NEWSLETTER 14.08.15

Dairy
Dairy farmers are able to cash in on Fonterra’s offer of a 50 cent advance on the payout, but sharemilkers, who don’t own Fonterra shares, miss out. Kerry Adams from DAA chartered accountants says the offer for the shareholders will ease their cash flow but it isn’t likely to help much. He says communication with bankers and accountants is paramount.

Dairy farmers facing very low returns this financial year are still liable for provisional tax based on their incomes last season. Kerry Adams says they need to look very closely at their budgets as IRD haven’t adjusted their protocols about payments and although next year the provisional tax will be a lot less, the calculations for this season’s payments are set in concrete.

If you want to break your agreement with your sharemilker because of the current financial pressure, ensure you get your lawyer to check your contract. Kerry Adams says he has several clients who want to change their land use because of the downturn, but if there isn’t an appropriate out clause the contract will stand.

Sharemilkers facing huge losses are starting to put themselves into voluntary liquidation. Obviously the flow on effect is cows coming onto the market with very low demand and rock bottom prices being paid.

There are more and more reports of dairy farmers selling stock to reduce costs.Kerry Adams says for many it is the only option as farmers try to work within the financial restrictions imposed by the payout rate of $3.85. He says it will mean a lower production level, but the costs will drop accordingly.
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Community
More help is flowing into North Canterbury as farmers from other regions continue to send emergency hay and silage. Grant Sylvester, a city businessmanwho has been coordinating the relief shipments says he is astounded at the level of support farmers are giving their counterparts and the generosity of transport companies who are donating their resources to get the aid there by donating the transport costs.

Cropping/ Horticulture
Cropping farmers faced with huge compliance costs are selling up and leaving the industry. Dennis Carter says he knows of several farmers who simply can’t make a profit out of cropping because of the new rules and regulations and so they are selling. He says if you were to sow your whole farm in barley you would “go broke” because the returns would be less than the inputs and compliance costs.
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Livestock
Sheep farmers in drought-affected areas such as North Canterbury are using palm kernel to supplement the lack of pasture but there’s a warning about copperbuild up in sheep from feeding it. Megan Hardy a nutritionist for Farmlands says sheep can’t pass copper out of their body so it builds up in the liver and can be fatal. She says there are several other supplements that can be used but the best solution if farmers want to use palm kernel is to monitor copper levels in the stock by a biopsy. 
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Irrigation: By RX Plastics
Don’t hit the button to soon. That’s the advice from Tony Davoren from Hydro Services who says there’s a temptation to start watering early but soil temperatures are still very low and there’s a chance farmers will use all their annual allocation before the season ends. Tony says each allocation is for a certain amount and once that has been used there’s no more. He says there aresevere penalties for those who more water than they are allowed.
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Livestock
Farmers in drought affected areas are being advised not to over sow worn out pastures. Roger Chambers from Farmlands says it’s tempting to over sow butmoisture conservation is vital and farmers are better off to spray out old pasture and start again from scratch. He says Lucerne is a great drought resistant plantbut the soils need to be prepared well in advance before sowing to that becomes along term solution.
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Commerce
Finally this week it seems Greece will trade out of their problems, within reason. Other EU countries have agreed to advance a further $86 billion for Greece to stay afloat.
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