Farmers Feeling Short-Changed

Ruralnews.co.nz/Sudesh Kissun 30 June 2008

Many New Zealand farmers are reeling after the share price of Fonterra their fair value shares (FVS) dropped $1.22 last month. They believe it is a ploy by Fonterra to protect the cooperative and prevent shareholders from going over to another processor. Fonterra says the price dropped as a result of the global credit crunch and high commodity prices, reports Ruralnews.co.nz. Invercargill dairy farmer Greg Roberts, who was told by Fonterra to hold onto his shares and redeem them in June, says it’s a “rip-off” and he is one of a group of disappointed farmers contemplating legal action. Meanwhile according to Fonterra chairman Henry van der Heyden, other farmers are taking advantage of the share price going down.

Full story:

http://www.ruralnews.co.nz/Default.asp?task=article&subtask=show&item=15712&pageno=1

Australia Unaffected by US

Weekly Times/Felicity Lunghusen 25 June 2008

US dairy exports have been valued at AU$1.39 billion, up 89.3% on last year. However, US wholesale cheese prices have weakened on the back of rising milk production, which is up about 3%. This increased production has meant a softening in the price of skim and whole milk powder. Joanne Bills, Dairy Australia senior analyst, does not believe Australia will be at all affected by skyrocketing US dairy export values. Dairy Australia’s latest statistics, according to Weekly Times, show the value of butter exports has jumped 16% to about AU$108 million despite the volume being down about 19% to almost 596,000 tonnes.

Farmers Hit Hard by High Australian Dollar

Farm Online  30 June 2008

Despite high dairy commodity prices, Australian farmers are feeling the pinch with increased input costs, drought, labour shortages and a rising AUD/USD exchange rate reports Farm Online.  Westpac's senior agribusiness economist, Justin Smirk, told Farm Online that the weakening of the US economy and the ongoing buoyancy of the Australian economy have been key factors behind the strength of the AUD – “As one of Australia's most trade-exposed sectors, farming has been slugged by the ever-strengthening dollar - peaking over US$0.96 in May.” It’s not just the rise of the AUD/USD exchange rate that is hampering Australian farm returns, there has also been significant movement against the currencies of Australia's main trading partners. NFF Vice-President, Charles Burke, told Farm Online that the appreciation of the AUD against the currencies for South Korea and Indonesia comes as the AUD has depreciated against the Yen and the Euro – “After weighting the currency impact according to the major export destinations of Australian agricultural produce, the actual currency impact for agriculture is an appreciation of approximately 10% since May 2007.  The NFF calculates that every 1% appreciation in the Australian dollar equates to a AU$190 million erosion of farm incomes, resulting in the high Australian dollar costing our farm sector over AU$1.9 billion since May 2007”. 

Full story:

http://fw.farmonline.com.au/news/nationalrural/agribusiness-and-general/general/high-aussie-dollar-costs-farmers

Fonterra Opens Research Centre in Chicago

Fonterra Release  26 June 2008

Fonterra Co-operative Group has opened its new corporate headquarters for North America and a new Application and Sensory Technical and Development Centre (CDC) in Chicago, Illinois. Chairman Henry van der Heyden said Fonterra would use its new base in Chicago to allow it to work more closely with its North American customers. “This move puts Fonterra closer to key customers, suppliers and centres of dairy research in an area that is one of the heartlands of dairying in the United States. We have long-standing partnerships in the United States, it’s a large and strategically important market and one where we’re growing our business.” The new Chicago Development Centre (CDC) will make it simpler and more effective to commercialise scientific innovations from Fonterra’s research and development hubs in Palmerston North, New Zealand, and Melbourne, Australia. “Fonterra sees exciting opportunities in its US business and we want to grow it together with our key customers,” said Martin Bates, Fonterra USA’s President and Chief Operating Officer. “We also want to use the US as a supply base to allow us to work with our international customers to ensure quality exports are sourced from the US to meet growing international demand. And the Chicago Development Centre means that our customers can provide us valuable feedback on our products as they’re being developed, especially in the fast-growing health and nutrition sphere.” The US relocation has been assisted by a US$1.14 million investment package from the Illinois Department of Commerce and Economic Opportunity. More than 50% of the skim milk powder sold by Fonterra internationally last year was manufactured in the US.