunny weather have seen the level of the water supply lakes drop by 10 percent," Ms Wilde said. Water levels in the Wainuiomata catchment are so low that the water treatment plant there may have to close.



http://www.nbr.co.nz/home/column_article.asp?id=20112&cid=4&cname=Business+Today

Finger Lakes Farms: Dairy is tradition for father and son

Emery View Farms in Newfield is a microcosm of the struggle dairy farmers across the Finger Lakes are involved in to stay in business and also a proud testament to the indomitable spirit of farmers united in the struggle.

Ronald Emery, 71, and his son, Frank, 44, are in Ronald's words, “doing all they can just to keep their heads above water.” They milk 42 cows on a third-generation family farm that Ronald's dad bought in 1941.Standing outside the milk house, as Frank is busy within sterilizing equipment before milking time, Ronald reflects on a career spent on and off the farm.
“I drove school bus for 43 years, delivered mail for 40 years and farmed it all at the same time just to make certain the bills were paid on time and I would be able to keep the farm in the family and pass it on to Frank,” he said.

One look at Ronald and you can see it hasn't been easy for him.

Sleep-starved from getting up every morning at 4, rail-thin from constantly being on the move working, two fingers are missing from his right hand after a farm accident, yet his eyes are clear and burn with intensity, and his body is taut and wiry like a steel cable.

“When I was younger, in the spring I would stay up all night plowing and then do the morning chores, catch a nap and keep right on going,” he said.

Frank emerges from the milk house and pets a purring barn cat pushing against his leg. A graduate of Newfield High School, soft-spoken and shy with a full beard that makes him look older than his 44 years, he also has experienced the dangers of farm life including a high fall from a silo and a chainsaw mishap that left deep scars. But like his resilient dad, he soldiers on with no second thoughts, completely dedicated to his chosen way of life.

From the barn door, Ronald points out a Holstein calf that takes a few wobbly steps before falling down.

“The part of her brain that helps her maintain equilibrium doesn't work,” he explained. “Pete White, our veterinarian, said he hadn't come across anything like that for a long time. He thought it was pretty unusual.”

Sadly, according to Ronald, the calf will not figure in the farm's long-range plans. In contrast, there is Edna, a healthy, robust first-calf heifer, the progeny of a bull noted for siring high milk-producing heifers. Edna is expected to make a significant contribution to the farm's rolling herd average of 27,000 pounds.

“That's what makes farming so interesting for me,” Ronald said.

“Nothing's static, everything is always changing in regards to the animals, the weather, crops. Each day you wake up to a brand-new scenario and have to be ready to deal with it. It's not always pretty or easy, but that's farm life.”

Glancing at his wristwatch, he heads into the barn to begin the evening milking with Frank. I ask him if he's looking forward to the day he can retire. He stops, turns back and says with a laugh, “Retirement? That word doesn't exist for me. No sir! I enjoy farming too much. I imagine the day I'm not farming anymore, that will be the day I'm no longer walking this good earth.”



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Upbeat start to Farmers Week; Dairy sector bouyed by high prices, new products

It isn't just record high world prices for milk or the rapid recovery in late 2007 of U.S. markets for Canadian dairy breeding stock that has Dairy Farmers of Ontario chairman Bruce Saunders smiling these days.

It turns out that milk is also ideal for introducing key dietary supplements to nutrition-conscious consumers, notably beneficial bacteria and Omega 3 fats. Saunders, who farms near Chatsworth and represents Grey and Bruce counties on the Dairy Farmers of Ontario (DFO) board, delivered an upbeat outlook for dairy farming in Elmwood on Friday during the opening day of this year's Farmers Week.

"It's a good year," Saunders said in an interview later. "For dairy, this is a good year and I fully expect 2008 will be a good year as well."

Friday's dairy day included a high profile panel on dairy food additives, including one of the inventors of the Omega 3 egg, Guelph University nutritionist Dr. Bruce Holub.

Over the past 23 years, Holub and his Guelph colleagues have demonstrated the nutritional benefits of feeding fishmeal to livestock, most notably chickens who produce eggs that carry fish-derived, Omega 3 fats.

Fish-derived Omega 3 is crucial to optimum brain and eye function but North Americans just don't get enough because they don't eat enough fish, Holub said. His research demonstrates the feeding of fish-based feeds to livestock can supply the Omega 3s missing from the North American diet.

The Canadian Cattlemen's Association recently announced research into Omega 3 beef and there are hog feeding experiments worldwide.

"Ten years ago when I first started work on Omega 3 eggs, there wasn't a single Omega 3 egg. Two years ago, it was five per cent of the market. A recent figure is 12 per cent of all eggs sold," Holub said.

"You name any animal category, Omega 3 is going to be a player for many decades to come," he said.

The market is huge and growing for new foods and food additives, research director John Michaelides of the Guelph Food Technology Centre told about 150 farmers at Friday's meeting.

U.S. sales of Omega 3 enhanced products increased from $100 million in 2002 to about $2 billion in 2006, he said. By 2011, Michaelides expects sales of Omega 3 foods to ring in at about $7 million.

That provides an important opportunity for dairy farmers, Saunders said, referring specifically to plans to develop and promote organic and Omega 3 enhanced milk.

"The message coming out now as to what dairy will do for you, the human being . . . we should all be drinking gallons and gallons of milk," Saunders said.

The new opportunities come on top of generally strong world milk prices.

Drought in Australian drought has eliminated that country's dairy exports and European and U.S. stockpiles of butter and skim milk powder have essentially disappeared, Saunders said.

"Will they stay at record highs?" Saunders asked of prices for milk. "No. Farmers will produce more. Supply will catch demand, but most people are saying not for 18 months."

Meanwhile DFO, which manages fluid milk in the province, has announced a 3.9 per cent increase in milk production quota and a price increase to farmers of 3.49 per cent effective Feb. 1. The nationally administered industrial milk price is up about one per cent.

2007 also brought the return of trade in breeding stock and livestock sales revenue lost to Ontario dairy farmers when the U.S. border closed in May 2003 after a case of mad cow disease was found in a cow in Alberta .

Saunders said the volume of trade has picked up quickly because of lucrative milk prices. Between 1,000 and 1,200 diary heifers a week are exported to the U.S.

"The result is that cattle prices are high and we're seeing that in some of the exports that are happening," Saunders said.

Farmers Week, a series of seminars organized by area farmers, continue today and Sunday with sessions on sheep, goats and horses with talks on ecological farming, beef and crops on Monday and Tuesday.


http://www.owensoundsuntimes.com/ArticleDisplay.aspx?e=843675&auth=JIM+ALGIE

Mengniu Dairy turns sour in HK gloom

Hong Kong's comeback faltered yesterday as investors chose to lock in profits from Wednesday's bounce rather than bet on further recovery.

The Hang Seng index fell 1.4 per cent to 28,751.21 in light trade after surging more than 1,300 points in the previous session.

Falling stocks outnumbered gainers by five to one. Mengniu Dairy , China's biggest milk producer, took the most eye-catching tumble after Merrill Lynch warned that soaring raw milk costs would damage profits.

The milk processor, which elbowed out Nestlé to become supplier to China's KFC and Starbucks outlets, lost 9.7 per cent to HK$27.30 after Merrill downgraded the stock from "buy" to "sell".

Banks, though, were the biggest drag on the index. Bank of Communications and the Bank of East Asia both lost 3.7 per to close at HK$12.68 and HK$48.45 respectively.

News emerged yesterday that Uni-President , Taiwan's largest food conglomerate, plans to list its China-based business arm in Hong Kong in a move seen as an overture to a buying spree in China. One person close to the situation said the initial public offering was planned for next month.

There are already 57 Taiwanese-owned China-based companies listed in Hong Kong, and 30 more are interested in a Hong Kong IPO, according to the Taiwan Stock Exchange.

The damp mood was not confined to Hong Kong, as stocks fizzled across Asia after Wednesday's strong showing.

Japanese shares resumed their slide, with the Nikkei 225 Average falling 0.7 per cent to 15,396.3. The broader Topix closed at 1,498.86, up 0.1 per cent.

Bank stocks rose in the morning in spite of news that three institutions had been hit harder than expected by subprimerelated losses.

Mizuho Financial Group , one of the affected banks, fell 0.7 per cent to Y546,000 after gaining earlier in the day. Aozora Bank slid 1.5 per cent to Y338, but the last of the group, Shinsei Bank , rose 4.7 per cent to Y356.

TDK dropped 6.1 per cent to Y7,350 after UBS put a "sell" recommendation on the electronic components maker and lowered its price target from Y9,500 to Y7,000.

Tokyo stock exchange data showed that foreign investors, the principal driver of the Japanese market in recent years, were net sellers last week, dumping a net Y282bn of shares.

Strategists say some of the sell-off is being driven by the need to cash in liquid stocks to close positions outside Japan, while nervousness about the rising yen and patchy economic data is growing. Goldman Sachs slashed its economic forecast for the country after disappointing gross domestic product data.

In China, the Shanghai Composite also sagged, closing down 0.9 per cent at 5,365.27. Analysts said the market was bracing itself for an impending rise in interest rates, perhaps as soon as today, in an attempt to cool the country's ferocious economic growth.

Minsheng Banking dropped 1.9 per cent to Rm16.48. Vanke , the biggest listed property developer, fell 1.4 per cent to Rm35.49.

In Australia, the S&P/ASX 200 closed down 1.1 per cent at 6,528.6 after a volatile day.

Miners BHP Billiton and Rio Tinto slid as investors awaited the next move in the former's attempt to take over its rival.

The groups' shares fell 2.5 per cent and 2.1 per cent to A$41.15 and A$134.9 respectively. BHP was also hit by an earthquake in Chile that cut power to its copper mines.

Indian shares faltered too, with the BSE Sensex index closing down 0.7 per cent at 19,784.89.

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