Andrew's blog

Interesting week....

Good to see some positive direction come out of Fonterra this week with the announcement of their investment in, and joint venture with, Beingmate from China and the plant expansions in the Waikato and Southland.  

Where will all the Cheese go?

Russia has announced a ban on food imports from many western nations including the EU and the USA (not NZ).  Russia is a major importer of cheese - most of the exports from the EU and US are cheese as shown in the following graphic from Fresh Logic.

Amusing song - serious message

It pays to see the lighter side of life - every now and then at least.  The link here shows middle aged men singing a contemporary song.  If you can get over this image and can find a quiet spot I suggest that you listen to at least the first two minutes of the >4 minute run time.

Another large gDT fall. Response?

It was headlines in the media this morning.  gDT falling another 8.5% p.a. Now down more than 40% since February.

For a quite rational discussion about the current falls and the impacts I recommend listening to the following interviews :

http://www.radionz.co.nz/national/programmes/morningreport/audio/20144476/big-slump-for-dairy-prices-overnight

So what's happening? 

NZ Export growth - animation

An interesting animation via NZTE on NZ export growth from 1983 to 2018.

https://www.nzte.govt.nz/en/news-and-media/features/animation-nz-exports-1983-2018/ 

The overwhelming conclusion is that the chart shows the growing importance of Asia to NZ.  

Another conclusion is that our geography is now a benefit at two levels; a benign temperate climate and we are relatively close to market. 

Milk Price volatility naturally hedged

 On the face of it, last week’s drop in Fonterra’s milk price forecast for the current season from $7.00/kgms to $6.00/kgms looks pretty dire – especially when compared to last season’s forecast of $8.40/kgms.  The apparent between-season drop in revenue is 29%.

This sort of milk price volatility has been a characteristic of the last few seasons and is likely to continue into the future, albeit that milk prices are generally on a rising plane and the outlook remains positive. 

Environment versus commodity production

In this morning's NZ Herald, Liam Dann in an opinion piece makes the case that dairying's past growth is unsustainable and that: 

"Converting land to dairy is understandable when economics point to it being the most lucrative use of the land.

But where conversions are marginal and predicated on historically high dairy prices, they are risky.

Agri-fax forecasts out

In our business we are hungry for information.  When I started my career, way too long ago (late 1980's), market updates were few and far between.  I remember two Dairy Board meetings per year which all and sundry attended because that was the only time to get an understanding of where the payout was heading - and they always put on a fantastic lunch.

Dispelling 'fat is bad'

In a spare moment I heard a great interview on National Radio with a journalist who’s written a book on diets, which summarises decades of research dispelling the ‘fat is bad’ view and highlighting that diets containing milk, butter, cheese and red meats are good.  Her thesis is that the main problems in food diets are excessive carbohydrates and sugar.

From the RNZ website: "Journalist Nina Teicholz has written for the New Yorker, the Economist, and the New York Times.

Milk Price falls to $6/kgms - for now

In an email to suppliers, John Wilson states (this is essentially public information);