Is its business leaders.
There’s Keys, the Fyfes, the Weldons. Who all spend so much money to look good on the covers of magazines. Who expect us to love them. They want to be hailed as messiahs or Atlases carrying the rest of us. These are the muppets who banged their heads together for a day to come up with ideas for saving jobs. Could only come up with a watered-down version of the Unions’ 9-day fortnight idea and a cycleway. Three months later, they’ve saved 303 jobs. Meanwhile the economy is losing 300 jobs a day.
But this post isn’t about the Atlases. It’s about the next tier down.
We had a great big dairy boom over the last few years. Exploding demand in India and China mostly. What does a sensible organisation do during a boom? First, it recognises booms don’t last forever. It uses the fruits of the boom to pay down debt, expand capacity sensibly, and be ready to ride the down-wave. What did the corporate dairy farmers do? They used the boom time super-profits to speculate on an ever-rising boom.
They bought up beef and sheep farms and pine plantations. Started converted the land to dairy at huge cost. Took on more and more debt. Much of the new land is very marginal for dairy. Not enough water. Especially land that had just been under pine. The result – higher water demand, higher electricity demand, more run-off, more carbon emissions and fewer carbon sinks (Landcorp, which owns a lot of the land deserves a lot of blame for letting its leaseholders make these conversions. That’s SOEs for you. Stupid system to have public assets that are not managed in the public interest). Producing milk on these new farms is much more expensive. The average cost of producing a kilo of milk-solids in New Zealand is now $4.54.
The boom didn’t last of course. just as these new dairy farms were coming online the world economy has crashed. Now Fonterra’s payout is forecast at $4.55. That’s before the 12% tumble in the price that Fonterra got in its latest auction. A whole lot of dairy land, mostly new stuff, is now unprofitable. Those brilliant businessmen who plowed money into dairy are set to lose their shirts. No sympathy from me. They had it coming. Problem is they’ll drag the rest of us down with them.
That’s what we get for allowing these businessmen so much power over our country. If it were me I wouldn’t bail them out. I would wait until they start to go under. Then buy their farms at rock-bottom prices and turn it back into publicly-owned commercial forest.