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Written in a deep summer haze

Written By: - Date published: 8:44 am, January 5th, 2015 - 94 comments
Categories: Economy, exports, farming, the praiseworthy and the pitiful - Tags: ,

Over the holiday break*, I was astonished by an anonymous NZ Herald editorial – “NZ economy is in a good place and thriving“.  I blame the drivel in it on an inferior intellect being cooked in the warm holiday weather. It evidentially turned to mush and lazily regurgitated one of Bill English’s wet dreams. For instance…

Even before China’s glut caused diary prices to drop, New Zealand’s government was concerned the country had become too reliant on a single market. This year new effort must go into countries such as Indonesia, now with an impressive new elected President.

The stupidity of that statement is quite apparent when you consider a few basic facts. Perhaps the anonymous dingbat at the NZ Herald who wrote this editorial should read their more realistic writers. For instance on the 17th with “Fran O’Sullivan: Milk price could sour English’s optimism” or today’s article from Jamie Grey “Farm and Treasury jitters at dairy price

Dairy farmers and the Treasury will be looking to 2015 and beyond with some trepidation after a 52 per cent decline in wholemilk powder prices over the past 12 months.

For the average Fonterra dairy farmer, the current $4.70/kg farmgate milk price forecast will not cover the cost of production this season, economists estimate.

The Treasury, in last month’s fiscal update, said its forecasts were based on a 25 per cent recovery in dairy prices taking place in 2016.

Going on the results of the last international dairy auction for 2014, which showed only a modest improvement in prices, the market has a way to go before Fonterra’s and the Treasury’s forecasts become a reality.

And the rest of the article is a exposition of clarity of the fix that our over expanded dairy sector has got itself into. While most farmers are pretty canny folk who don’t over-extend too far, but there is going to be a major shakeout of the rural sector and those regions that are heavily dependent on them over the next few years. It is rather inevitable when you look at the dairy sector without the comforting anti-panic shades on.

The major driver of dairy prices for NZ farmers over the last few years here has been the sale of wholemilk powder mostly for a baby formula into a vast market of chinese children. But the pricing issue is that wholemilk powder stores well and prices are related to supply as well as demand. Currently there is a lot of unsold stock sitting around the world and a lot of new capacity to produce more.

It appears that there is glut of stock in China and we have had a large stockpile of stock here compared to previous years when I looked at it earlier in the year. Even worse as Jamie Grey writes

Production has been strong in many other countries. In the United States, low feed prices have made milk production far more viable.

In parts of Europe, countries are increasing production in advance of quotas coming off next year and as Russia’s ban on western food products – mostly dairy – continues to destabilise the market.

Compared with the last quarter of 2013, wholemilk powder was the worst performer in 2014, dropping by 51.8 per cent, according to Global Dairy Trade data.

Mass marketing campaigns of product into places like Indonesia that the anonymous sunstruck mushhead wrote in their editorial do not flare into existence overnight. They take years to develop into significiant volumes in such markets where the demand has to be built first. Such markets are things that may influence demand in the 2020s or later but are damn unlikely to do much for years.

Moreover in a market where there is a glut of stock, high production capacities world wide, and an internationally traded commodity such markets are unlikely to significantly increase the farmgate price.

To me, this doesn’t look like a bust, but simply a classic case of the supply market finally catching up with demand. As such I’d expect prices to lift a bit towards the end of the year as stockpiles diminish. In the absence of other massive markets with inadequate domestic dairy being opened up in the next few years, dairy farmers here and world wide can expect normal prices at the around $5/kg or likely less to resume for a number of years.


 

* Back to work today. I am prepared to suffer the cool air of the airconditioning 🙂

94 comments on “Written in a deep summer haze ”

  1. Paul 1

    All this proves is that John Roughan thinks the following.
    I’m happy with my lot in the world.
    Therefore all is good with the world.

    • rod 1.1

      Was he on the New Years honours list? just a thought.

    • lprent 1.2

      We don’t know if it was John Roughan.

      After all it could have just as easily been the fantasy writers at the Treasury who wrote the fiscal update for 2015/6 that relied on getting a 25% price increase for dairy products over coming year.

      • Colonial Rawshark 1.2.1

        Oh I’m sure they’ll be heavily censured for getting it all so wrong – not. Pretty sure that astrology has a more sound basis than economic forecasting.

        • One Anonymous Bloke 1.2.1.1

          At least astrology can predict what the night sky will look like in six months 😉

          • Poission 1.2.1.1.1

            Astronomy can,astrology cannot as it is outdated due to precession.

            http://dionysia.org/astrology/sun-signs.html

            • Colonial Rawshark 1.2.1.1.1.1

              Old civilisations developed advanced astronomical observation methods as part of their astrological endeavours. I would suppose that only a fraction of their abilities are known today, and if their respective civilisations had not ended, they would have continued improving their approaches. Of course today we also have the advantage of advanced space based instruments etc which they did not.

            • One Anonymous Bloke 1.2.1.1.1.2

              Which makes it a nil-all draw between Economics and Astrology 🙂

      • Tracey 1.2.2

        It was probably written from a friend’s beachhouse… said beachhouse is of course huge and worth a hellova lot more than an average kiwi home, the people around the writer all had great christmases and had driven their new cars to the gathering at said beachhouse, hence and ergo, the economy and NZ is clearly thriving.

        • One Anonymous Bloke 1.2.2.1

          The rules of evidence are a leftie conspiracy.

        • Colonial Rawshark 1.2.2.2

          There’s another case of Bollinger in the attic, James, why don’t you grab it and get it in the chiller for tomorrow’s BBQ.

          • Tracey 1.2.2.2.1

            and order up the helicopter, the holiday highway is gridlocked

            • Colonial Rawshark 1.2.2.2.1.1

              Our government ministers aren’t above calling in an NZDF helicopter to shuffle them around.

          • Once wasTim 1.2.2.2.2

            I’m sure Nik and Conrad will be laughing their arses off while you do (get that case of Bollinger from the attic) – I’m not certain, but probably in the case of Conrad, one of his grave concerns. If so – “told ya so” will be of little comfort. (Hang on a mo’ ….. I’ll js try n txt hime 2 c but he may hv 4gottn 2 put the smrtfone in the coffin with him)
            Christ! – when did common sense and a functioning human being’s basic thought process take a back seat to all this ideologically driven gubbamint pollsy.

      • Atiawa 1.2.3

        ANZ bank Chief Economist Cameron Bagrie is even more upbeat according to his comments today on Stuff.
        ‘ pure economic expansion”

    • Chooky 1.3

      Farmer newspapers are more realistic than the Herald

      eg ‘NZ Farmer’ (December 15) ‘Back to Basics Key to Survival’…”Survive the payout drought by going back to farming basics – and if you don’t know how to farm the old fashioned, low-cost way, ask someone”….. job losses predicted…….”Going back to pasture -based farming key to survival’

      ….Hayley Moynihan( Rabobank director of dairy research in NZ and Asia) “said milk prices were now falling in key production markets, which would in time produce a supply response and lower export growth”….

      and from ‘Rural News’ ( December 15) ‘Beef buffers dairy doom’…”Higher sheep and beef prices seem set to buffer the drop in export earnings from dairying, according to the latest economic update from the Ministry of Primary Industries (MPI)

      …and ‘Farmers accept change is needed’…dairy leaders forum on ‘sustainability’…Dr. Rick Pridmore ( Dairy NZ’s strategy investment leader for sustainability)…” its accepted that sustainability is an issue that needs to be addressed”

      ‘China , Russia biggest wildcards in dairy prices’…..”New Zealand farmgate prices fell from 60 US cents/L at the end of the season to 35 US cents/L last month, while some European producers’ payouts went from 60 US cents/L to 45 cents/L during the same period”

      …while Russia “imposed sanctions on all dairy products from the European Union, US, Canada, Norway and Australia, after the row over UKraine worsened” ….New Zealand is exempt

      Question: Why aren’t we trading and selling dairy to Russia like Central and South America…and Israel and India?

      http://rt.com/business/200047-russia-india-meat-milk/

      http://rt.com/business/190260-brazil-begins-dairy-exports-russia/

      http://rt.com/business/178664-latin-america-benefits-russia-ban/

      http://in.rbth.com/blogs/2014/08/08/great_opportunity_for_indian_companies_to_enter_russian_food_market_37289.html

      http://www.stuff.co.nz/business/farming/agribusiness/10363174/Russia-wants-our-cheese-but-at-what-cost

      Question: Are we stupid?…If these other countries including Israel can trade dairy, ag products/technology with Russia …why cant we?

      • Draco T Bastard 1.3.1

        If these other countries including Israel can trade dairy, ag products/technology with Russia …why cant we?

        We probably can but doing so would upset the US and so National won’t even think of going there. Of course, they’ll say that it’s up to the individual farmers to do so if they’d like but getting into such a market takes more resources than any individual farmer has available and Fonterra, after the price crash of dairy, probably doesn’t either.

        • Chooky 1.3.1.1

          “Fonterra, after the price crash of dairy” should be going there…..NZ farmers need to get together a farming cooperative that trades directly with Russia and any other country that is best for NZ farmers and the NZ economy…forget about the political middlemen and straw man politics

          an example of the right way to go is trade with United Arab Emerites (UAE)…article NZ Farmers Weekly (15 Dec)…Malcolm Millar (MFAT, Abu Dhabi)…”There are growth opportunities here for NZ in every respect….If you are a NZ company and serious about doing trade into the Middle East and right through Africa, the UAE is the jumping off point, even to Europe”…blah , blah

          Labour should be pushing trade where ever possible

          • Rolf 1.3.1.1.1

            There are huge opportunities everywhere in the world, especially Asia, it is the New Zealand politicians and bureaucrats that stand in the way, always favoring their mates and friends. Make use of all the competent kiwi expats already in place to help. The feudal lords, New Zealand politicians and bureaucrats, hate the guts of them as they could expose their incompetence. That New Zealand is a US Quisling and satellite state does not exactly help either.

            • One Anonymous Bloke 1.3.1.1.1.1

              New Zealand “politicans and bureaucrats” negotiated the FTA with China in the first place. It sounds like these competent expats are pretty ungrateful. Unless you’re projecting, I suppose.

              That seems more likely.

              • Colonial Rawshark

                Closely related but different, Key has ordered a stop to last stage work on the Russia FTA for no good reason, and signalled to our dairy industry that they should not deepen its involvement with Russia.

                All of this is US driven madness and directly against NZ’s commercial interests.

                Let’s remember that we were exporting dairy to the USSR during the very height of the cold war.

                • Tracey

                  publicly told fonterra not to take advantage… privately he will have given a nod
                  and a wink.

                  • Colonial Rawshark

                    Or be even harsher and more negative about Russia behind closed doors, to senior dairy executives.

                    • Tracey

                      money before mates…

                    • Colonial Rawshark

                      I’m not doubting that there will be some kind of payoff promised, down the track…

                    • ghostwhowalksnz

                      We know that Fonterra wants some of the rules changed regarding supplying competitors with milk.
                      These were indroduced to allow a little bit of competition, as the mega merger broke the rules about market share

                      Guess this will come early in the year

  2. les 2

    Yes I read this article and was quite amazed by the statements made.Including this part…’ Russia is in a dire state largely of its own making’!

  3. saveNZ 3

    I saw the Herald editorial and it looked so stupid I could not even be bothered reading it.

    In general I am boycotting the Herald. But at a cafe I browsed briefly through Saturdays paper. Was astonished how thin and un news worthy it was. Reminded me of Fiji newspapers.

    A sum up of the mush that is digested by the few that try to read this propaganda mag.

    something like a half page dedicated to….
    Presenters look a million bucks – for $111k
    TVNZ says new clothes needed to keep hosts looking their best, and it’s less than bill for 2013

    Riveting stuff…..

    • ghostwhowalksnz 3.1

      The readers are not those of the New York review of Books you know !

      First of all it has to please its advertisers, so theres a slant towards ‘supermum’ stories and the lives and loves of local celebrities.

  4. Atiawa 4

    Why would you bother with the Herald nowadays when there is BBC news and Al Jazeera on line.
    We are told to “think globally and act locally”. FFS our most widely read daily newspaper is incapable of allowing us to do that with editorials misrepresenting the local/global realities that directly affect our economy.
    Can it be raised as an issue with the NZ Press Council?

    • Colonial Rawshark 4.1

      You can add Russia Today on to the list. (The BBC considers itself the propaganda offset to Russia Today, funnily enough).

      • Once wasTim 4.1.1

        It does CR – except that there a few within (ekshly quite a few) that are clever enough to know better. Unfortunately, they’ve got mortgages to pay and families to support. Might take a little longer, but when the inevitable happens …..
        There’s this ‘western’ mindset yea? – It assumes that when ‘Russia’ is mentioned – you can transpose the word ‘Putin’. I think that “fucking” Victoria Nueland/Newland “bitch” fell into that trap. (someone just take her out the back ffs!)

        But….. PLEASE y’all, don’t judge the BBC on any romantic notions of what you once thought it was. If they could, UK Tories would be getting away with the neutering of PSB that’s gone on in Nu Zull. (There’s been quite a few BBC deserters over the past two Tory terms if you check it out – to places like Al Jaz and elsewhere. I’m surprised Simpson hasn’t gone yet)

        • Colonial Rawshark 4.1.1.1

          I find the BBC pretty good…except whenever the western empire decides to start a war somewhere (which seems to be increasingly often nowadays) the views it broadcasts are usually 95% for the war, 5% against the war.

          • Murray Rawshark 4.1.1.1.1

            That seems to be its version of balance on Palestine as well. I think the BBC just seems good by comparison with Kiwi media.

            • Colonial Rawshark 4.1.1.1.1.1

              I like a quote by Chris Hedges about the corporate media narrowing the acceptable public debate to: ‘shall we bomb them’ and ‘shall we bomb them and send in ground troops.’

            • Paul 4.1.1.1.1.2

              Jacqui Smith an example of a biased British correspondent.(BBC)

          • Paul 4.1.1.1.2

            BBC was totally biased on Scottish referendum.
            A journalist by the name of Robinson was particularly bad.

  5. Paul 5

    Slightly more realistic, sobering and thoughtful predictions for 2015
    http://www.informationclearinghouse.info/article40607.htm

  6. Chooky 6

    @ Paul …yes sobering …

  7. Sable 7

    Does anyone take the Herald seriously anymore? They might be better served redeveloping their business as a seller of budget loo paper…

    • Paul 7.1

      I think people get it for the crossword

      • Olwyn 7.1.1

        It is not even much good for the crosswords. I buy the Dom a couple of times a week for the crosswords, and I live in Herald territory.

    • Tracey 7.2

      yes they do, those who buy it.

    • GregJ 7.3

      Does anyone take the Herald seriously anymore? They might be better served redeveloping their business as a seller of budget loo paper…

      “Granny” Herald used to be the voice of the Establishment – now it is just a squalid little rag that frankly I’d hesitate even to wipe my ass with… 😈

  8. RedLogix 8

    In the Melbourne’s The Age this morning is an article on the same theme from one Michael Pascoe:

    Uppity Kiwis feeling boastful about their dollar approaching parity with the mighty Aussie might do well to stick to rugby for their kicks. Their China-driven boom is coming to an end as quickly as Australia’s. And they have less to fall back on when it does.

    Meanwhile, reports of Gina Rinehart going long on dairy farms could prove as reliable a warning as many another billionaire diversifying outside his or her area of expertise.

    The New Zealand economy’s resurgence has owed much to China’s demand for milk products and getting in early for a comprehensive free trade agreement with the Middle Kingdom.

    Trouble is, China has been busily investing and encouraging others to invest in increased and globally diversified milking. Just as iron ore miners have ramped up production both from existing provinces and new projects from Africa to Mongolia, New Zealand’s farmers are facing increased competition from South America to Russia and all points in between, including Australia.

    This time last year I was in Uruguay, a country that, in several ways, is the New Zealand of South America. It’s small, agricultural, relatively peaceful (the lowest murder rate of the continent), has a similar population of 3 million or so and a large diaspora, manages to perform disproportionately well in its chosen football code, is socially advanced on several levels (gay marriage, legalised marijuana) and has ridden cows to posterity, courtesy of Chinese demand.

    Chinese investment in Uruguay is obvious and remarked on by the locals: Chinese cars on the roads, new buildings sporting Chinese brands. And Uruguay is just one small corner of the global market China has been developing as a source of commodities and consumers. It’s been doing that developing both as a matter of Beijing policy and individual entrepreneur’s search for opportunities.

    Read more: http://www.smh.com.au/business/tears-ahead-for-chinadriven-milk-boom-in-new-zealand-20150104-12hiwq.html#ixzz3NtFzXVEA

    • Bearded Git 8.1

      I liked this part too RedLogix:

      “Tourism is more important to the New Zealand economy than it is to ours, and we are their main source of visitors. At $1.05, the New Zealand travel experience is expensive: Noosa kills any kiwi bay of anything, there’s only so much sauvignon blanc you can drink and the only remarkable part of skiing the Remarkables is the appalling dirt road to get there.
      Barring the discovery of real hobbits, dragons and treasure, the place needs any currency advantage it can get. New Zealand is facing the same problem Australia has known too well: a dollar that is too strong for its own good and too slow to adjust to weakness in its key commodity export.”

      The problem Key and his Federated Farmer mates are not facing up to is that most costs associated with dairy farming are fixed. This means when you try to get out of dairy into other more profitable/sophisticated industries it is like trying to change direction in a super-tanker.

      • ghostwhowalksnz 8.1.1

        One of Keys personal investments was in corporate dairy farmer, so technically Key is a Queen St farmer

      • Murray Rawshark 8.1.2

        The East coast beaches in Northland and Coromandel are far better than anything I’ve seen around Noosa.

        • Colonial Rawshark 8.1.2.1

          And fewer Australians

        • mickysavage 8.1.2.2

          The west coast beaches from 90 Mile Beach to Whatipu are outstanding …

          • Murray Rawshark 8.1.2.2.1

            They are, but I like the sheltered little coves and rivers on the other coast even more.

            Queensland beaches are usually bleak, no natural shelter, sand dunes full of snakes, loud mouth lifeguards, and a built up backdrop with overpriced restaurants. I don’t really like them much at all.

        • Halfcrown 8.1.2.3

          “The East coast beaches in Northland and Coromandel are far better than anything I’ve seen around Noosa.”

          Funny that, I felt the same thing when I visited Noosa (not to return),

    • Tracey 8.2

      Thanks for sharing that RedL, if anyone disputes the wizard of oz nature of the government they ought to be feeling tempted by now to peek behind the curtain.

  9. Paul 9

    Even the Daily Torygraph in the UK can see the storm clouds brewing.
    Can someone wake Roughan up from his slumbers?
    http://www.telegraph.co.uk/finance/economics/11322623/Ten-warning-signs-of-a-market-crash-in-2015.html

    • Colonial Rawshark 9.1

      the markets have precious little to do with the real economy being faced by the 90%, anyway.

  10. Draco T Bastard 10

    The Treasury, in last month’s fiscal update, said its forecasts were based on a 25 per cent recovery in dairy prices taking place in 2016.

    Hahahahahahahaha…

    deep breath

    hahahahahahahahaha….

    Personally, I’d be surprised if it went above $5/kg ever again. It sure as hell won’t be getting to the $6/kg that Treasury wants it to be.

    • tricledrown 10.1

      What is the biggest loss in dairy exports is the loss of nearly all infant formula sales in China!
      Oravida being the only company that has managed to keep its market share!!
      Insider trading obviously has its benefits.

    • Once wasTim 10.2

      ……. so that means there are a load of Treasuy officials that won’t be getting bonuses or performance pay eh Draco?
      Pigs fly …. but never mind, they’ll squeal in vain when sheeple eventually get really really pissed off and demand accountability. Unfortunately I’ll probably not be around to witness it

  11. Ad 11

    Great links Lyn and Red.
    Far more real than my main orbits of Auckland and Wanaka.

    Also toured Bluff and Invercargill and Riverton and Nightcaps this holidays – some amazingly stark deprivation index neighbourhood contrasts there.

    Most of my rellies are dry stock farmers north of Kerikeri – ain’t no boom there – ever.

    • Colonial Rawshark 11.1

      Also toured Bluff and Invercargill and Riverton and Nightcaps this holidays – some amazingly stark deprivation index neighbourhood contrasts there.

      And very limited Labour presence, in general.

  12. Al 12

    OK, I appreciate that the ‘rockstar economy’ notion is clearly bovine excrement at best … but did we really need the visual?!

    • Colonial Rawshark 12.1

      It is pretty rough when you are checking the front page of The Standard with a mouthful of roast beef sandwich.

      • Anne 12.1.1

        Thank goodness its been mentioned. Too much for this sensitive wee soul. Could someone remove it – pleeeease?

        • lprent 12.1.1.1

          Nope…

          I think I got immunised from looking at 400 of those rear ends every morning and evening whilst working on a town supply back in the 70s for 6 months. Spending a year farming convinced me of the wisdom of avoiding that gamble because I couldn’t see how a town boy like me could ever own a farm at the prices they had then.

          But look at how well it fits with my post. A natural visual indication of what I think about that editorial…

      • McFlock 12.1.2

        lol

        Yeah it wasn’t the best sight before breakfast, either 🙂

        • Jenny Kirk 12.1.2.1

          Nor after dinner !
          I, too, thought the visual more than a bit OTT ….. and I’m now living in the country where that sight is much more common than in the previous city/suburbia residence of 10 years ago. But hey …. it’s also “sort of” funny.

  13. aerobubble 13

    New car sales up. Petrol prices down. Markets seize on opprtunity however irrational.
    The world was mired in the gfc, Key came to power, he shovelled lower to middle income earners taxes into the hands of investors to use on dairy and beefing up house prices. It was entirely irrational, entirely market short termism.

    What else would you expect, if a investor reaps an extra few percent of dividend from a ponsi scheme, i.e stolen money, then they get to keep it. Its stolen money.

    We live in an risk permium country where our legislature hands over wealth to investors.

    Of course the milk boom is over, of course oil will return to new highs, of course a new round of cars left on the side of the road for sale will begin again.

  14. Murray Rawshark 14

    Is that idiot writer saying that a lowering of the price allows Fonterra to sell to poorer countries? Imagine the wealth that would accrue from giving it away! The market would be worldwide. Except at home of course. Kiwis would still have to pay ridiculously high prices for milk, cheese, and butter.

    I’m also a bit unsettled by the fact that millions of Chinese babies may no longer be getting breastfed. I wonder what this will due for immunities and general health?

  15. Ross 15

    I live in Asia. Milk is marketed here, to massive halls packed with expectant mothers, by guys in white coats talking audio-visually, with streamers and balloons and free gifts and graphs that mean: scientific. The message is: your breasts aren’t enough, baby needs formula. I see stores dedicated to baby formula. Nothing else. Whole stores. Baby formula. Why are we part of this madness?

    Stupid (rhetorical) question of course. It’s only money. What’s a few (thousand) dead babies compared to our healthy quarterly balance sheet. They’re only Asian. Asians don’t experience death like we do. They can handle it, just ask General Westmoreland. I saw one of his bombs the other day, just walking on the beach, a beach full of babies. A bomb. In the sand. Killing babies still. They don’t mind.

    • greywarshark 15.1

      This has been done before. There was a large scandal over nestle milk back in the day. Babies that would have thrived on mother were being fed from bottles that weren’t hygienically cleaned, of milk formula that was mixed in containers that weren’t hygienically cleaned, mixed with water that was a little purer than downstream from a NZ non-complying dairy farm.

      The boys and girls in white coats can play on the fear of something going wrong for the baby of the Chinese who have been one, or the first, country to make an honest effort to limit population growth, by limiting most in a draconian ruling, to one child only.

    • geoff 15.2

      Ross do you have any links that can show examples of what you’re talking about? It would be great to do a post on this angle.

      Here’s an old article I found…

      http://www.3news.co.nz/world/infant-formula-contributes-to-malnourishment–unicef-2012110608#axzz3NwItp1Th

      • Ross 15.2.1

        Geoff, no links just first hand experience. The graphic in your article is exactly what I can see in any number of shops here. As are the hordes of pregnant women emerging from “events” carrying goody bags and formula samples. I am going purely on visuals here though. The language is impenetrable to me, but the message seems pretty unmistakable, as was my wife’s commitment to formula (but fortunately not to giving up breast feeding). Maybe it says in the pamphlets somewhere, breast feeding is good for the baby. But the rest of the guff is clearly that baby will only get fat and have strong bones and healthy teeth by feeding with preparation X.

  16. steve bradley 16

    Good on you Lynn for your continuing materialist analysis of one of the mainstays of our agricultural economy. Selling products of the land and sea, in one form or another, earns much of our foreign exchange – which we can either invest to improve productive capacity or fritter away on Lamborghinis, marble bathrooms, and exotic foreign holidays. Internationally traded primary production is always subject to boom and bust pricing. For many years the NZ Dairy Board worked to stabilize prices received by cockies from their respective cooperative dairy companies. In a boom year the Board would hold money back and release it in a bad year. It would be interesting to compare price stability then and now. One other thing. We all know that the dairy industry has been so profitable of late that it is displacing other forms of agricultural production such as dry stock and cropping. All throughout New Zealand one can still see cattle grazing up to and through the banks of rivers and streams. As a country or a nation-state we are obviously unable to limit the endless exapansion of dairying to the detriment of our water supplies. But perhaps if prices stay low enough for long enough ‘the invisible hand of the market’ will save us from completely fouling our own land. But is this the way to manage a country in the 21st century?

  17. Miracle Worker 17

    The most revealing aspect about the NZ Herald article this article refers to, is that the NZ Herald has so far refrained from publishing any of the comments it invites readers to make in response to it.

    That speaks volumes about it, really.

    • GregJ 17.1

      Yep – they have a number of “columnists” they also don’t seem to allow comments for (in fairness Stuff also does the same with some of their columnists). Although perhaps that’s not totally bad as you always come out feeling a little dirty wading through the comments on the Herald.

    • Sacha 17.2

      “We aim to have healthy debate” – yeah, right.

    • Ffloyd 17.3

      I could have sworn this editorial initially had about 50 comments. While I didn’t read the article when first published I did go to comments and read a few then had to leave it thinking I would get back to it, but when I did that, they had disappeared. From what I remember the comments I did read were very derogatory.

  18. dave 18

    I am amazed the new Zealand media can compete especially the herald and tvnz there is just no need to watch any of there programming technology has totally surpassed them
    to make the point Russell brands the truths now has a larger viewer ship than the sun paper hes using go pros in his own apartment tv broadcasting infer structure is redundant and you to have question the value of tvnz at this point in time. they are not the gate keepers any longer and haven’t been for a long time and rts abbey martin and Max kaiser are much better than hoskins

  19. Saarbo 19

    100% spot on LPRENT.

    We have Fonterra http://agrihq.co.nz/article/wmp-recovery-predicted?p=6 talking up a recovery…which in a commodity market is stupid and self serving: the only result of this is markets such as the US will continue to over supply: US up 3.5% to November 2014 over November 2013 http://usda.mannlib.cornell.edu/usda/current/MilkProd/MilkProd-12-19-2014.pdf

    Fonterra is the big world player in dairy exports, and if they are signalling a recovery then producers will continue to produce, and it does seem that the US can turn on production like a tap these days with their mega dairies.

    I agree, expect some recovery on the prices we are currently selling at but still expect sub $6 pay out until 2016/17…maybe beyond, which will cause forced farm sales.

  20. georgecom 20

    This may have been raised above, did not read every comment. But if “New Zealand’s government was concerned the country had become too reliant on a single market” as the editorial suggested, then why hasn’t the New Zealand government done anything about diversifying our economy?

    A ‘do nothing approach’ is a damning indictment on the Government if it was really that concerned.

  21. The Fairy Godmother 21

    Formula pushers are no different to drug pushers imo. Do just as much harm capitalism doesn’t value breastfeeding because it makes them no money

  22. disturbed 22

    The second big recession is finally here folks as predicted for 2015.

    CNBC said it this morning and Peter Schiff has nailed it.

    Time to turn away from this Key sell everything we need and again invest in our workforce to produce products we need and sell what we overproduce.

    We have again been duped by the idiots running treasury, let us become self reliant and self sufficient again as we were in the 1950s and allow workers to share in industry as partners as European countries do, and boot these carpetbaggers out of our country.

    http://investmentwatchblog.com/lord-monckton-peter-schiff-dollar-is-toast-crash-that-is-coming-will-be-orders-of-magnitude-worse-than-2008-prepare-for-years-without-food/

    • Lanthanide 22.1

      That article was written in 2013, predicting a crash would happen that year.

      Funnily enough, I’ve had food for the last 18 months, and it seems most of the western world has as well.

      I guess a broken clock is right twice a day, though?

    • Murray Rawshark 22.2

      Monckton is bloody well disturbed all right.

  23. gnomic 23

    This story seems to suggest that someone wasted valuable moments of their life reading an editorial from the NZ Herald. Seek help at once. Without wishing to be smug, I have survived several decades whilst never reading stuff so predictably tripe. Or perhaps trite.

    The people of the USA have a word ‘shill’ which seems applicable.

    As to the world of the near future, my antennae tell me that a sudden change in the price of petroleum driven by dark forces, and a number of dreadful dangerous localised wars, and a resurgence of irrendentist Islam, can not possibly lead to peaceful and secure times. Did I mention a precipitate decline in dairy prices, and the sudden emergence of myriad competitors? And what about the fracking boom, likely pretty well fracked?

    Batten down the hatches. Good luck.

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