New financial report reveals how the current economic climate is hurting our farmers, West Coast rural communities question value of steep rates hike, and Kiwi shearers triumph at Royal Welsh Show sets up a test series decider.

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New financial report reveals how the current economic climate is hurting our farmers

A new financial survey reveals challenging times for dairy farmers, particularly in Waikato and Bay of Plenty. The average farm in these regions operated at an $86,000 loss during the 2023-2024 season, with milk payouts falling below the break-even point.

The annual report by AgFirst, an agricultural consultancy, models a typical dairy farm of 133 hectares, milking 368 cows and producing around 140,000 kilograms of milksolids. This model showed a 62% drop in profit before tax compared to the previous season.

For Fonterra suppliers, the financial blow was cushioned by a capital repayment and dividend payment from the co-operative's sale of its South American business. However, non-Fonterra suppliers and sharemilkers missed out on these offsetting payments.

The expected milk payout for the 2023-2024 season is $7.75 per kilogram, an improvement from earlier forecasts but still below the $9 per kilogram break-even point. The outlook for the new season remains challenging, with an $8 per kilogram payout also falling short of break-even levels.

AgFirst highlights that a reduction in interest rates could significantly impact farm profitability. A 1% decrease in rates could lower debt servicing costs by about 20 cents per kilogram. If rates were to drop by 2-3% over the next two seasons, it would markedly reduce the break-even payout needed.

Despite these challenges, farmer morale is described as "okay." Many farms are entering the new season in good physical condition, and there's a sense that the worst may be behind them. However, finances remain tight, particularly for non-Fonterra suppliers and sharemilkers who may need to cut operating costs and defer debt payments.

West Coast rural communities question value of steep rates hike

West Coast farmers are voicing strong criticism of their regional council's decision to implement a 27% rates increase, the largest in the country. This move comes at a time when rural families are already grappling with financial challenges.

Simon Cameron, Federated Farmers West Coast president, describes the increase as "staggering" and "disproportionate," especially during the current cost-of-living crisis. He argues that while rising costs affect everyone, including councils, this hike goes well beyond inflation rates.

The West Coast Regional Council recently adopted a ten-year plan, featuring an average rates increase of 27% in the first year, followed by 12% and 7.5% in subsequent years. Despite calls from Federated Farmers to reduce proposed expenditure, no cuts were made.

Dairy farmer Frano Volckman, vice-president of Federated Farmers West Coast, highlights the disconnect between the council's decision and the economic realities facing farmers. He argues that the council should seek more funding from central government, given the region's unique challenges of a large area with a low number of ratepayers.

Both Cameron and Volckman question the value farmers receive for their rates. They note the lack of essential services like rubbish collection, mains water, and sewerage in rural areas, and criticise the poor maintenance of local roads.

Cameron is calling for greater accountability from the council's senior leadership team regarding spending decisions. He suggests that the council should first look at improving its own efficiency before raising rates, as would be expected in the private sector.

Cameron has also expressed his commitment to building stronger relationships between Federated Farmers and local councils. He aims to foster better communication and understanding of farmers' circumstances, advocating for more proactive discussions to find fair solutions.

Otago farmers seek clarity on proposed water regulation

Meanwhile Federated Farmers in Otago are demanding transparency from the regional council regarding new freshwater rules scheduled to take effect this October. The organisation's Otago president, Luke Kane, is urging the council to disclose potential impacts and costs associated with these regulations.

Kane says that significant changes have been made since the draft regulations were released. However, due to the confidential nature of the consultation process, the community remains largely uninformed about these alterations.

A major concern centres on the application of Te Mana o te Wai, a key principle in the new regulations. Federated Farmers claim to have received confidential information suggesting costs exceeding $110 million for just two small Otago towns, amounting to more than $50,000 per ratepayer. They warn that if similar costs apply across the region, it could result in a multi-billion-dollar expense for Otago.

The farming organisation is also concerned about local interpretations of Te Mana o te Wai. They suggest that treated wastewater might require land discharge rather than returning to waterways, and water drawn from one water body might not be allowed to enter another due to cultural considerations.

While acknowledging respect for local Iwi and Māori cultural beliefs, Federated Farmers argue that these interpretations could have significant financial and practical implications for the region. They note that these requirements focus more on cultural and spiritual needs rather than the scientific health of waterways.

The group also points out that 82% of Otago's local waterways are already swimmable, questioning the necessity of such extensive and costly changes.

Another area of concern for farmers is meeting new national standards for freshwater management. They've requested information on naturally occurring sediment levels in Otago to help manage their contributions but claim to have received no response.

With the government currently reviewing national freshwater directives and extending the deadline for new regional plans to 2027, Federated Farmers are calling for a slower, more transparent approach. They argue this would allow time to understand and respond to changing central government directions for freshwater management.

Up to 100 jobs at risk as BX Foods aims to reduce costs

Chinese-owned meat company BX Foods is considering reducing staff numbers at its Oamaru plant, citing unsustainable operational costs. The facility, which handles beef, lamb, mutton, and veal, may see significant changes in its workforce.

The company has announced a proposal to cut its operations from two shifts to one, potentially affecting around 100 jobs. This move comes as BX Foods grapples with challenging industry conditions over the past two years.

Financial records show BX Foods' profit decreased from $2.6 million to $1.6 million in the year ending December 2022, despite a slight increase in revenue.

The company, which acquired Lean Meats Oamaru nine years ago with approval from the Overseas Investment Office, is now engaging in a consultation process with affected employees. Feedback will be received until August 5th.

Kiwi shearers triumph at Royal Welsh Show sets up a test series decider

New Zealand shearing has achieved its most significant success in Wales in half a decade, securing a double victory at the Royal Welsh Show. The Wools of New Zealand team, consisting of David Buick from Pongaroa and Jack Fagan from Te Kūiti, levelled the three-test series against Wales with a narrow win over Welsh shearers Gethin Lewis and Richard Jones.

In a closely contested match involving 20 lambs each, Buick and Fagan emerged victorious, with merely 1.2 points separating the four competitors. This resulted in an overall win for the Kiwis by 1.5 points. Adding to the success, Fagan claimed the title in the Royal Welsh Show open championship final.

This victory marks a turnaround from the first test at Cothi, where the New Zealand team fell short by 7.25 points. The final test, scheduled for the Corwen Shears, now holds the potential for New Zealand's first shearing test series win in Wales since 2019.