Agsafe Weekly Rural Report

Agsafe Weekly Rural Report:

Finance: The NZ dollar was steady through the week and finishing at a level similar to the last 2-weeks. The economy outside of agriculture is struggling. Brent Crude is moving around below the $US70/barrel - currently $US66.

Wool: The wool prices are firming. There is strong demand from China and Australia & NZ are struggling to meet the demand!!.

Beef, Sheep & Venison schedules: The meat schedules are steady with strong demand for red meat internationally. The strong schedules are pushing domestic meat prices up. Legs of lamb are between $60 & $90

Dairy Prices. There are indications that the g/DT may fall again this coming week which will put pressure on Fonterra to review the FGMP. The trend to the lower level will require most farmers to review their budgets for the season.


The power outages and damage around the Southland area are a reminder to farmers everywhere. The access to generators is essential. There have been similar cases across the country in recent years and it will get worse as the power grid relies more on solar & wind to generate unreliable electricity. Perhaps a generator could go on the buy-list with money from the Fonterra sale. One generator could service several farms if necessary. You need to keep the water supply operational and the cowshed functioning.


You can hear us live on the radio on Monday morning at 7.35 am with Brian Kelly on Country Sport Breakfast – Radio NZ Gold AM. 792 AM in the Waikato & 1332 AM in Auckland.

Jim’s Weekly Rant:



Last week Alliance Meat Cooperative sold 60% of its shares to the Irish meat company, Dawn Meats, to bail itself out of a serious financial situation. It was the last of the remaining true farmer meat cooperatives in NZ and now overseas interests control most of the NZ meat industry. This week Fonterra shareholders agreed to sell its consumer brands to the French Company Lactalis for $4.2 billion. Lactalis is the largest dairy products group in the world, and is the second largest food products group in France, behind Danone. It owns brands such as Parmalat, Président, Kraft Natural Cheese, Siggi's Dairy and other major international brands. Selling off the family silver is never a good idea!! I believe it was a wrong move to sell the Consumer Brands, but the average age of the farm owners and the promise of large tax-free payments is enough to sway anyone. Fonterra has struggled to grow the brands, and that has been a management problem and not the brand problem. The sale of the consumer brands has been considered several times since the inception of Fonterra and even when Fonterra was being formed they were an issue then. The sale will put +/-$400,000 into the average farmer’s bank at a rate of $2.00 per share and leave Fonterra with $1billion to reinvest in the Coop. Local economists commentaries have been interesting and aligns with the comments I have received from individual farmers. Approximately 40% to 60% will go into debt reduction, an estimated 30% will go towards deferred maintenance and some will go to reinvestment or asset expansion. The injection of money into the economy is expected to increase the Gross Domestic Product (GDP) of NZ by 0.7% as there is an accepted industry multiplier effect that rural money has in the economy. It is considered that each dollar earned generates 6.5 to 8 times the amount through the economy, so the $4.2 billion will generate $27 to $34 billion of business in NZ. It works like this. “Farmer A” gets $100,000 and he buys a tractor, some of the tractor money goes off-shore, but the tractor selling company gets some, the salesman gets some, his family has more to have a holiday with and that flows through the motels, the airlines, the restaurants and they might even buy a new vehicle. It keeps on going around. The whole country will benefit from the sale of the Fonterra business. Those that reduce debt will need to consult their financial advisors as the level of tax-deductible interest will be reduced, after the compounding lowering of the interest rates has already had an effect. The debt reduction will allow the farm owner to have more cash available each year and that will be taxed. Some farmers will be considering further farm development and there is an opportunity to deposit some funds into the IRD’s Farm Equalization Scheme and then withdraw it in the year of expenditure to gain additional tax benefits and the IRD deposit rate is currently 3% (better than the bank). The Fonterra farmers will receive a substantial amount of tax-paid capital and it is important to spend and use it wisely. It will benefit your businesses and the wider NZ economy. It will be a bit like the 1950’s “wool boom” over again where many sheep farmers on the “Solider Settlement Farms” were able to become debt free over a couple of years. But the real test will be with Fonterra and how it reinvests the $1 billion retained to grow the value of the Fonterra shares and the dairy economy.


Contact AgSafe NZ Ltd - Phone 027-2872886. We can prepare your Work Safe manual and hazard management plan at a very competitive price. We can arrange drug tests and farm maps for your property.



Calf rearing is important for your future production – Check out the Bell-Booth “Queen of Calves” rearing plan. There is research data from Massey University measuring the benefits. They are clearly documented and the long-term benefits are more production per cow and longevity of the animals!! Research has shown calves can be weaned approximately 22 days earlier when Queen of Calves is used.

Drone Spraying a cost-effective way to spray weeds, sow grass seed etc. www.dronespraying.co.nz Check it out and contact Jordan Salmon email jordan@dronezup.co.nz