Early Bird I Thursday September 19th 2024

Whole and skim milk powder lead the charge at the latest Global Dairy Trade auction, Synlait shareholders approve crucial capital raise, and Federated Farmers celebrate 125 years of championing rural New Zealand. 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! Whole and skim milk powder lead the charge at the latest Global Dairy Trade auction Dairy farmers have received a welcome boost as whole milk and skim milk powder prices increased in the latest Global Dairy Trade (GDT) auction. The GDT price index saw a 0.8% uptick, with whole milk powder prices rising 1.5%. Skim milk powder experienced an even more significant jump, climbing 2.2%, marking its highest average price on the platform in the past year. All products, except milk fats, saw price increases at the auction. Anhydrous milk fat and butter prices softened slightly, bucking the overall positive trend. The auction results largely aligned with pre-event expectations, with 89% of the total 43,497 tonnes available finding buyers. In the milk fat category, AMF prices eased 1.2%, marking its first decline after four consecutive increases since July. Butter also saw a slight dip of 1.7%, settling at an average price of US$6,546 per tonne. Cheddar prices rose 2.9%, reaching its second-highest price in the last 12 months. Mozzarella continued its upward trajectory with a 4.5% increase, lactose rebounded from a previous decline, rising 3.5%. North Asia maintained its position as the top purchaser for both milk powders and butter, accounting for 51% of the total product volumes. Southeast Asia and Oceania led in Anhydrous Milk Fat purchases, while Africa dominated the cheddar market. Synlait shareholders approve crucial capital raise Synlait Milk has avoided a potential collapse as shareholders overwhelmingly approved a critical capital raise in a high-stakes vote. The decision marks a turning point for the NZX-listed company, which faced possible insolvency without this financial lifeline. At Synlait's Dunsandel site near Ashburton yesterday, more than 90% of votes cast favoured the rescue package. This decisive action allows Chinese dairy giant Bright Dairy to increase its stake to over 65% with a substantial investment, while a2 Milk Company maintains its 19.8% holding. The move, however, significantly dilutes minority shareholders' stakes from 41.2% to just 14.9%. Synlait's chair, Simon Robertson, emphasised the gravity of the situation, stating that without shareholder approval, the company would likely have needed to cease trading and initiate formal insolvency processes. The dire circumstances stemmed from Synlait's unsustainable debt levels, exceeding $550 million, a result of an ill-fated expansion strategy. The approved capital injection aims to deleverage Synlait's strained balance sheet, providing a critical buffer for the company to implement its turnaround strategy. This financial restructuring follows a $130 million emergency loan from Bright Dairy in July, which kept the company afloat in the short term. Despite the dilution of their stakes, minority shareholders seemingly recognized the lack of viable alternatives. The New Zealand Shareholders Association, while describing the raise as a "dead rat" for smaller investors, acknowledged the company's precarious position. In the wake of the vote, Synlait's shares saw an immediate positive response, opening up 7.7% on the NZX. This market reaction reflects cautious optimism about the company's future prospects now that its immediate financial crisis has been averted. The successful vote not only secures Synlait's immediate future but also unlocks a new $450 million banking facility, crucial for the company's ongoing operations. However, this facility's 12-month term underscores the challenges that still lie ahead for Synlait. Fonterra invests $150 million in Whareroa cool store expansion Fonterra is set to invest $150 million in a new cool store at its Whareroa site in Taranaki, marking another significant step in its strategic expansion plans. This latest announcement follows recent commitments of $75 million for a protein plant at Studholme and $150 million for a UHT cream plant at Edendale in the South Island. Chief Executive Miles Hurrell attributes these substantial investments to Fonterra's robust financial position, emphasising the company's ability to fund future growth while executing its strategic vision.  The planned cool store at Whareroa will span approximately 19,000 square metres and boost the site's cheese storage capacity by 5,000 tonnes, bringing the total to 26,000 tonnes. This expansion is crucial for Fonterra's supply chain resilience, according to Chief Operating Officer Anna Palairet. The cool store project will commence next month, implemented in two phases to maintain current operations.  Federated Farmers celebrate 125 years of championing rural New Zealand. New Zealand's cornerstone of rural advocacy, Federated Farmers, is commemorating its 125th birthday, a milestone that underscores its longstanding commitment to the country's agricultural sector. The organisation's roots trace back to 1899, when Thomas Portland Smith established the first properly constituted Farmers' Union branch in Kaitaia, recognizing the need for a single unified voice to strengthen farmers' position and create leverage when engaging with the government. The late 19th century posed significant challenges for New Zealand agriculture, including market fluctuations, land management issues, and the complexities of navigating government policies. The NZFU quickly gained traction, particularly in the North Island, holding its first national conference in 1902. A parallel movement emerged in Canterbury in 1910 when Henry Acland of Mt Peel Station formed the Sheep Owners' Federation, addressing issues like fluctuating wool prices, disease outbreaks, and the need for improved farming practices. The agricultural advocacy landscape further evolved in 1925 with the establishment of the Women's Division of the NZ Farmers Union by Florence Polson, which later became Rural Women New Zealand. The post-war era saw these diverse groups merge in 1945 to form Federated Farmers, creating a more comprehensive and unified voice for the agricultural sector. Current president Wayne Langford expresses pride in the organisation's consistent advocacy over 125 years, stating they've been standing up for farmers and rural communities, giving them a strong voice, and advocating for what's fair through booms and busts, significant land use change, market downturns, and the removal of subsidies. Langford emphasises the organisation's strength lies in its ability to navigate differences between various sectors and provinces. He describes Federated Farmers as an incredibly democratic and diverse grassroots organisation, fostering robust debate on major farming issues. This approach sets them apart, as they can't just take a position that works for one sector but must confront tough discussions as a collective group to find a pan-sector position benefiting all farmers. Southland farmers battle 'relentless' weather as spring struggles continue Staying with Federated Farmers, they say Southland farmers are facing a grueling start to the season as relentless wet weather and snow blanket the region during its busiest time of year. Jason Herrick, Southland Federated Farmers president, describes the situation as dire, noting that all of Southland is absolutely drenched, with soil capacity well over 100% and completely waterlogged. The timing couldn't be worse for farmers. Dairy farmers rely on this time for peak milk production, while sheep and beef farmers count on good survivability rates for newborn animals. The current conditions are threatening both sectors, with Herrick warning that if farmers don't get peak milk or good survivability now, it will impact income at the end of the season. Invercargill MP Penny Simmonds corroborates the severity of the situation, citing Environment Southland data showing rainfall in some areas has reached over 200% above the long-term average for September, with half the month still to go. She emphasizes that farmers are facing the dual challenge of managing calving and lambing while contending with these relentless wet conditions and weather events. See omnystudio.com/listener for privacy information.