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GDT brings bumper start to spring. PAGE 3

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Nozzle turns on charm PAGE 33

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Rural support network PAGE 22 SEPTEMBER 13, 2016 ISSUE 364 // www.dairynews.co.nz

EYE IN THE SKY “There’s a misconception that to use a drone effectively you must be a whizz-kid with flash cameras,” – Alastair Tremewan, South Canterbury PAGE 5

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DAIRY NEWS SEPTEMBER 13, 2016

NEWS // 3

GDT signals super start to spring PAM TIPA pamelat@ruralnews.co.nz

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“A SUPER start to spring” is how Rabobank dairy analyst Emma Higgins describes the third consecutive significant rise on the Global Dairy Trade (GDT) event platform. The GDT price index rose 7.7% with the average price US$2920/MT over 14 rounds. The allimportant whole milk powder (WMP) index was up a more modest 3.7% with an average price of US$2793/MT. “There were more bidders this time around: 199 bidders in this event compared to 177 in the prior event – a sign that the prospect of increased prices has flushed out more buyers looking to fill inventory pipelines before commodity prices move higher,” Higgins told Dairy News. On the supply front, news of less milk available around the globe continues, Higgins says. “The cut in European milk production has carried on into June and July and a drastic reduction in milk production in South America, along with a similar prospect in Australia, continues to support our view that the global exportable milk surplus will continue to tighten in 2016.” This short-term coverage demand, combined with slowing global production, has translated into all dairy categories improving in the latest GDT event, Higgins says. “This time around WMP lifted the least in this event at just +3.7% (US$2793/MT) compared to butter at almost +15% (US$3764/MT). SMP lifted a significant 10%, realigning Oceania prices with European SMP prices.” ASB senior rural economist Nathan Penny says the dairy price correction in August and now September has been swift and large. “For now, we expect prices to consolidate over coming auctions as markets will need to take a

Rabobank analyst Emma Higgins says the prospect of price hikes flushed out more bidders last week.

breath,” Penny says. “For example, the relatively flat prices across the different WMP contracts hints that that may now be the case. However, we expect continued production weakness to lift prices again later in the season.” Penny says NZ spring data, as it comes through, will support or challenge the view that global production will weaken further. “Also, with EU’s production now also clearly on the wane, we expect the wedge between NZdominated products (WMP) and EU-dominated ones (SMP) to narrow. For example, June EU production data showed a 1.6% fall compared to June 2015.” Senior economist Anne Boniface says in her agri update that, unlike recent auctions, the increase wasn’t driven by WMP. Instead SMP and anhydrous milk fat (AMF) prices rose 10% and 15.4%

respectively while WMP lagged. “That’s a bit weaker than the 8% or so lift the futures market had been pointing to,” she says. The recently confirmed support from the European Commission to subsidise the region’s dairy farmers will have helped support SMP prices, Boniface says. EU milk production is expected to be dampened further by the €500m payment to European farmers, including €150m for reducing milk production and extending private storage. If fully utilised, the payments for reducing milk production would lead to a 1.1 million tonne reduction in supply. Boniface says fundamentals have moved in favour of dairy producers over the last month or so, with improved demand coinciding with lower milk supply from key global exporters. TO PAGE 4

DAIRY NEWS SEPTEMBER 13, 2016

4 // NEWS

Rural women urged to make their votes count

Dairy tops Moscow talks DAIRY WAS on the agenda at a recent Moscow meeting

DAIRY WOMEN’S Network

(DWN) is urging voters to support rural women to represent them in the upcoming local body elections. Now is the time to ensure a diverse rural voice is heard by people being elected to local government, farmer cooperatives and regional councils, says DWN chief executive Zelda de Villiers. “New Zealand needs a rural voice on many of these boards as issues outside the farmgate are increasingly impacting the way farmers do business,” she says. DWN trustee and ASB rural general manager Mark Heer says diversity and capability of its members are the two key qualities that make an effective board. “We know that diversity increases the performance of an organisation. Not only gender diversity, but also age, cultural, experience and urban/rural diversity,” says Heer.

“Diversity of thinking leads to better decisionmaking. It allows you to highlight risks and opportunities you may not see with group thinking, which leads to a better performance overall.” He says not enough women stand for election and when they do, not enough are selected, leaving an untapped talent pool in the community. “Add all this to the fact ASB rural general manager that 80% of the world’s Mark Heer. purchases are made by boards include women, 17% on women. There is a need to get closer to the consumer, which NZX-listed companies and 42% is a good reason that a better on state sector boards. “At DWN, we take leadership gender mix at the board table is development of our members needed.” The Human Rights’ Commis- seriously, providing women with sion’s 2012 ‘NZ Census of Wom- the opportunity to develop their en’s Participation’ report shows leadership skills by ‘doing,’” says just 14.6% of primary industry de Villiers.

“The network helps women to utilise and develop their skills by volunteering as regional leaders, being part of the conference committee or as a paid project leader or presenter of our dairy modules. “When women have the courage to put up their hands for these opportunities, we are stunned by their skills and impressed by the development and growth we witness, often over a short time.” DWN trustee Cathy Brown agrees: “I am often surrounded by extremely capable women in the dairy industry which I take for granted until I sit around other board tables and realise the calibre of skills that the women of the dairy industry have and how transferrable those skills are.”

for Foreign Minister Murray McCully. He raised the decline in trade, including dairy products, between New Zealand and Russia because of access issues NZ products face. McCully met with Russian Foreign Minister Sergey Lavrov. “Russia plays an important role in global affairs and I valued the opportunity to hear Russia’s views directly,” McCully says. “Bilaterally we have seen trade relations decline in the last two years. “NZ and Russia hold different views on the situation in Ukraine, and while we are not part of the sanctions or counter-sanctions process, these differences have constrained trade relations.” McCully says they discussed how trade outcomes can be improved despite the current policies. He looks forward to the opportunity to improve those policies, to maximise the potential for trade and economic relations as conditions permit.

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Australia dropped 10% in July, relative to a year ago, as farmers responded to the sharp reduction in farmgate milk prices late in the 2015-16 season. But perhaps most importantly, EU milk production has also slowed materially, down 1.5% in June from a year earlier. New Zealand domestic production is expected to be down about 3% this season on the back of reduced supplementary feed and reduced herd sizes, Higgins says. Weather and pasture conditions will play a critical role in farmers getting back to basics. “But while another lift in dairy prices is certainly good news for NZ dairy farmers, the strength in the NZ dollar is taking some of the shine off the improvement,” she says. Westpac continues to forecast a farmgate milk price of $5/kgMS this season; Fonterra is forecasting $4.75/ kgMS. Westpac says this is based on some loss of recent lifts as it suspects recent gains have been overdone relative to supply news. Fonterra will confirm the 2015-16 farmgate milk price – currently forecast at $3.90/kgMS – when it announces its annual results on September 22.

DAIRY NEWS SEPTEMBER 13, 2016

NEWS // 5

Drones earning their keep on farm NIGEL MALTHUS

DON’T WAIT for the technology to be

proven – the age of the farming drone is here now, say two South Canterbury dairy farmers already using off-theshelf drones in their weekly farm management. “There’s a misconception that to use a drone effectively you must be a whizzkid with flash cameras,” says Alastair Tremewan, “Rather, having an eye in the sky in itself, without any technical wizardry, can provide an enormous benefit.” Tremewan, who runs a family farm near Geraldine, and near neighbour Nick Hoogeveen, general manager and part-owner of the Kintore Farms group, are both enthusiastic users of standard Phantom drones. The Phantom is an off-the-shelf model made by the Chinese company DJI, regarded as a market leader in small drone technology. Tremewan says he got into drone use because he “loves technology”. Before returning to the family farm he had spent time in various technology-related ventures including online retail. When he saw how Hoogeveen was already using a drone on his properties he bought his own. He has since started a public Facebook page called Drones on farm NZ to promote and discuss drone usage. Research is continuing into aerial measurement of pasture nutrient levels by a partnership of Ravensdown, Massey University’s precision agriculture group, and AgResearch, funded by the Primary Growth Partnership and led by Massey’s professor in precision agriculture, Ian Yule. The use of sophisticated hyper-spectrum cameras is central to that research. However, Hoogeveen says he did not want to wait for more sophisticated

applications to be developed. “I’m a farmer so I don’t have time for that.” For Hoogeveen and Tremewan the primary use is visible-spectrum aerial mapping of pastures to GPS-level precision. Using software from the American firm DroneDeploy, a drone can be set to autonomously run a grid over a given area, taking a series of vertical photographs that are then automatically stitched together into a single map. “To survey one of my farms, which is about 238ha, takes me roughly 40 minutes with three battery changes. So that gives me a snapshot in time of what my farm is like at that point,” says Hoogeveen. The result is “like a fully upto-date version of Google Earth”. He was using it to confirm his spring rotation planning, checking that stock was grazing to target amounts. “Over the winter we were using it to do a survey of the run-off block then we could

draw on it with GPS precision where the crops had been grazed so we can see what area of crop we have left and how much we had used in the previous week,” says Hoogeveen. Tremewan says it had allowed him to bring his maps of the farm up-todate after decades of unmapped small changes. He had used it to plan and

A drone photo shows how easy it is to capture images of pasture usage. Inset: DJI Phantom I drone, similar to the one used on the farm.

implement changes to the paddock fencing layout. “I mapped over that area and was able to replot the size of the paddocks before we ever did anything and make sure it was all in line and that our paddock sizes would be the same. “Once you’ve made the photo you can draw out the border and it will tell you accurately the square metreage.” While standard drone cameras are great for mapping, assessing crop density in terms of kilograms of dry matter theoretically requires expensive after-

market infrared cameras. However, stock cameras have enough residual sensitivity at the red end of the spectrum to do what Tremewan calls “mock NIR (near infra-red) imagery” by fitting the lens with a filter to block out the rest of the visible spectrum. “It’s not the most accurate thing in the world; if I was a crop farmer I wouldn’t rely 100% on it but it uses the little bit of near infra-red spectrum that’s on the camera as standard. I’ve used that overlay to show us where the cows have had too much pressure on the ground – areas where we might be looking at re-seeding, something like that,” says Tremewan. “It’ll come up a different colour from the rest, where the grass isn’t growing,

basically.” Tremewan was also using his drone to monitor fodder beet crops over winter. “As the cows slowly graze away the fodder beet you can run a scan over the top of the paddocks then go to your computer and drag the measurements out and work out exactly how much is left.” Simple aerial photos taken weekly also allow him to keep track of silage and baleage stocks. “It’s a good tool overall, even without a fancy camera, just to take photos of the paddock conditions so when we make re-grassing decisions or generally discuss the highs and lows of different paddocks, we’ve got something there to look at,” he says.

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DAIRY NEWS SEPTEMBER 13, 2016

6 // NEWS

Four key shifts in state’s trade policy THE GOVERNMENT is planning a trade

Stephen Jacobi

Dairy must be at forefront of strategy refresh AS NEW Zealand’s largest exporter, dairying needs to be front and centre of the trade strategy refresh, even as the government looks to address the newer issues of services, investment and the digital economy, says Stephen Jacobi, executive director, NZ International Business Forum and the APEC Business Advisory Council (NZ). “So it’s good to hear there will be a continuing focus on tariffs and increased attention to non-tariff barriers which are major issues for dairy,” Jacobi told Dairy News. “Dairy also stands to benefit from the new issues, because as the industry works to add value to volume, such matters as e-commerce, protection for offshore investments and embedded services (especially provenance, quality and integrity) are all important.” Jacboi says while he agrees that implementation and enforcement of existing agreements is important, we should not overlook new agreements, eg in Latin America, Central Asia and Africa – all growing areas for dairy consumption. “Second, as the government looks to shift resources, it is important that industry is part of the conversation; this calls for new consultative and advisory structures to be put in place,” he says. “As the minister says, more coordination with business is required but it’s not yet clear how this will be done.” Lastly Jacobi says the increased attention the government is placing on articulating the case for trade with public stakeholders is welcome. “There is a new questioning of the pace and extent of globalisation around the world,” he says. “This requires some rethink of the way trade policy is made if we are to avoid the bitter and wholly unproductive debates we have seen about TPP.”

policy strategy refresh with four key shifts, says Trade Minister Todd McClay. They aim to make the New Zealand economy more resilient, and in turn help to lift growth and raise living standards for NZers. McClay stressed in a recent speech that throughout these shifts the WTO will remain important. “It’s the only forum where we can achieve disciplines on agricultural subsidies; and with NZ companies trading globally, setting trade rules globally through the WTO makes sense for NZ companies,” he says. The first shift was in the balance between negotiation of further agreements and making the Todd McClay most of those we have, -- ‘implementation’. “Having invested heavily in building what you might call ‘architecture’, the fact that most of our exports go to markets that are now covered by FTAs means in future we are likely to spend less effort looking to negotiate new agreements and more effort on implementing and upgrading our existing agreements,” he says. But he says before we shift the weighting of our effort, we have to complete the existing agenda of negotiations. “And we’re not ruling out negotiating new agreements, or upgrading some of the existing ones in future. But the emphasis would shift mainly to getting the most out of the agreements we have.” Business has noted that more effective implementation will need more

coordination, especially between business and government, he says. “I agree. A number of elements in the trade policy strategy refresh will raise new challenges for NZ business.” A second shift will be to increase the focus over time on the barriers and distortions to our goods exports caused by non-tariff barriers. This is typically longterm, resource-intensive work and ministers are already taking steps to improve coordination and focus across agencies on non-tariff barriers. McClay says however that the government recognises that high tariffs are still critical impediments for some industries, notably dairy. It will still seek opportunities, including in future negotiations and the WTO, to address these remaining tariff peaks and the tariff escalation which affects a wider range of value-adding businesses. A third, important shift arises from the changing nature of business. Services and investment are of increased importance. The digital economy is transforming the operating environment for NZ. Services make up most of NZ’s GDP, and are a key source of employment for NZers. “A number of mainly ‘services’ exporters have told officials that they share an interest in the success of ‘goods’ exporters, because the latter are also important customers for them,” McClay says. “I am encouraged by that. We are increasingly moving beyond rigid divisions

of interest between our ‘goods’ exporters and our ‘services’ exporters. In modern business the boundaries between selling goods, services, intellectual property and making investments are blurring.” McClay says over time he expects goods and services trade will increasingly have an equal weighting in trade policy in NZ. “Services and increasing overseas investment – typically so that businesses can get closer to end customers -- are key elements for NZ firms to enable them to add value to volume. “A valuable insight from business in talking about the proposed trade policy strategy refresh has been the perspective that firms need to identify a place in a value chain or value network where they can see themselves able to extract significant value, and to then work backwards from there on how to occupy that place – rather than the simple production-driven narrative of ‘moving up the value chain’. E-commerce (digital trade) has emerged as a vital channel to market, and with modern communications technology an increased range of ‘digital products’ can now be delivered to customers directly over the internet. This is also of particular importance to NZ, as another means to reduce the challenges of distance from market and small scale. There are opportunities for goods trade as well. “The time is here when a small business in Invercargill can export to a consumer market of billions of people through online e-commerce platforms. These platforms can navigate the cultural and linguistic challenges while arranging secure payment, freighting and customs procedures all with the click of a button.

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DAIRY NEWS SEPTEMBER 13, 2016

NEWS // 7

Visiting Indonesian farmers amazed at cow numbers SUDESH KISSUN sudeshk@ruralnews.co.nz

INDONESIAN DAIRY

farmer Septian Jasiah Wijaya has returned home from a month-long study tour in New Zealand with new ideas to run his farm. Wijaya (23) from Bogor, West Java, was impressed by the discipline among farm workers and the scale and technology of NZ farms. A priority for him will be upgrading his effluent management system; after heavy rain his effluent pond floods and

pollutes nearby streams. Wijaya was one of a small group of Indonesian farmers and government dairy extension workers who spent a month in NZ visiting Fonterra farmers and processing sites under the co-op’s dairy development programme. Wijaya says the visit was an opportunity of a lifetime and he was impressed. He says dairying in NZ is very different from Indonesia. “Workers are disciplined and you have better technology,” he told Dairy News.

“And farms with 400 cows have only two workers; in Indonesia a farm with 400 cows will have like a factory of workers.” Wijaya has 37 people working on his farm -- 52ha divided into a dairy farm, a fattening operation for cows and a goat farm. He runs the dairy farm while the other two divisions are leased. He has 75 cows but milks 34 cows twice a day; the morning milk is processed into mozzarella on the farm and the afternoon milk is sent by tanker to

AWARDED FOR SUPPORT FONTERRA HAS won a top social responsibility award in Indonesia for its dairy scholarships for local farmers. The scheme was named Indonesia’s Best Corporate Social Initiative for Social Responsible Business Practice in the 2016 MIX Marketing Communications Magazine Awards. Fonterra director social responsibility Carolyn Mortland says the award is for the co-op’s support of communities in its markets. “Our dairy development

programme is one of the ways we build relationships with local dairy industries and governments to create strong local partnerships, which in turn grows market opportunities. “We’ve seen great results from this programme: last year close to 90% of the farmers we worked with reported improved milk quality. Others were producing more milk as a result of new milk hygiene, animal care and farm management practices.” The scholarship programme is now in its fourth year.

Visiting Indonesian farmers Septian Jasiah Wijaya (right) and Egi Giantara at Fonterra head office last month.

the Indonesian subsidiary of FrieslandCampina, a European co-op. Wijaya took his plunge into farming aged 17; he borrowed US$400 from his father to buy goats and sold them for profit at religious festivals. He went into dairy farming with the help of Indonesian government officials running a local dairy farm. Another Indonesian farmer, Egi Giantara, from

Sumedang, described himself as more typical of Indonesian dairy farmers: he runs 12 cows in partnership with his brother and parents and supplies a local cooperative. The visit to NZ had inspired Giantara to start using supplementary feeding to improve volume and milksolids, and to rent land to increase cow numbers. Fonterra’s director

of social responsibility, Carolyn Mortland, said the dairy development programme is crucial to ensure the cooperative continues building support in offshore markets. The development work supports the growth of sustainable dairy farming in key markets where Fonterra operates, such as Indonesia and Sri Lanka, sharing its expertise and working with local

farmers, governments and industry bodies. “As a global business, for us to continue growing in our most important markets, we need to have strong local partnerships. Supporting the sustainability of local dairy industries within these markets is a natural way to achieve this,” says Mortland. @dairy_news facebook.com/dairynews

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DAIRY NEWS SEPTEMBER 13, 2016

8 // NEWS

Kiwi dairy ranks well with w The fine milk and butter products of New Zealand have long had a good reputation in Russia. A journalist in central Russia, Nataliya Shkol’naya, sent Dairy News this exclusive, rare look into the ordinary citizen’s view of dairy markets and embargoes. But the Fonterra food safety recall of 2013 was well publicised, and a false view remains.

EVEN WHEN Russia

was in the Union of Soviet Socialist Republics, every student knew that New Zealand was the ‘land of the long white cloud’, had the best rugby players and the most delicious milk and butter. But the Fonterra food safety scare of 2013 was well known in this country, and Russia insisted on stopping imports of NZ products until a full investigation was held. At that time NZ supplied anhydrous milk fat, whey protein concentrate and milk protein concentrate – which was little produced in Russia – and the volume of supply of Fonterra products ranked second place after Belarus, about 10-20%. Russia is going through a hard time at present: many countries have imposed sanctions and in retaliation Russia restricts the import of food products. But about year ago (August 17, 2015) Russia decided to cancel the limits and Belarus 256,784.4 ton $1817.2m

allow importing of dairy products from 29 NZ dairy processing facilities. This fact speaks for itself on how valuable the products of ‘the land of the long while cloud’ are to Russia. But if Fonterra has ever told Russia that the botulism scare of 2013 was a false alarm, the information was never passed to the public. There are a lot of detailed articles about the bacteria, how dangerous it was and how the government was saving us by not importing products. Three years later there has been a small note (in the news media) to say they were starting to import again. (Shkol’naya was told by Dairy News last week that the scare was a false alarm). There are so many different varieties of infant formula on the shelves of Russian shops that you don’t know where to start. To make it easier for people to find what they need, the Russian experts make yearly ratings of infant formula. Often the

Kazakhstan 20,981.2 ton $598.7m

Argentina 16481.1 ton $79.3m

opinion of professionals does not match the opinion of moms and dads, who choose products based on colorful packaging and affordable prices. Unfortunately, city residents are unable to directly buy dairy products from farmers, to ensure the quality of such products, given the distance of farms from the cities. So when they choose dairy products in the shops they have to rely on their intuition, neighbours’ advice or television advertisements. Unfortunately, the results of annual tests of dairy product quality are not encouraging: consumers of dairy products continue to be deceived. Sadly, the answer to the question “what products will have highest demand?” is simple – cheap and healthy. Russians understood a long time ago that high price does not mean high quality. It is not a secret that before the 2014 embargo on ‘certain kinds’ of New Zealand 12,680.7 ton $63.9m

Results of 2015 show NZ is included in the list of five largest importing countries of dairy products.

agricultural products, raw materials and foodstuffs), Russia was the world’s fourth-largest importer of dairy products. So we can still argue about who is more affected by the ‘war of sanctions’ – the buyers or the sellers. It is noticed by consumers that exclusion of essential exporting countries led to price stabilisation, and at some points to a decrease in product prices. Data from 2015 show NZ is among the five largest suppliers of dairy products: Note this example of the magnitude of the loss for European Union countries and Australia due to embargo. Recently Russia’s President Vladimir Putin signed an order extending the embargo on food imports, in retaliation to sanctions, until the end of 2017. In the Russian government’s opinion, the import restriction policy in Russia stimulates the development of the food industry while foreign farmers continue to bear large losses. But in the opinion of average Russian citizens, whose monthly incomes US$150–200, nothing has really changed. They didn’t even notice

Alexandra Sayapin Russian farmer.

the absence of Finnish oil, Lithuanian curds or cheese with a delicate crust of penicillin from Italy and France, because they were unaware of their presence in the first place: their incomes discourage them from even approaching the store counters where products are located.

It’s obvious that embargo (on imports into Russia) was imposed not to stimulate development of Russian industries, but to try to remind the European Union 206,138 ton $1817.2m

European Union that it needs Russian markets. Undoubtedly, Russian politicians hope that the exit of the UK from the EU will undermine the already Australia 16,629 ton $75.2m

Just an example of how much was a loss for European Union and Australia due to embargo.

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DAIRY NEWS SEPTEMBER 13, 2016

NEWS // 9

h wary Russians shaky European unity on the issue of sanctions against Russia. It is known that the UK strongly supported those sanctions and Russian diplomats believe that without England there would be no one to zealously uphold the sanctions against Russia. In contrast to officialdom, the average Russian citizen doesn’t really care. Foreign policy does not apply to the most important issues; foreign policy is less important than the economy, standard of living, unemployment,

health care, inflation, social policy, education and pensions. An analyst at the Center for the Study of the Dairy Market, Ekaterina Zakharova, says that on January 1, 2016, in the Russian Federation there were 215,218 farms of all kinds, and the centre says 21,312 (in late 2014) are engaged in milk production. In its public speeches the Ministry of Agriculture says it wants to develop the dairy industry. But in reality, according to experts, the ministry does nothing to achieve

DAIRY FARMING IN EXTREMES THE MAIN difference between New Zealand and Russia is the short duration of the grazing period says Alexandra Sayapin, a farmer in the Kaluga region of Russia, who recently introduced robotic milking. So the average grazing period would be 100-150 days in the year, he says. Russia has three types of dairy farm: firstly, old farms built back in Soviet era, about 30-40 years ago. Usually these have 100-200 head of cattle, kept in farm buildings during winter and let outside during summer. Preferred species are Simmental and Swedish. They are generally inefficient. Secondly is a type of farm started in about 2000, prompted by the growth of dairying. Animal numbers are much larger – 800 to 5000 – and they are housed in barns with rotary milking platforms and feeding equipment. There is no grazing; the cows are kept inside the whole year and eat hay. The preferred species is Holstein. Thirdly is the farm type which has 20-100 head of cattle. “I’ve got this type of farm, but a bit different from original one: I’ve got 400 head,” Sayapin says. “Recently, farmers demanded robotic milking systems. The machine is very useful yet very expensive. In order to afford it I had to increase the herd size on my farm where they are grazing the whole year. There was no money left for the stable after buying robots,” Sayapin laughs. “The cows are out of the cold on a special deep litter, spread with the use of special technology. “There’s layer upon layer of dry straw, growing layers with time; the bottom straw begins to ‘burn’, and even minus 35°C it is warm for the cows to lie on. My species is Red crossbred cattle. They have high cold resistance. “There are no problems with cleaning up the manure. The building with the milking robots has a slit floor so all manure falls there and after it fills up it gets pumped out. Then it is diluted with water and in this form is taken out to a field.” Milk is processed on the farm and a number of branded products are produced, including cottage cheese and yoghurt. Visit http://sayapinmilk.ru/

that goal. The dairy industry in Russia is now in quite a difficult situation. A decrease in the number of dairy farms due to low investment places the industry behind pig or poultry farming. At the same time,

the dairy industry is technologically advanced and capital-intensive, with a long payback period. This helps explain the shortage of dairy products on the Russian market and Russia’s reliance on imports of dairy products.

Alexandr Sayapin’s farm in Russia.

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DAIRY NEWS SEPTEMBER 13, 2016

10 // NEWS

Email ends Oz farm dream MADELEINE BRENNAN

Australian dairy farmer Adam Nelson in his empty dairy.

WHEN AN email from

Fonterra came through announcing a step down

in milk price, Australian farmer Adam Nelson knew the writing was on the wall. Just four years earlier, at age 22, he’d put everything on the line to

take an opportunity as a lease farmer on a dream property near Drouin in Gippsland, Victoria, and he’d been slogging away through low milk prices and poor seasons ever since. With an average farmgate milk price of A$5.60/ kgMS, the 2015-16 season had been playing out quite well until Fonterra followed Murray Goulburn’s lead and cut it to A$5. ‘’We got the email and two days later the cows were gone,’’ Nelson says. The bottom line said it all.

claim you have to pay interest back on that loan they’ve given you, for the debt you shouldn’t have.’’ He knows all business decisions come with risk, especially when you are starting out. But Nelson says he would like to see the government hold Murray Goulburn and Fonterra to account for pushing their debt back on to farmers. ‘’Murray Goulburn need to just cop it on the chin and take out a loan themselves; their business needs to pay that off, not the farmers. Because if I

“We got the email and two days later the cows were gone.”

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‘’That kind of budget is thousands of dollars. And you don’t even need to sit down to work out that ‘this is going to cost me’.’’ He didn’t have the equity or the reserves to support a price lower than the cost of production. During his first three seasons he barely broke even. ‘’A good year would have set me up in the industry so that I would be able to weather the hard times. But I didn’t manage to last long enough to get one of those,” he says. Despite the emotion of ending what had been a lifetime dream, he approached it with a clear head. “If I had kept going I would have been liquidated. I could have held on and waited for a nice opening price or the possibility that the opening price was good. Thank god I didn’t.’’ Nelson says he was never interested in taking a support loan from Fonterra. ‘’They are double dipping on their money there. ‘’You go to the bank to borrow money, you don’t borrow money from people who say you owe them money and then

make an error on the farm myself, if I spray a paddock with the wrong thing, if I put a crop in and it fails, that’s my responsibility. Do I then send a bill up the line to Murray Goulburn or Fonterra? “They’ve turned around and done exactly that but in the opposite direction.” For now, Nelson is working on a family friend’s dairy farm, putting money back in the bank. He says he’s not ready to start planning for the future, but it’s unlikely he will again try to chase his dream of owning a dairy farm. But he’s happy to share his story with others. “I’m not too proud to say I’m struggling. I’m despondent right now but I know I’ll get back on track, I’ll get motivated again. It will fall into place. Everything happens for a reason.’’ He’s also proud of what he achieved. “I know that I was a good farmer. I know I had my budgets and I’m proud of what I was able to achieve in a short time; but at the end of the day it’s been taken out of my hands and I’ve been thrown under the bus.”

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DAIRY NEWS SEPTEMBER 13, 2016

12 // NEWS

Little upside from a fall in O AUSTRALIA’S MILK

production is set to fall significantly in the 2016-17 season due to the damage caused to farm cashflows and industry confidence after the late cuts to milk prices in April this year. The developing drift from El Nino to La Nina weather will take a while to provide tangible benefits to producers in southern regions, but meanwhile the numbers of cows sent to abattoirs is likely – on early production numbers at least – to take milk output to its lowest point since the mid-1990s. Much has been written about the profound effects of the cut in milk prices on farmer profitability and the damaged trust in a couple of major milk processors. But there are other larger impacts to come.

STEVE SPENCER Firstly, an adjustment of this magnitude -- 5-10% of national milk output, mostly felt in southern regions -- will push up costs in the supply chain for milk processing and affect the strength of the sector for several years. Lower factory throughput will reduce plant profitability and keep hurting farmgate prices for all producers. Secondly, if milk volumes fall below 9 billion litres, the effect will push the domestic share of milk processed closer to 70%.

But does this mean it will change the determinants of farmgate prices, so that the world market will have less influence on milk values? No, that won’t change. We’re effectively an open market for cheese, butterfat and milk powders and have a large lowcost exporter across the Tasman that views this market as part of its home ground. Several large multinational groups – fast food chains and large food brands – operate with global sourcing policies, reinforcing the fact that world prices set wholesale prices in the Australian market. Why is pricing made so tough by food companies? There are no significant segments of the food market in Australia that are immune from price

Australian supermarkets remain the largest channel to consumers for dairy products.

pressure, whether through grocery stores, convenience outlets, fast food or other dining out venues. Sure, there are niches that create premiums for a

limited number of players, but if they get too big they quickly risk being ‘commoditised’. That brings us to the grocery market, the largest

channel to consumers for Australian dairy products, where the operating environment will probably get a little worse. Australia’s two major

supermarket chains posted their 2016 results last month, and the contrast between Coles and Woolworths couldn’t have been greater.

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DAIRY NEWS SEPTEMBER 13, 2016

NEWS // 13

n Oz supply Coles’ ‘trusted value’ pitch to consumers is still the single biggest shaper of the Australian food market, and has worked well for Wesfarmers shareholders. Coles lifted earnings by only 4% this year, but profitability has grown 60% over the past five years in the midst of a deep-discounting war waged for consumer trust, while it grew its supermarket

Some analysts have criticised Woolies for keeping prices too high; now the new regime has committed to funding more price cuts. I can hear the bleeding hearts out there asking ‘so why should you care?’ Answer: as the dairy value chain feels the pain of shrinkage, the biggest market for milk just got tighter, if that were possible. The supermarket

“Much has been written about the profound effect of the cut in milk prices on farmer profitability and the damaged trust in a couple of major milk processors. business sales by 30% on 8% more store numbers. Coles’ underlying business rose 4% on a comparable ‘same-stores’ basis. But the scariest number for Australian food producers is the underlying food price deflation, which was almost 2% in 2015-16, and has been in deflationary mode since the postGFC tightening really got underway in 2009. At the other end of the spectrum, the sustained attack by Coles and the swelling influence of the discounter Aldi finally came home to roost for Woolworths, which reported the unthinkable for a big grocery player -a fall in sales of its food business. Stagnant sales caused profits to crash, down 40%, as retailing margins collapsed from 7% to 4.5%. For many years Woolworths has claimed it was defending its world-beating margins yet, in a single year, they fell below Coles which has run a leaner business.

ing realisation that ‘cheap for the sake of cheap’ isn’t a great idea. Let’s see if that gains more traction, or whether the compulsion to follow Aldi is just too great. • Steve Spencer is a director of Australian food consultancy and analysis company Fresh Agenda.

“Labour is trained, then they leave. The Astronaut completely knocked that problem out”. - Mark Hexter.

stakes will get higher and the long, hard contests between the big three will now drag on as Woolworths attempts a major turnaround. Meanwhile the economy isn’t getting any better, as household incomes in real terms have been slowing down – suggesting ‘value’ will still be important to many grocery buyers. Some things might be a little different however. Retail analysts we follow point to signs that the average shopper is getting a little jaded with specials and savings, as discounts are less effective at cutting through and moving traffic between stores and shifting products off the shelves. Both big chains might have to create more excitement in their brands to draw more cash from purses and wallets. On the other hand, it is apparent that shoppers and the communitys are taking more notice of how suppliers are being treated; there is a grow-

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www.dairynews.co.nz

Australia is an open market for cheese and Fonterra enjoys a good reputation there.

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DAIRY NEWS SEPTEMBER 13, 2016

14 // NEWS

Co-op, bank sign for good yarns AWARD-WINNING

MENTAL

health scheme GoodYarn is writing a new chapter as it grows around the country. Fonterra and Rabobank have signed to run the scheme’s workshops for their staff; 14 organisations are now doing GoodYarn. The scheme was last month named joint Best Mental Health Promotion/ Illness Prevention effort at an Australia and New Zealand mental health conference. It is the work of WellSouth, a primary health organisation, and DairyNZ, as part of the Transforming the Dairy Value Chain Primary Growth Partnership, a seven-year, $170 million scheme led by DairyNZ, Fonterra, the Ministry for Primary Industries and others. Organisations wanting to be part of GoodYarn have to go through a licensing programme to train their own staff. Terry Buckingham, Fonterra’s health and wellbeing manager, says the co-op

“In time we hope the programme will benefit our wider Fonterra team and maybe adapted further.”

– Terry Buckingham, Fonterra

was keen to do it. “This season we are delivering GoodYarn workshops to our 1500 tanker drivers. They are our biggest team of people spending time on farms and they recognised they could do better in talking to farmers. They recognised that farmers have pressure and stressors from a number of directions.” The co-op realised the drivers and farmers would benefit from GoodYarn’s workshops that teach how to stay healthy, recognise stress in others and respond effectively. Buckingham said tanker drivers

were involved first because they were “farmer-facing”, but others in Fonterra might also participate in the training. “Many of our Farm Source team have already been through the training and we are including more technical sales reps to prioritise staff who are working alongside farmers on a regular basis,” he says. “In time we hope the programme will benefit our wider Fonterra team and may be adapted further.” Hamish Midgley, Rabobank’s national manager, major agribusiness clients, says the GoodYarn workshops will help bank staff better recognise and manage their own stresses and be “more attuned to our clients’ and communities’ needs”. “The training will also allow Rabobank to take a leadership role in communities to help change the ‘industry language’ and stigma about mental health and get people talking about this issue in a more constructive

Dana Carver, DairyNZ

way,” he says. Midgley says the bank would like to support other organisations looking to deliver the GoodYarn workshops to a wider audience. Dana Carver, DairyNZ wellness and wellbeing programme leader, says teaming up with Fonterra and Rabobank would take the workshops to thousands more people. “Working for Fonterra or in rural banking at the moment is not easy and

GoodYarn will help the employees of these organisations to keep themselves well, which is paramount for the industry.” She says other organisations and businesses would be approached. The 14 organisations now signed include LIC, CRV, Farmlands, Ospri, the Pharmacy Guild and several Rural Support Trusts. Also thinking about it are ASB Bank, Primary ITO and New Zealand Young Farmers.

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DAIRY NEWS SEPTEMBER 13, 2016

NEWS // 15

Pooling farm data online gets the nod makes the technology useful. There is a menu of different information sources and you can pick which ones you want on your screen. “The ability to drag and drop the panels means each of us can decide what our screen looks like and where our information is shown. You can set individual limits and get alerts on, say, your cows’ somatic cell count.” LIC says interested business partners see it as a way to deliver value to their customers. “The farmers on the trial are also telling us what data sources they use so we can talk to these providers about being part of the project,” LIC says. Helping to develop the online solution is Figured, a company founded by farmers for farmers. Figured provides real time budgeting tools that work with Xero accounting software. Fonterra chief operating officer Farm Source Miles Hurrell says the tool responds to what farmers want – one place to access all the data sources they use, to improve onfarm performance. “Currently farmers have lots of data sources, all developed in isolation,”

Hurrell says. “They have asked for a way to bring all those data sources together in one place. This would reduce the need for double entry of data. It will also give them the ability to benchmark their farm against others using aggregated data, leading to more productivity and profitability.

“The technology is aimed at helping farmers trim costs and use their resources efficiently.” LIC chief executive Wayne McNee says today’s farmers have so much information and an ever-increasing range of technology on offer. Both can add huge value to a farming business, to

support more informed decisionmaking and improved profitability, but accessing and using the information to make decisions can be difficult. “Farmers have told us they want simplicity, they want one place to see all their records and information and they want it in real time.”

Miles Hurrell, Fonterra.

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LIC SAYS reports positive feedback from farmers trialling an online technology tool. The tool, developed by Fonterra and LIC, brings together a farmer’s milk production and quality data, herd data, pasture data, local weather forecasts, etc into one online portal. LIC is trialling the tool with 50 farmers for their feedback on how the system works and what information they would like to be included. Waikato farmer Ross Crabb says having all his data in one place, also available on his mobile phone, will be an advantage. “The speed of the information is key: it’s all there in one place, on one page, and you can quickly look through to find what you want to know without having to log on to different sites.” Farmers can choose what information they want and how it is displayed on their screen, an appealing feature says Crabb. “Every farmer gets up in the morning looking for certain things. Every farmer is different, so to be able to get the information you always look for at your fingertips

DAIRY NEWS SEPTEMBER 13, 2016

16 // NEWS

Fonterra offloads top Oz coffee milk FONTERRA HAS

Fonterra has sold Riverina Fresh brand in Australia.

offloaded the business claimed to make Australia’s best coffee milk. The co-op has sold its Wagga Wagga plant and Riverina Fresh brand to Blue River Group. Exclusive negotiations led to the two signing to a

sale, subject to conditions but expected to be complete next month. Fonterra Australia managing director René Dedoncker says the Wagga Wagga business is strong, with its award winning brand Riverina Fresh favoured by baristas but

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not core to the co-op’s strategy in ingredients, consumer and foodservice business. “Divesting the Wagga Wagga business follows the divestment of noncore assets, including our yoghurt and dairy desserts business, our Bega shares and our stake in Dairy Technical Services; it allows us to focus and put all our energy into our core businesses of ingredients, consumer and foodservice,” says Dedoncker. “Our Australian operations have particular ingredients strengths in cheese, whey and nutritionals, complemented by our consumer and foodservice businesses. These businesses and dairy foods are matched by our manufacturing footprint in Victoria and Tasmania.” All Fonterra’s employees in the Wagga Wagga business have received job offers from Blue River Group. The group’s co-chief executive and founder Craig Shapiro says the decision to buy Riverina Fresh reflects the company’s ethos of investing in businesses that generate economic returns, and equally achieve positive and measurable

social or environmental outcomes. “The acquisition of the Wagga Wagga dairy business and the Riverina Fresh brand provides Blue River Group with an opportunity to invest in the agricultural sector and the Riverina regional community,” Shapiro said. Riverina Fresh has made dairy products since 1922, gaining a reputation for high quality, award winning milk, sourced from about 20 dairy farms in the Riverina region. Riverina Fresh milk is reckoned Australia’s leading coffee milk, highly regarded by baristas and roasters. “The business has a dedicated and committed workforce and provides significant regional employment opportunities,” says Shapiro. “We look forward to building on the existing strong relationship with the local farming families and distributors who stand behind the Riverina Fresh brand.” Rob Collier will remain chief executive, responsible for the Wagga Wagga business. “Blue River Group’s investment in Riverina Fresh will help a niche brand flourish,” says Collier.

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FONTERRA SAYS it is intent on building a sustainable business in Australia. In the last 12 months the co-op has commissioned a multi-million pack beverage plant in Cobden, creating 50 local jobs; secured new long-term customers for its nutritionals plant in Darnum including Bellamy’s Organics; and has entered a joint venture agreement with Beingmate. The co-op is also building a new cheese plant in Stanhope, on track for completion mid-2017. Fonterra Australia managing director René Dedoncker says it is moving to support its market-leading cheese and spread brands Western Star, Perfect Italiano, Mainland and Bega. “We’re building on the early success of our newly launched Anchor brand in Australia, and we’re maintaining the excellent performance of our foodservice business. “All these initiatives have laid the foundation for a strong sustainable business that is profitable for the long-term and well-positioned to pay our farmers the best possible milk price in a competitive global market.”

DAIRY NEWS SEPTEMBER 13, 2016

WORLD // 17

Arla’s milkbased health beverages ready to take on soft drinks.

Dairy giant takes on soft drinks EUROPEAN DAIRY

co-op Arla Foods is taking on soft drinks with healthier milk-based alternatives. The co-op’s ‘Good Growth 2020’ strategy includes globally marketing healthier beverages based on milk and natural ingredients. A sparkling milk and fruit drink, a milk and tea drink and a high-protein energy drink are aimed at tripling sales outside standard white milk. The goal towards 2020

is to triple the revenue of milk-based beverages from $350 million in 2015. Arla says global sales of milk-based beverages is about $152 billion annually, about equal to the global standard white milk market. However, milk-based beverage sales are growing much faster, especially outside Europe. “By addressing the beverage market more strategically, we can double the size of our playing field for liquid milk products and capture significant growth

ARLA’S PLANS Products and packaging: focus on developing ‘ambient beverages’ with milk, yogurt or whey as the main content. These can be flavoured, carbonated or have added protein, fibres, grains, etc. Beyond dairy there are uses for milk, yogurt or whey in sports drinks, water, coffee, tea, etc. Channels and distribution: extend Arla’s existing sales and distribution outside traditional retail to milk-based beverages in convenience stores, petrol and train stations, gyms, workplaces, cafes, bars, etc. Markets: the co-op aims by 2020 to be the leading provider of milk-based beverage in Northern Europe and a leading European supplier in Asia, Middle East and Northern Africa. UK, UAE and Singapore are selected as test markets.

opportunities for Arla,” says Hanne Sondergaard, executive vice president

for global marketing and innovation in Arla. “Through branded

milk-based beverages we can create more value for our farmers.”

Modern urban lifestyle worldwide has led to people increasingly snacking and getting their nourishment out of their homes. Mealtimes are blurring, more women are working and more people are living in bigger cities. “We have a big opportunity to provide people with nourishment when they need it,” Sondergaard says. “We will expand our portfolio to include products that will nourish you, fuel you or refresh you

whenever and wherever you need it. “This will create new sales opportunities for us in places such as convenience stores, petrol and train stations, gyms, workplaces, cafes, bars, etc, where we are hardly even present today.” In beverages, Arla works with its Cocio subsidiary and with Starbucks on coffee drinks. It recently launched Arla Protein and Arla Move, both with natural ingredients.

EU co-op suffers big profit hit ONE OF the world’s largest dairy co-ops saw its first-half profit fall 17% on the back of increased milk production by farmer suppliers. Royal FrieslandCampina reports its first-half 2016 profit fell to $243 million versus the same period last year. Its farmer suppliers produced 11.9% more milk (583m kg), the extra being turned into basics such as milk powder, foil cheese and butter -- sold

below cost. Net sales decreased by 2.2 % to $8.3b; the decrease in revenue due to lower selling prices was largely offset by higher volumes. The milk price for member dairy farmers fell to 46c/ 100kg of milk (first half 2015: 55c) due to the lower guaranteed price for raw milk and the lower value (performance fee and reservation in member bonds).

Royal FrieslandCampina chief executive Roelof Joosten described it as a “special first half year”. “FrieslandCampina does well in Asia and ingredients and has a nice volume growth in added value products 2.3%,” he says. “We had to handle considerably more milk; [the consequent increase in manufacture of ] basic dairy products meant we could only drop

a loss in the market. This is reflected in the decrease of 17% in profit and the milk price paid to member dairy farmers.” FrieslandCampina farmers supplied 8.2b kgMS. Net sales decreased by 2.2% to $8.3b; currency effects had a net negative impact of $132m. Sales (volumes) of added value products such as infant food, ingredi-

ents for infant formula and condensed milk rose by 2.3%. The volume commodities increased even more, by 16.8%; sales prices decreased by 5.6% and added value goods prices fell by 4.3%. In the first half of 2016 more raw milk was sold directly to third parties as a result of the high milk supply and production capacity being fully occupied, the co-op says.

after year after year

DAIRY NEWS SEPTEMBER 13, 2016

18 // WORLD

Genetic merit and profit link out in paddock TWENTY-SEVEN DAIRY farms in Austra-

lia will be put under the microscope in an effort to prove a link between genetic merit of animals and onfarm performance. Speaking as part of last

Australian scientist Jo Newton.

month’s Future Ready Expo in Bega, research scientist Dr Jo Newton said the Improving Herds project will ensure the science behind genetics is backed up by real-world application.

‘’It’s one thing to do genetic research in an office building somewhere, but it’s another to actually take what you’ve learned and translate it into real onfarm applications and results,” says

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Newton, from the Victoria Department of Economic Development, Jobs, Transport and Resources (DEDJTR). The project has genome tested each focus farms’ rising two-year-old heifers, totalling 2500. “So now we already have information about the genetic merit of these animals before we know their lactation, their susceptibility to disease, etc, and through the lifetime of the project we will be able to follow these cows through their first lactation, through their second lactation and see how their performance in the dairy translates back to their predicted genetic merit,” Newton says. “We’re looking to demonstrate the value that better data recording and high genetic merit can contribute to farmer profit.” Previous research

has confirmed that high genetic-merit cows are more profitable. ‘’The focus farm model enables the information to be gathered at various regions and various types of farm systems.’’ Newton says environmental factors such as mastitis are accounted for within the study. “’One of the advantages of looking across many different focus farms is that we can look within a herd. ’And when you are comparing animals within the same herd, they are subject to the same management routines and environmental conditions.” The Improving Herds project has been developed by the Gardiner Foundation, led by DEDJTR and supported by Dairy Australia, ADHIS, National Herd Improvement Association and Holstein Australia.

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A NEW Zealand keynote speaker at the Grassland Society of Southern Australia’s annual conference hopes to get producers back on track to make good quality pastures. Dr Doug Edmeades, managing director of Agknowledge, says in legume-based pastures “we have lost the way -- lost our experience and knowledge of how to grow good clover-based pastures”. Edmeades told the conference that many producers could no longer picture good quality pasture, that fertiliser wasn’t always being used properly and that “pseudo-science” was confusing farmers. He says the ideal mix is 30-40% clover and the balance any productive grass. “Clover is the essential component in our low-cost pastoral system.” “There are various reasons why we lost our way. We’re probably spending enough on fertiliser but not with the right balance. “The science is there, with calibrated soil tests and clover-only tests to interpret. This is not new technology, it’s already there; it’s just a matter of getting the data appropriately interpreted.” Edmeades says a lack of fertiliser demonstration trials have contributed to the loss of knowledge. “Years ago we used to do a lot of fertiliser trials on pastures and farmers loved to look at them, so they knew what a good pasture looked like.” (Source: Grassland Society of Southern Australia)

DAIRY NEWS SEPTEMBER 13, 2016

WORLD // 19

Arla’s branded sales soar despite milk glut in markets EUROPEAN DAIRY co-op Arla Foods says its strategic branded sales grew 6% in the first half of this year. The co-op says despite Europe’s oversupply of milk it has strengthened the quality and profitability of its business. But it admits the lower market prices in Europe have depressed group revenue. Revenue for the first half of 2016 was $7.5 billion, 5.3% less than in the first half of 2015. Increasing milk volumes in Europe depressed market prices in the first half of 2016, and global milk prices reached the lowest level for many years. Arla’s total milk volume in the first half of 2016 increased 1.9% to 7.2b kg; it dealt with this extra supply by moving it into the most profitable sales channels – retail and foodservice – processing all its farmer-owner milk and innovating to maximise payments to suppliers. Chief executive Peder Tuborgh says despite the difficult market Arla improved the quality of its business by relentlessly pursuing its strategies. “Our dairies have effectively processed 119m kg extra milk from our owners and our commercial teams in all markets have sold this extra volume into retail and foodservice channels, avoiding it being used for the production of less profitable commodity products. “This is crucial at a time when Arla and our farmer-owners continue to be challenged by the global market decline.”

Growth in revenue from higher volumes of strategic branded products was 6.1% versus 3.1% in the same period last year. This was double the pace of growth of private-label products. The Arla brand was up 5%, Lurpak 7.6% and the supported brand Puck 10.2%; Castello was down 0.7%. Arla Foods chief financial officer Natalie Knight says its brands are growing according to plan despite tough market conditions. “Our international business has... increased sales in sub-Saharan Africa, China and Southeast Asia. “In Europe, where some markets are dominated by private-

label products, our branded business has continued to grow.... The performance of our strategic brands is crucial, even at a time when global prices have driven down our overall revenue, because it strengthens the quality of our revenue through improved market positions and increased profitability in line with our strategy, Good Growth 2020,” says Knight. The outlook for the second half of 2016 is positive, and Arla expects its full-year profit to stay on track, and it expects to pay farmers more for milk. Arla Foods is owned by 12,700 farmers in Denmark, Sweden, UK, Germany, Belgium, Luxembourg and the Netherlands.

Sales of Arla’s Lurpak branded butter was up 7.6%.

IMPROVED PROFITS FOLLOW RESTRUCTURE ARLA’S PROFIT for the first half year was $190 million – 2.5% of revenue (excluding gain from sale of entities) versus 2.3% in the same period last year. The company’s Good Growth 2020 strategy includes cutting costs by $610m by the end of 2019. An efficiency programme started early 2016, and $152m savings are expected by the end of this year. In the first half of 2016, Arla’s chief financial officer Natalie Knight.

Arla restructured, making 500 white collar employees redundant. It expects to see the first cost improvements take effect during the second half of 2016 and achieve annual savings of $53m in 2017 and onwards. The difficult global dairy market contributed to the co-op’s ‘performance’ price of 46c/kg in the first half of 2016, says chief financial officer Natalie Knight. “The market situation affected... the milk price for our farmer-owners, who have suffered the consequences of the oversupply of milk in Europe. “[However], we continue to outperform our international peer group. We expect to be at the

high end of our range of expectations of 103 to 105 versus our peer group index for the full year.” Arla chairman Åke Hantoft says the severe downturn in the market over the last two and a half years has been an eye opener. “To me, the difficult market situation makes the strength of being an international dairy cooperative even more obvious. We do not have to stake all our milk in one single market or a narrow product portfolio. “In a difficult market, we have paid a milk price above our peers. “I am confident our strategy will continue to deliver positive results for Arla’s owners in the years to come,” Hantoft says.

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DAIRY NEWS SEPTEMBER 13, 2016

20 // OPINION RUMINATING

EDITORIAL

Minister nails water issues

MILKING IT... A1 or A2?

THE HEALTH benefits of A2 milk, if any, are set to become the central element of a legal battle in Australia between NZX-listed A2 Milk and Japanese-owned beverage giant Lion, in Sydney. Lion has filed a counterclaim against A2 Milk in the Federal Court of Australia alleging A2 has engaged in misleading and deceptive conduct in its marketing of A2 products. The counterclaim follows a lawsuit filed against Lion by A2 in June over the Australia-based, ASX-listed company’s milk packaging, which included the words “naturally contains A2 protein”. A2 Milk’s product is marketed on the fact that it does not include A1 protein, whereas standard milk such as Lion’s has both A1 and A2 variants.

$1/L milk not here – yet

AS AUSTRALIA’S competition watchdog gears up to investigate that country’s dairy crisis, Agriculture Minister Barnaby Joyce has pointed out that New Zealand doesn’t have $1/L milk marketing ploys despite having the same retailers. But he’s only half-right. Australian retailer Woolworths owns the Countdown chain of supermarkets in NZ. Countdown is locked in fierce competition with the NZ-owned Pak n Save chain. The other Australian player, Coles, doesn’t operate here. And there’s nothing preventing Countdown offering milk at $1/L as does its parent company. Joyce acknowledges cheap milk has hurt dairy farmers for years, a problem now made more harmful by depressed export prices.

Mooing at the moon

DOES A full moon really induce labor in pregnant women? Scientists examining this old wives’ tale find conflicting evidence. But a new study suggests some truth in this folklore, for dairy cows, at least. Researchers at the University of Tokyo analysed the birth timing of 400 Holstein Friesian cows. Reviewing the records of full-term spontaneous cow deliveries during a three-year period, the researchers found birth frequency increased as the full moon neared. In fact, the number of births peaked at the near-full and full moon, the researchers say.

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Calling young milk drinkers

BRITAIN’S DAIRY farmers are facing another crisis: the younger generation is drinking less milk. This is because health professionals are treating milk and dairy products as the ‘enemy’, an expert has warned. David Dobbin, chief executive of United Dairy Farmers co-op says younger generations are drinking far less milk than their parents and grandparents did. He says a ‘three-a-day’ campaign will be launched to promote the nutritional benefits of dairy products in a bid to turn the tide.

ENVIRONMENT MINISTER Nick Smith nails it when he says that he doesn’t buy into the rhetoric that farmers are environmental vandals and environmentalists and recreationists are economic imbeciles. He is right; we have a bad habit in New Zealand of turning environmental issues into polarised battlegrounds of winners and losers. So credit should go to the Land and Water Forum for breaking down barriers and navigating a pathway allowing substantive reform. A more collaborative approach to resolving water policy problems remains the way forward. Water is the lifeblood of farming and food production, and is central to the interests and concerns of other sector groups; understandably tensions over water quantity and quality have troubled people in many regions. Farmers have supported moves towards more collaborative ways of working together at national, regional and catchment levels, strongly advocating for spending on infrastructure and innovations to deliver win-win outcomes. But farmers want a level playing field on which to tackle water quality issues. The Government acknowledges water quality is worst in urban areas but points out that these are comparatively small in total area. The worst quality degradation is in more intensively farmed areas, caused by minimum flows being too low and levels of nutrients or sediment being too high. Farmers and dairy industry stakeholders have been doing their bit to improve water quality: they have hugely reduced pollution entering lakes and rivers from dairy sheds and processing factories. And town effluent systems have been upgraded, costing billions. Farms are easier to regulate because they require a consent, they come up regularly for review and councils are able to set standards and monitor performance. Lobby group Fish & Game is quick to blame dairy discharges for degrading river water quality to the point where swimming is risky. The Government rightly says it is committed to improving freshwater quality and swimmability but is cautious of setting rules that are unworkable. A national rule for all water bodies to be swimmable all the time is impractical, Nick Smith says. During heavy rain most of our rivers breach the 540 E. coli count at which swimming becomes risky, he points out. Unsurprisingly, Fish & Game is furious with Smith for blaming birds. Instead of criticising farmers routinely, Fish & Game and others must put their shoulders to the wheel to help work out a national solution.

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DAIRY NEWS SEPTEMBER 13, 2016

OPINION // 21

Co-op model vital to NZ CRAIG PRESLAND

THE COOPERATIVE business model has stood the test of time and thrives worldwide; New Zealand is an outstanding example of its enduring success. With member ownership and sustainability at its heart, the co-operative business model goes back almost three centuries to its origins in the UK. In NZ our first known cooperative was formed on John Mathieson’s dairy farm on Otago Peninsula in 1871 and is part of what we now know as Fonterra. NZ now has at least 100 registered cooperative businesses and organisations. Together, their annual revenues exceed $43 billion – almost 15% of our GDP. Globally there are an estimated 2.6 million co-operatives that turn over at least $US3 trillion a year and employ 250m people. Cooperative members are usually either suppliers or customers of their organisation although some overseas co-operatives are owned by their staff. The business model is reasonably simple: benefits are provided to members either on the basis of volumes sup-

In recent years Fonterra has listed on plied and/or the amount of business transacted with the organisation. In the NZX and has differentiated between the case of volumes supplied, an initial supplying shareholders (members) and external investors who (opening) price is paid are able to buy units on for products such as milk, the NZX, the latter not meat and horticultural being suppliers of milk products by the organand having no voting isation at the beginning rights. of the financial year and The cooperative busia final payout is made at ness model is based on the end of the year once economic, social and annual returns are finalenvironmental sustainised. With consumerability. Cooperatives, owned co-operatives, enduring and successful prices for products (such Craig Presland as building products or fertiliser) or ser- for decades and centuries, offer stable vices (such as banking or insurance) are employment – at least 43,000 jobs in charged to customers and a year-end NZ. These jobs are critical to social and rebate/dividend is paid back to custom- economic wellbeing. Of Cooperative Business NZ’s ers once annual returns are finalised. The Cooperative Companies Act (CBNZ) full members, 70% have been in 1996 requires that only 60% of voting business at least 25 years and three are rights are to be held by transacting 100 years old or more, including Fonshareholders which, therefore, pro- terra (by way of its preceding co-ops) at vides a generous level of capital rais- 145 years. The dairy giant is NZ’s largest ing options. Cooperatives are able to organisation by far, having succeeded for raise funds from their members, from decades despite fluctuating market conpublicly issued debt securities such as ditions, including its recent challenges debentures, from private debt, banks from high global milk supply volumes, low commodity prices and over the past and retained earnings.

12 months a strengthening NZD against the USD. Fonterra’s endurance, and the ability of the dairy industry to ride through market downturns, is a reflection of the strength of the cooperative business model. It would appear that light is now beginning to shine on the horizon with the rise in whole milk powder prices (a key indicator) to almost $US3000/tonne and Fonterra’s latest farmgate milk price forecast for 2016-17 to $4.75/kgMS solids, up from $3.90 paid in 2015-16, and $4.40 paid in 2014-15. (As a reflection of the strong variability that can eventuate year on year, a record $8.10 was paid in 2013-14.) Cooperative organisations, large or small, are committed to serving their members by succeeding commercially while taking due note of the key cooperative principle: concern for community (social responsibility). One only has to look at the quality of the top three nominations for our recent CBNZ to gain an understanding of how Kiwi co-operatives give back to local communities each year: Farmers Mutual Group with its Farmstrong scheme supporting farmers working

through tough times, Foodstuffs South Island with its support for people struggling since the Canterbury earthquakes and supporting young people in education in the South Island, and Fonterra with its Milk in Schools scheme. These organisations care about their members, communities and NZ’ers. Co-operatives have their own members (customers, clients, suppliers, staff, etc.) now totaling a least one billion globally. Here in NZ we have three cooperative financial institutions with 350,000 members (customers) between them, ie Co-op Money NZ, The Co-operative Bank and Rabobank. That’s almost 8% of all Kiwis. Members in the cooperative sector – suppliers, customers or staff – all benefit from the strength of the co-operative business model and its relative certainty. NZ has the potential to lead the way globally in achieving all of the United Nations 17 sustainable development goals, however a key factor will be our willingness and ability to work co-operatively with each other. We need to work smarter. • Craig Presland is the chief executive of Co-operative Business NZ.

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DAIRY NEWS SEPTEMBER 13, 2016

22 // AGRIBUSINESS

Network fills gap for rural women PAM TIPA pamelat@ruralnews.co.nz

DAIRY WOMENS Net-

work (DWN) fills many gaps for women in rural areas, including providing a social network and upgrading their skills, says chief executive Zelda de Villiers. De Villiers was responding to the findings of a student research project from the Lincoln University Kellogg’s Rural Leadership Programme, by NZ Young Farmers communication manager Nadine Porter. The survey found 57% of rural women feel isolated, and many find their skills and training from university or career are not being utilised. DeVilliers points out that DWN, a rural support network with over 9000 members, is increasingly seeing women from other agriculture sectors become

members, as well as rural professionals. “Our 36 groups run 210 events per year, including learning and social events to connect, have fun and support each other. “DWN is also finding that rural women increasingly connect through social media channels such as Facebook, to stay up-todate about what is happening in friends’ and families’ lives, and to access industry and local news and events. “Our live chat sessions are popular and show high levels of engagement. Often we have chat sessions from 7-8pm where women can ask different industry experts questions. “Within DWN we have recognised that women on farms often don’t have the opportunity to utilise the skills they have been trained in. We have 70 volunteer group leaders able to develop and utilise skills like event management,

presentations and facilitation skills, as well as their community leadership skills within the network. “We also offer paid and volunteer roles to develop and present training to members, project leader positions and conference organising roles. “We have found that when we ask for expressions of interest from our members for these roles we have many well qualified, passionate and capable applicants applying. [Much] unutilised capacity often resides in rural areas, looking for opportunity to share their skills. “We encourage rural women who aren’t connected with us to visit our website to find out more.” Porter’s survey found 57% of the rural women surveyed find isolation their top issue. Porter is surprised at where women get their support: 75% of respondents find it on social

media forums like Facebook. “This means the way in which rural mothers find support has changed in the technological age. Being able to be honest and be anonymous if they desired, in a forum such as the 6000-strong Farming Mums NZ Facebook page, was mentioned as being attractive by many women interviewed.” Porter also says 58% of women surveyed were not using the skills they had been trained in, leaving them unfulfilled. “There is a wasteland of knowledge among rural women that is not being utilised. From university, to a career and then back to the farm where they may not be able to use their skills, a vacuum exists. While the Government is concentrating on bringing new people into the primary industry we need to ask ‘is there a way in which we can use the

skills that currently exist but are not being used to their full potential?’ ”

Zelda de Villiers

Scholarships open to all BALLANCE SCHOLARSHIPS for

tertiary study in agribusiness and related fields are this year offered to urban students. For the first time, any New Zealand secondary school students -including the families of Ballance AgriNutrient shareholders -- may apply for scholarships. Ballance’s aim is to encourage more urban students to consider the diverse professions and opportunities in agribusiness. Chief executive Mark Wynne refers to the “wealth of opportunities on farms and in farm advisory roles, and in many professions as diverse as food science, patent law, accounting and chemical engineering”. “We want to attract talented and curious minds from every field of study so our agribusiness sector continues to lead the world in best practice and innovation,” says Wynne. “As the agribusiness sector evolves we need fresh thinking from the next generation to help come up with new

ways to do things more efficiently and produce more from less in a sustainable manner.” Four scholarships are on offer, each valued at $4000 for up to three years, open to any secondary students wanting to start university study next year. Ballance aims to support innovation at the tertiary level and to developing agribusiness leaders from the next generation. Wynne sees a need for the agribusiness sector to address succession planning on a broad scale, especially because by 2025 the NZ agriculture industry will 50,000 more people, extra to replacements. “This requires support from across the entire sector, and it begins by attracting talented, passionate people who see a vision for themselves and our country’s economic future within agribusiness.” At least 77 students have taken up Ballance scholarships since 2002. Applications will close on October 30. www.ballance.co.nz/Our-CoOp/OurCommunity/Scholarships

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DAIRY NEWS SEPTEMBER 13, 2016

AGRIBUSINESS // 23

Organics demand ‘exciting’ for land sales WITH 66% of Kiwis now buying organic food, prospects for organic producers look ever more promising, comments real estate firm Bayleys. The company refers to a recent Organic Aotearoa market report on a strong shift by consumers to organics, for which the domestic market is now $250 million – up 45% in four years. Of the $240m of organic exports last year, fresh fruit and vegetables were the largest by value – $108m. Bayleys national country manager Simon Anderson says every aspect of protein, fruit and vegetable production

years the infrastructure to support the organic sector has grown. For example, growers once had to make their own organic fertiliser, but now certified manufacturers offer products and treatments. Hoare says organics has grown more sophisticated because of large European and US corporates buying into established family owned organic brands. In NZ, interest in organic dairying has risen recently, especially because Fonterra has said it will pay North Island organic suppliers $9.20/ kgMS – at least double the anticipated price for the season.

Demand for organic dairy products is rising.

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The global market for organic dairy products is expected to grow 12% a year, says Organics Aotearoa NZ. This is off a base that represented 11% of total global dairy sales in 2013; the bulk of sales were in Denmark (24%), Sweden (12%) and the UK (7.5%). China and India are seen as key growth areas for organic dairy products. NZ sales have been growing rapidly, with a reported 50% increase in organic sales of milk in the past year. And the Organic Dairy Hub Co-op (Dairy Hub NZ) is forecasting payment of $8/kgMS for the coming season to suppliers. Dairy Hub founder Bill Quinn says the cooperative is keen to expand its supplier base into the South Island, and finds farmers keen to talk. “We are working with 30 larger farmers in South Canterbury and North Otago on the transition process to organic; the interest is there.”

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DAIRY NEWS SEPTEMBER 13, 2016

THIS SHOULD SETTLE THINGS once and for all

RUMENSIN MAX Showed no significant settling or layering after 3 12 hours

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GENERIC. B Showed significant fallout, with approx 13%5 of the active ingredient as bottom sediment

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24 // MANAGEMENT

Grassy path to herd p FOR WILFRED van Beek, getting the basics right in a simple grass-fed system has led to successful herd reproduction and repeatability. Van Beek is 29% sharemilking on 155ha near Greytown, Wairarapa, and in a relatively short time has pushed the property into the top tier of six-week in-calf figures, achieving 75% last season over a 10-week mating span. He came to the property five years ago when the reproductive performance was not looking good. “The six-week incalf rate was around 57% and the empty rate was up at 24%.” Those figures had earlier prompted farm owner James Smallwood to get into the DairyNZ InCalf programme, launched then by certified advisor Adrian Evans, of South Wairarapa Vets. Evans says InCalf enabled him to sit down with farmer clients and realistically assess reproductive performance with set benchmarks. The 78% six-week in-calf target was a simple one and did not give any room to hide or disguise performance. “And James was onboard as an early adopter,” says Evans. The initial focus was on the ‘low hanging fruit’ that, once picked, can pro-

TACTICS FOR LIFTING HERD REPRODUCTION STATS ■■

Bull power – check the numbers of bulls against herd size for optimal ratio post-AB.

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BCS at drying off – resist the urge to milk too long; focus on BCS 4.5

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Optimise planned start of calving date, to match grass growth to grass intake; minimise supplements required while still fully feeding the herd in the run up to mating.

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“It’s made a big difference. We have a submission rate after their first calving of only one percent point lower than the herd, at 85-86% over three weeks, and empty rates comparable to the herd average of 12%.” vide gains even within that season’s fertility performance. That included boosting bull power post-artificial breeding (AB) and improving the staff’s ability to detect heats, through better training and attending DairyNZ heat detection workshops before the mating season started. “After only a couple of seasons we had lifted the six-week figure to the mid60s,” says Smallwood. That coincided with

van Beek taking over. He entered with some of the initial work done, but Evans says his task to improve reproduction outcomes even further was helped by having a boss who was “completely onboard” with the InCalf objectives. After little success in synchronising part of the herd in his first season, van Beek decided to step back and look harder at what could be addressed. “One thing not great

was the young stock: they were coming in a bit light as first-calvers; body condition score (BCS) was not where it needed to be.” He started to manage them more closely on the farm’s run-off. “That mainly involved feeding them better and putting essential minerals into them.” That included a copper bullet and a longacting selenium dose in January as yearlings, and again before mating as rising two-year-olds, and a drench every four weeks. “It’s made a big difference. We have a submission rate after their first calving of only one percent point lower than the herd, at 85-86% over three weeks, and empty rates comparable to the herd average of 12%.” Herd BCS at drying off was also addressed.

DAIRY NEWS SEPTEMBER 13, 2016

MANAGEMENT // 25

d reproduction “James was committed to dealing with the poor reproductive performance and the first year we came he dried the herd off earlier at 4.5 BCS and we got them to 5.0 BCS by the start of calving. He was prepared to sacrifice a decent level of production to achieve that, but he believed it was essential.” Van Beek tuned up the allocation of the farm’s grass feed resources. “They used to leave for the run-off on June 1; it would be mowed out then the herd would be back home, when you really wanted the platform to ramp up what grass growth it could and they would all be here at once.” Now the herd is on the platform until well after June 1 and he has pushed the herd’s planned start of calving out to August 1, a big jump from July 15. “It has made things a lot simpler. We can do an accurate spring rotation planner once the herd is off, to our September 13 balance date.” While not necessarily delivering more production, that shift reduced the bought-in feed required with the earlier calving date. “It’s stripped back, we use a bit of ProGibb. I think we could push it back to be more certain of making our 2600kg DM average cover for the start

of calving.” He believes copper and selenium supplied through the water line also help maintain herd health over the high stress post-calving period. Drying off is also determined by a cow’s calving date, so later calvers with good BCS can expect to milk well into June. The herd is now being fully fed post-calving at minimal cost, with the farm classed as a system three due to winter grazing on the run-off. The staff are also wellversed in heat detection. The team attend a DairyNZ heat detection training day every year to get into the mating headspace; for Wilfred it is critical because the herd is milked through two separate dairies. “Fortunately both my herd managers are very good, experienced operators. You need to know your staff have the ability to detect heats consistently; it is just too much pressure on you as the boss otherwise to maintain concentration over that length of time.” Van Beek views his six-week in-calf success as an outcome of his overall focus on growing more grass all year round and matching supply to demand as close as possible, with a harvest of 16.5t DM/ha/year.

Adrian Evans (left), South Wairarapa Vets, says InCalf enabled him to sit down wth farmer clients like Wilfred van Beek.

“There probably are farms with higher incalf rates out there, but the challenge for me is to match that supply and demand, and achieve that high in-calf rate as efficiently as you can with pasture.” • This article was originally published in Inside Dairy, September 2016

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DAIRY NEWS SEPTEMBER 13, 2016

26 // MANAGEMENT

Robust and agile by best use of energy, water and nutrients BRENT BOYCE

MOST DAIRY farmers

are good at growing and harvesting pasture. The real trick is to harvest the best possible pasture to get the highest energy and quality, rather

than just harvesting dry matter. While a small percentage of farmers have moved into intensive dairying systems, the foundation for most is nearly always pasture. Here in Nelson/ Marlborough, special

emphasis in the last three seasons has been on lifting pasture quality appropriate use of strategic mowing and topping (as per the LUDF guidelines). The reasons for this are: limitations on stocking rate, weed infestation (i.e. giant

SUMMARY THE CHANGES outlined above are quickly building resilience into the farming systems in this region. Concentrating on maximising resources inside the farm gate (harvest of energy, nutrients and water), and being robust with stocking rate, debt and capital gives the farm the agility to take advantage of opportunities when they arise.

This has a positive impact on the farm business bottom line. In turn, it can provide financial lending institutions the confidence that a pathway to system change or improvement is viable and profitable; and their clients’ businesses should be more robust and sustainable in both the short and long term.

buttercup and pakihi rushes) and marked fluctuations in pasture growth in any given month. Too many times I have seen cows overdry mattered and underenergised, and they don’t reach a decent lactation peak (>2.0kgMS/cow/ day). Strategic mowing can certainly cut that problem down to size. I have seen the average MS/cow production for these strategic mowing farmers rapidly increase to 410kgMS/cow by 2015. This compares to the remaining farmers’ district average of 345kgMS/cow (refer Keoghan Kellogg Paper 2015: ‘Why do the All Blacks need a coach when 76% of farmers don’t?’). The focus on maximising the harvest of energy, nutrients and water is causing other big changes in our region. This includes the further integration of water efficient high ME crops such as summer chicory under our K-Line irrigation systems (and the continued use of turnips on dryland). Irrigated chicory is used where our pasture struggles and growth slows, and is unable to match cow demand in our hot summer temperatures. These farmers are now rotating these irrigated chicory crops with short term annual ryegrasses to lift recorded (on Minda land and feed) annual dry matter production to 25tonnes/ha (vs 14t/ha off existing pasture). Soil nutrient uptake by the chicory plant is excellent with its deep taproot. Growing chicory on the effluent area is also smart use, along with harvest of nutrients (growth rates

of >200kgDM/day in the heat of summer have been recorded in chicory on these areas). The use of autumn fodder beet for lactating cows is also increasing. Yields are more achievable with fodder beet on our dryland; utilisation is better – typically utilised cost does not exceed 15c/kgDM vs 30c/kgDM for maize – and the fodder beet has higher metabolisable energy (ME) for lactation. Intensification of wintering has also occurred on the dairy platform and runoffs with the use of fodder, improving water and nutrient harvest. The long-term sustainability of this intensive wintering will need further assessment as soil damage and sediment issues become a problem. Regarding milking frequency, gone are the days of simply milking twice a day all season. A growing number of farmers are integrating 3in2 and OAD milking into their milk harvest regimes – the same milk for lower energy use. This can include OAD for the first couple of weeks of lactation, 2AD from then to Christmas, then 3in2 from Christmas to midApril (often when summer crops come into the round), then OAD for the last grazing rotation to the end of May; or a mix. Farmers now achieving close to 500kgMS/cow from fewer than 500 milkings represents a great saving of time and energy. A farmer milking from early August to late May (on average 3-hour milkings including getting cows and wash-up) will save 120 milkings and 15 days (Think of the

Brent Boyce

holiday possibilities. Ed.) These are big energy savings for you and your staff physically, in shed costs, and in your cows’ longevity (better repro, reduced laminitis and better condition score at dry-off). And typically you won’t sacrifice cow production. Another important change is the drive to continue to build robustness and agility in the farm business. To be resilient and sustainable, the farm business must have the ability to take the knocks when the going is tough, and bounce when things improve. The ongoing payout variability means that systems must be robust enough to produce milk solids at the optimal cost for that business – with pasture as the first line of feed. Get your profit from your pasture first. To maximise pasture use I recommend you set the stocking rate so that cows can produce at a minimum 90% of their liveweight from pasture. Debt levels need to be sustainable for that business. This means working the margins of costs and returns and producing enough

milk solids to satisfy the financial lending institutions’ criteria for debt loading, and prove to them that your business is robust even in low payout years. Too high a debt reduces the agility of the business if any opportunities arise; some tough decisions may need to be made. Spending large sums of capital to build a business that is only viable in times of high payout is not sensible, and again reduces the agility of the business. Maximising energy, nutrient and water harvest inside the farm gate at the cheapest possible cost gives robustness. If an input does become economic to feed (and you can produce more milk) then a marginal analysis needs to be done to verify profitability; and per cow performance (not cow numbers or stocking rate) can be increased. The agility to take advantage of any fresh opportunity without having to go into lots of debt is critical to long term success and robustness. • Brent Boyce is a LIC FarmWise consultant for Nelson/ Marlborough.

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DAIRY NEWS SEPTEMBER 13, 2016

MANAGEMENT // 27

For hoof health and increased immunity…

Kevin Macdonald, DairyNZ

No supplements when grass is growing Use of supplements during adequate supply of pasture in spring may lead to pasture wastage and higher-than-target postgrazing residuals. DairyNZ senior scientist Kevin Macdonald explains a project to demonstrate the benefits of maintaining target post-grazing residuals. RPM) and 1905 kgDM/ha (11.5 clicks RPM) for the target residual and high residual farmlets, respectively. Once PKE supplementation was stopped (during summerautumn), the cows grazed to 1850kg DM/ ha (8.8 clicks RPM) and 1995kg DM/ha (9.7 clicks RPM) on the target residual and high residual farmlets, respectively. The lower post-grazing height measured on the RPM but greater kg DM/ha in summer is normal as the pasture base gets denser, thus there is an increasing kg DM/ha for any given height due to a buildup of dead material. Total milksolids (MS) production at both sites was similar. Although the MS profile differed at times, when cumulative production over the length of the project was measured there was no benefit from cows peaking higher through feeding PKE and leaving a higher residual in spring, compared with cows grazing pastures only and achieving target residuals throughout the project. The reduced MS production in summer-autumn of the high residual cows can be attributed to the poorer pasture composition and lower quality arising from higher residuals in spring. There was no difference in cow BCS at the end of the project at Scott Farm but at WTARS the high residual cows were better – 4.2 compared with the target residual cows being 4. While pasture composition and quality at Scott Farm was similar in spring, high post-grazing residuals in spring on the high residual farmlet resulted in summer and autumn pastures with a lower perennial ryegrass content and higher proportion of dead material. This change in pasture composition resulted in reduced pasture quality in summer and autumn. The pasture quality and composition data collected from the Scott Farm demonstration is consistent with expected trends. Research in NZ and overseas has demonstrated that high post-grazing residuals in spring results in pastures with higher amounts of dead material and lower nutritive value at subsequent grazings.

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feed in New Zealand dairy systems has increased. When supplements are fed to grazing dairy cows, pasture dry matter intake declines which is known as substitution. Feeding supplements when there is an adequate supply of pasture in spring (i.e. pasture growth is greater than herd demand) may lead to pasture wastage through substitution and higher-than-target postgrazing residuals which, in turn, results in reduced growth and pasture quality at subsequent grazings. In 2015, DairyNZ set up farmlets at Scott Farm (Hamilton) and WTARS (Hawera) to demonstrate the benefits of maintaining target post-grazing residuals (1500-1600kg DM/ha or 7-8 clicks on rising plate meter on the RPM; 3.5 to 4 cm) during spring. Two farmlets were established at each site; cows on one farmlet grazed to the recommended target post-grazing residuals of 1500-1600kg DM/ha (target residual), while cows on the high residual farmlet were offered up to 3kg PKE per day resulting in a higher post-grazing residual of 1800-2000kg DM/ha. Cows in the high residual group were supplemented from late August to midDecember at Scott Farm, and from midSeptember to late December at WTARS. In mid-December at Scott Farm and late December at WTARS, the PKE was removed from the diet of the high residual cows and both farmlets were managed similarly until the end of the project (late-March at Scott Farm and mid-April at WTARS). Supplements were removed to demonstrate the carry-over effect of high post-grazing residuals in spring on cow performance, and on pasture over summer and autumn at each location. At both locations, milk production and pasture growth were measured, and at Scott Farm pasture composition and nutritive value were also measured. From the start of the project until December (spring), the average post-grazing residual was 1660kg DM/ha (9.2 clicks

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DAIRY NEWS SEPTEMBER 13, 2016

28 // EFFLUENT & WATER MANAGEMENT

Precious, vast water resources need better allocation NEW ZEALAND is

richly endowed with fresh water but it needs to be allocated more cleverly, says Environment Minister Nick Smith. Giving the 2016 Lincoln Environment Lecture at Lincoln University recently, Smith noted that NZ has more freshwater per capita than almost any other nation. The average 2.3m of rain falling nationwide each year equates to 145 million L/person/year -enough for each person to have a bath every 30 seconds, every minute of every hour of every day. It is seven times more than in Australia, 16 times more

than in the US and 70 times more than in the UK or China. But this abundance can have a downside, Smith says: a lack of appreciation of how important water is to our economy, lifestyle and health. Many of our major export industries depend on freshwater: it takes 800L of water to produce 1L of milk, 400L for 1kg of beef, and 200L for 1L of wine. These industries are effectively exporting ‘virtual’ water with a good dose of Kiwi ingenuity, says Smith. “This same freshwater is the source of 60% of our

renewable electricity and the only reason we earn $1 billion a year from manufacturing aluminium. “Our rivers and lakes are equally pivotal to our tourism industry – think of Huka Falls, Mt Cook reflecting in Lake Pukaki, jet-boating the Shotover River or trout fishing on Lake Taupo. “You can connect 60% of our external earnings as a country to this abundance of freshwater. It is core to NZ’s competitive advantage and quality of life.” On allocation, Smith says our water shortage problems are in distinct areas and only at specific

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seasons. The total NZ freshwater resource is 600 trillion litres and we use 11t L (1.8%). “Six trillion litres of that -- at least half -- is for irrigation. 2.5t L is used by industry 2t L is used each year for town municipal supply and about 0.5t L is used for stock water. “Some communities have been getting in a lather about bottling drinking water. Numbers such as 100m L of water being consented for bottling sounds big, and there are calls [to suspend] consents for fear bottled water exports will have our rivers and aquifers run

Nick Smith speaking at Lincoln University.

dry. But these consents are minute. This is about as logical as suggesting we solve Auckland’s traffic problems by banning bikes. “The main game is agriculture -- not only the biggest user by far, but where the use is growing. For 25

years the area of irrigated land in NZ has more than trebled from 250,000ha to 800,000ha -- by far the fastest rate of growth in irrigation of any OECD country. “This growth reflects our abundance of water, the strength of our

agriculture sector and the huge productivity gains available in NZ from adding a reliable water supply to fertile soils and our temperate climate. [But] our systems for allocating freshwater are blunt and unsophisticated.”

THINK BEFORE YOU SCOFF ENVIRONMENT Minister Nick Smith acknowledges we have challenges with water quality but he cautions those who exaggerate the problem at the expense of New Zealand’s reputation. “Our water quality is generally good by international standards. “Our biggest river in the South Island (Clutha) and the biggest in the North Island (Waikato) are both significantly better than waterways such as the Murray/ Darling in Australia, the Thames in the UK, the Seine in France, the Rhine in Germany or the Mississippi in the US. “It is difficult from the hard data to draw simple overall conclusions on freshwater quality. The first problem is that the trends vary significantly from one river to the next.” Smith says several years of data

is needed to make comparisons meaningful because water quality varies dramatically seasonally and from a dry year to a wet one. And it depends on what you are measuring. “The best summary I would give of the data on overall fresh water quality throughout NZ is that bacterial contamination and macroinvertebrates are unchanged during the past 25 years, dissolved phosphorus is improving and nitrate levels are generally deteriorating. “The broad conclusions I draw are these: the worst water quality is in urban areas but these are comparatively small in total area. The most significant declines are in more intensively farmed areas and are caused by minimum flows being too low and levels of nutrients or sediment being too high.”

DAIRY NEWS SEPTEMBER 13, 2016

EFFLUENT & WATER MANAGEMENT // 29

Choices ‘need not be either/or’ Environment Minister Nick Smith recently outlined the Government’s objectives on freshwater management. Here are excerpts from his speech given as part of the 2016 Lincoln Environment lecture. THE NUMBER one objective is to improve freshwater quality; it is too important to our quality of life, national identity and economic wellbeing to allow it to go backwards. The second objective is maximising the economic opportunity for jobs and wealth creation from our freshwater resources. The third objective is to improve the involvement of Maori in freshwater decisionmaking, consistent with our Treaty settlements and obligations. Some people question the objective of improving Maori participation in freshwater management, but the obligation arises not only from Treaty settlements. My practical experience in Canterbury with Ngai Tahu, in Waikato with Tainui, in Lake Taupo with Tuwharetoa and in Rotorua Lakes area with Te Arawa is that iwi bring a constructive and helpful dimension enabling real momentum to improve our freshwater. Water issues often come down to a clash of values between environmentalists and land owners. Maori have a foot in both camps and are proving to be valuable bridge builders over these troubled waters. We can achieve the first and second objectives stated above. Some people are

dualistic about our nation’s water choices: they insist on either water quality or growing the economy. We disagree. We clearly need limits, and not all irrigation projects, for example, will pass sustainability tests. But many water projects can deliver both environmental and economic dividends. Let me reinforce this point with three examples. Few people appreciate that water storage and irrigation can enable land use changes that actually reduce nutrient run-off. The Lee Valley dam in Nelson will enable about 2000ha of dryland farm to be converted to horticultural crops. Irrigated apple orchards leach substantially less nitrate than the existing farming. Water storage projects can also enable higher minimum flows in summer, as has become obvious in the Opihi River in South Canterbury with the Opuha scheme. Enhanced minimum flows improve the ecological health of rivers, enhance recreation and can reduce nutrient concentrations and the risk of algal build-up. A further benefit is that water storage schemes can be used to prevent the build-up of harmful algae with high freshening flows. The ultimate big opportunity for water

storage projects to contribute positively to water quality is particularly pertinent to Canterbury. Ninety per cent of the water in Canterbury is in the big alpine rivers, but the bulk of the huge water takes for irrigation are from the groundwater and vulnerable lowland rivers. The infrastructure costs to farms of storing and using the alpine river flows is

much greater, but the environmental impacts and ongoing energy costs can be much less. One of the difficult public policy challenges is to engineer this switch from groundwater to stored alpine river water. We have six clear policy views on how we can best deliver on these improvements in freshwater management. The first is that

stronger national direction is required. My first job as an undergraduate civil engineer was with the National Water and Soil Conservation Authority in Canterbury, just before its abolition in 1987. The view then – which dominated public policy for 20 years – was that the regional authorities could do the job. The problem with this approach was it ignored

concerning water. We have sought to step-up central government involvement a few notches. We have expanded the number

the broader national interest: it wasn’t efficient to re-litigate the same issues 16 times over, and regional councils have struggled to confront the hard political choices

TO PAGE 34

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DAIRY NEWS SEPTEMBER 13, 2016

30 // EFFLUENT & WATER MANAGEMENT

Canterbury farmers doing their bit on water ALL WATER consent holders in Canterbury are fully compliant or have abatement notices in place to become fully compliant with the Water Measuring and Reporting National Regulations, reports Environment Canterbury (ECan). About 3800 farmers have spent $50 million over the past four years on water metering to be fully compliant. IrrigationNZ chief executive Andrew Curtis says farmers are to be congratulated. Given public concerns shown earlier this year, this is a huge achievement by the primary sector in a short time and comes at considerable cost to farmers, he says. “Farmers have invested $50m over the past four years in the capital costs

Canterbury farmers have spent $50 million over the last four years on water metering.

associated with water metering.” This includes alterations to headworks and telemetry and the water meters themselves. Another $2-$3m per year is being spent on third party costs, managing and sending the data to ECan and another $1m on the monitoring costs charged by the regional council. “This investment shows how committed the farming community is to managing its resource responsibly. This is huge, given that most town water supplies in NZ do not individually meter their water,” says Curtis. ECan chief executive Bill Bayfield says measuring and managing water use is a critical step to improve the health of Canterbury’s waterways and to ensur-

ing the sustainability of the agriculture industry. “The water meter programme has been hugely successful… has been world-leading in terms of the number of [Canterbury farmer] installations and a sophisticated service industry that has developed alongside. “Around 3800 farmers have gone above and beyond the national requirements for water measurement and have

installed systems that provide daily data which enables efficient water use; that number is steadily climbing. “We appreciate this has taken a lot of time and effort and we congratulate the majority of water users who have played their part and are now enjoying the benefits.” Receiving accurate water data on farms is an important step in ensuring water is managed efficiently to meet the

70%

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12% gain in 12 years with rising costs

60% 50% 40%

30% 20% 10% 0% -10%

community’s environmental, economic and cultural expectations. ECan says it takes non-compliance of consented takes very seriously, and is now publishing abatement notices (that have not been complied with) and infringement notices online. This is in response to the public’s desire for more transparency in water measurement.

2002

2004

2006

Region Average

2008

2010

2012

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EFFLUENT & WATER MANAGEMENT // 31

Treat poo as fertiliser DAIRY FARM effluent is a valuable resource and farmers should treat it as fertiliser. However, the Waikato Regional Council cautions that effluent needs to be managed with care because it is not a balanced fertiliser, being high in potassium. “This can lead to higher leaching levels of magnesium and subsequent animal health problems if potassium soil test levels are high. “You can manage this risk by increasing the effluent area or by making silage on the effluent area and feeding it out on noneffluent areas of the farm.” Applying shed effluent at light rates will ensure stock feed intakes are not adversely affected. The council says managing dairy effluent is also necessary for the health of waterways and groundwater; so knowing the regional council’s rules for effluent management is important. Under the Waikato regional plan you cannot exceed 25mm per application and 150kg of nitrogen from effluent per hectare per year. So you need to know how much your irrigator is applying and how concentrated your effluent is. Dairy effluent must not discharge into surface water or contaminate

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DAIRY NEWS SEPTEMBER 13, 2016

32 // EFFLUENT & WATER MANAGEMENT It is impractical to have a national rule that all water bodies are swimmable all the time, says the Government.

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Nick Smith

It would be impractical to have a national rule that all water bodies be swimmable all the time, he says. “Most of our rivers breach the 540 E. coli count required for swimming during heavy rainfall. “Water bodies like the Washdyke Lagoon in Canterbury and Lake Papaitonga in Manawatu are home to many birds whose E. coli make it impossible to meet the swimming standard without a massive bird cull. “There are also rivers associated with geothermal activity that makes water quality unsuitable for swimming.” Smith says we also need to be open about the cost of regulations on communities and the fact that many water bodies have long hydrological

cycles that mean it is a protecting our waterways. long time before we see People have made it clear improvement. they want rivers, lakes “The government is and streams safe to swim open to strengthening the in and gather food from,” national requirements on says Johnson. swimmability and has the He criticises the Land and Water Forum minister’s claim that the working on options. A government can’t set a lot of work swimmable standard for is going into freshwater because of understanding flooded rivers. the proportion “I am flabbergasted by of time our the minister’s claims. He waterbodies is trying to hoodwink the public by claiming that meet the E. because flooded rivers coli standards aren’t swimmable we for swimming can’t have a swimmable and how we can ensure it is standard for water quality. We should be talking improved.” about rivers when they are But Fish not flooded as this is when & Game says the government has failed most people go swimming. all New Zealanders by “This is cynical politics. refusing to commit itself Who in their right mind to higher freshwater wants to swim in a raging standards, such as making flooded river? it safe to swim in rivers. “People want to be able Environmental to swim in a river during organisations including Fish & Game have been campaigning for the government to improve the country’s water quality standards by lifting Bryce Johnson the present ‘wadeable’ requirement to summer while relaxing ‘swimmable’. with their friends and Fish & Game chief family. Surely, that isn’t executive Bryce Johnson too much to ask.” says the government isn’t Johnson also dismisses aiming high enough and the minister’s claim that the minister’s comments the only way to make let down all NZers. some waterways safe for “The government is out swimming would be to cull of step with the public on the birds that live there.

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DAIRY NEWS SEPTEMBER 13, 2016

EFFLUENT & WATER MANAGEMENT // 33

Washdown nozzle opens floodgate to sales NEW HYDROFAN washdown nozzles launched four months ago are selling in numbers exceeding expectations, says Peter Reid, director of Numedic. “Dairy farmers are seeing how this nozzle can save water, electricity and time” he says. Water savings of up to 70% are a notable benefit -- by using less from the farm water source and less in the yard. This has a cumulative effect on power savings and cuts the quantity of effluent that needs to be pumped onto land. The nozzle also save time, Reid says. The company says comments on its Numedic Facebook page show farmers keen to save time and money. Other industries are now using the nozzle -freezing works, truck washing facilities and also councils for washing their mowers. Continuing design work will fit the nozzles for specific uses. Mining companies in Alaska and South Africa have also requested samples for trial. The nozzles have so far been exported to Chile, Australia and South Africa. Says Reid, “Farmers changing to the Hydrofan nozzle can keep more money in their pocket.” Numedic is an accredited company in farm dairy effluent system design. Tel. 0800 686 334

Irrigation efficiency seen rising FARMERS HAVE installed more efficient irriga-

Numedic says its washdown nozzle is winning friends.

tion systems in Canterbury over the past decade or so, according to two new reports prepared by Aqualinc. The Canterbury Detailed Irrigation Area Mapping reports, commissioned by Environment Canterbury (ECan), analysed irrigation areas and application types in the region from 2002 to early 2015. “There has been a significant move by farmers over the past 10 years to convert to more efficient spray irrigation systems,” says Don Chittock, programme manager for the Canterbury water management strategy at ECan. From mid-2010 to 2015 the amount of efficient spray irrigation went from 371,000ha to 479,000ha, an increase of 29%. Total irrigation went from 425,000ha to 507,000ha (19%). Over the same period there was a 48% reduction in the amount of surface (borderdyke) irrigation from 54,000ha to 28,000ha. “Many farms are changing from the inefficient borderdyke system to centre pivot spray irrigation, which uses about half as much water to the same effect.” The reports also estimate around 60% of irrigation is happening at 80% efficiency or more, which meets the target set for industry agreed good management practice.

DAIRY NEWS SEPTEMBER 13, 2016

34 // EFFLUENT & WATER MANAGEMENT

Low water use, low application rate A SOUTHLAND

effluent company has opened new premises as demand grows for its efficient technology. The Clean Green Effluent is now in larger premises on Nith St, Invercargill. It installed its first system in 2007 and has grown ever since,

it says. Its compact, efficient Clean Green Effluent system automatically disperses effluent with virtually no environmental impact because of its very low application rate. The system first filters out solids by means of the company’s patented

weeping wall. The solids are retained in a concrete bunker and the liquid portion weeps through to a pumping chamber for despatch to a storage tank for yard washing. This fresh green water is recycled across the yard and back to the weeping wall doing the

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washdown without fresh water hosing. The company says this reduces total fresh water consumption to about 20L/cow/day instead of the usual 50-70L/cow/ day, reducing energy

demand and storage or distribution. The system ‘superlow’ application depth (0.25mm) suits all soil types, with no risk of leaching or run-off, the company says.

And it allows irrigating at times of the year when soils are near or at their storage capacity, reducing the requirement for storage capacity. Systems use 33,000L water tanks for total storage.

Non-use of open ponds reduces a farm’s rainwater ‘footprint’ and total effluent application. System maintenance takes only about three hours per month, the company says.

Choices ‘need not be either/or’ FROM PAGE 29

PHILL STAYS GREEN WITH INCREASED REVENUE Farm owner and agricultural consultant Phill Everest uses Growsmart® Precision VRI to “kill five birds with one stone.” He’s able to improve the sustainability of his dairy operation while reducing its environmental impacts. Phill sees the benefits in terms of track maintenance and grass growth as well as ensuring the availability of his water. The water he saves under one pivot can be redistributed to irrigate an additional 23ha of his farm. FieldNET® integrates with Precision VRI to provide complete remote pivot management, with VRI control, monitoring and reporting. “The first time using the new FieldNET tool for Precision VRI, I found it very easy. It was much simpler and quicker having just the one place to go to control my pivot and manage my Precision plans” Find out how you could benefit from increased water efficiency using Precision VRI with FieldNET by talking to your Zimmatic® dealer or visiting growsmartprecisionvri.co.nz

of water directorate personnel from 10 to 50 in the Ministry for the Environment. We supported and funded the Land and Water Forum to enable a national conversation on freshwater management. And we have made greater use of national direction under the RMA than any previous government. There is a balance to be found. The very nature of water problems varies significantly nationwide, and local knowledge and solutions are needed. On issues such as nutrient limits, what constitutes good management practice, stock exclusion and swimmability, we need to find the right mix of national consistency and local flexibility to get the best outcome for New Zealand. The second driver of our reform programme is a strong belief in the need for a more collaborative approach to resolving water policy problems. This is because we have a bad habit in NZ of turning environmental issues into

polarised battlegrounds of winners and losers, and the litigious architecture of the RMA does not help. I do not buy into the rhetoric that farmers are environmental vandals and environmentalists and recreationists are economic imbeciles. I have been trying to lead a culture change at both a national and local level where different water users and interests work together on finding solutions that will work for the environment and the economy. I am indebted to the commitment and work of all the participants in the Land and Water Forum and I acknowledge their new chair, Hugh Logan. They have broken down barriers and navigated a pathway in which substantive reform has become possible. I remember being told by a stroppy southern farmer shortly after my appointment as minister that the day a landowner needed a consent to change to dairying would be the same day hell froze

over. In Southland, and now in many parts of NZ, a consent is required and, significantly, consents have been declined without a riot over property rights. This national collaborative approach pioneered by the Land and Water Forum is being replicated at a local level throughout the country, with Canterbury in the vanguard. An important part of the Government’s RMA reform this year is supporting this new approach. This takes longer at the front end: the problem is that even when a consensus is found, it can easily be unstitched because of the drawn-out appeals process and there is a risk of groups gaming the system. The RMA Bill currently before Parliament formally recognises these collaborative processes and limits appeals in the case of a consensus being agreed. This provides an added incentive for councils and water stakeholders to find solutions.

DAIRY NEWS SEPTEMBER 13, 2016

EFFLUENT & WATER MANAGEMENT // 35

Moves on stock, land use to restore rivers GETTING MORE stock

out of waterways and further restricting land use changes are recommended as part of plans to improve the health of rivers in Waikato. A committee of river iwi governors and Waikato regional councillors will recommend that a proposed plan change for the Waikato and Waipa rivers be sent to the regional council for consideration. The committee’s decision at a meeting at Karapiro recently followed consideration of the proposed plan change formulated by a multi-sector collaborative stakeholder group (CSG). The CSG was formed as part of the ‘Healthy Rivers: Plan for Change/Wai Ora: He Rautaki Whakapaipai’ project, running since 2012. The project involves river iwi, Waikato Regional Council and key stakeholders including farmers. The regional council is due to consider the notification of the proposed plan change this Thursday (September 15). The public will be consulted once a plan change recommendation is signed by the council. The committee has agreed to an 80+ day sub-

missions process because of the level of public interest in the plan change, and the complexity and volume of information supporting the plan change. The plan change is intended to begin an 80-year process of restoring the rivers to safety for swimming and food gathering along their entire lengths, as is required by the Te Ture Whaimana o Te Awa o Waikato (Vision and Strategy for the Waikato and Waipa rivers). The Vision and Strategy stemmed from Treaty settlement legislation giving iwi a central role in protecting their tupuna awa (ancestral rivers). The CSG had regard to both the vision and strategy and the National Policy Statement on Freshwater Management in its deliberations. The plan change focuses on the contaminants nitrogen, phosphorous, pathogens and sediment getting into the rivers. These can harm the health of water bodies or present risks to people and stock, and the aim is to reduce their presence to acceptable levels. Due to the extent of change required, the CSG has recom-

mended an 80-year staged approach to achieving the water quality required by the vision and strategy for the rivers. The first stage covered by the proposed plan change recommended by the committee involves actions over a decade that will ultimately

A plan has been announced to improve the health of rivers in Waikato.

result in 10% of the change towards achieving Te Ture Whaimana. Analysis indicates the measures proposed by the CSG will make major improvements in bacteria levels and some improvement in phosphorus and sediment levels in the first

10 years. Specific ideas for boosting river health being suggested in the proposed plan change include: getting more stock out of waterways, new resource

consent requirements and introducing extra restrictions for land use change, management of direct discharges to the rivers, targeting particular catchments for spe-

cial attention, nitrogen discharge benchmarking and requirements for high emitters to reduce discharges, and requirements for greater planning of land use activities.

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DAIRY NEWS SEPTEMBER 13, 2016

36 // EFFLUENT & WATER MANAGEMENT

Why are effluent ponds necessary? EFFLUENT PONDS are built chiefly for temporary deferred storage and treatment of effluent from dairy milking sheds. They are also used to store and treat leachate and effluent generated by silage stacks, wintering pads, barns and farm infrastructure such as lanes and stock underpasses. The purpose of a farm dairy effluent (FDE) pond is to provide temporary storage and treatment of effluent during periods when soil conditions are not suitable for irrigation.

Scientific research on the environmental effects of effluent irrigation highlights the importance of effluent storage as contingency during these periods. Effluent storage is particularly important in wetter regions of New Zealand where there are extensive mole and tile drainage networks, high water tables and higher drainage-risk soil types where nutrient leaching to groundwater or waterways could occur. Agricultural research has identified the value

in providing increased onfarm effluent storage. However, a lack of national guidance has seen the development of FDE ponds inappropriately designed, sited and constructed. FDE ponds range in size, shape, construction materials, and capacity. Earthen embankment ponds are formed from compacted earth material with a compacted clay liner (CCL) or geomembranes (also knows as synthetic liners), while concrete ponds may be

Effluent ponds provide temporary storage and treatment of waste.

formed from a series of concrete cast in situ or precast panels or sprayed (Shotcrete) concrete. Other FDE containment structures include proprietary concrete and synthetic lined tanks. So why are effluent ponds necessary? Regional councils and unitary authorities impose a range of regulatory requirements on the discharge of effluent (to air, land, or water). The purpose of these regulations is to

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face waterways. All FDE structures including ponds, sumps, tanks, dams, and pipes or channels between them must have a contained system that prevents FDE leakage. For new FDE ponds, the proposed site should be thoroughly investigated before design and construction begins. Generally, an FDE pond should be located in an area with low permeability soils to reduce the risk of seepage loss. Soil profile samples should be obtained to provide information on the material properties. These should be obtained at the depth, and beneath, the bottom of the proposed FDE pond. The prevailing groundwater regime is also critically important. Assessing the potential for an existing FDE pond to leak is difficult. However, it may be possible to see if it is leaking by visual observation and by measuring fluid levels over time, while taking into account evaporation. Essentially, ponds that show a rapid drop in level over relatively short peri-

ods will probably be seeping at unacceptable rates and need further assessment. Visual assessments to determine obvious highseepage zones (for example, through embankment or conduits) are good starting points. It would also be prudent to establish whether the existing liner (if present) has been damaged. These assessments could be followed by verifying the soil profile and characteristics around representative portions outside the pond using the techniques described below. Associated permeability testing may also be necessary to confirm the seepage rate of the soil profile, to confirm whether unacceptable seepage is an issue. If there is any doubt about a pond leaking and no obvious cause is located, then environmental sampling and investigation may be required to pinpoint the source and impact of any contamination. • Article sourced from www. dairynz.co.nz

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avoid, remedy and mitigate adverse effects on the environment. The requirement for FDE ponds is driven by most councils under the Resource Management Act 1991 (RMA). Using an FDE pond to process and store effluent enables farmers to manage the effluent’s discharge. The irrigation method used determines the rate, depth and evenness of application and therefore the likelihood of environmental contamination. It is good practice to discharge effluent to land when soil conditions are appropriate, where soil moisture is at a sufficiently low level for the contaminants in the effluent to: ■■ Be utilised by the soil’s biological system ■■ Not move to surface water via overland or subsurface flow ■■ Not infiltrate groundwater ■■ Give any such ponding or run-off the potential to adversely affect the environment, such as excessive nutrients and pathogens entering groundwater and sur-

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IT IS appropriate to investigate where a pond will be sited and to avoid installing design elements that allow for the pond being close to sensitive features. These features can include surface water bodies, artificial watercourses, installed subsurface drains, groundwater level, bores, registered drinking-water supplies, coastal marine areas, trees, stop banks, dwellings, places of assembly, urban areas, property boundaries, milking areas and sites of cultural significance. It should be noted that prevailing winds can carry odour a long way. Unknown sites of cultural significance are unlikely to be identified before works begin. However, if discovered during construction, work should cease

and the site should be reported immediately to the NZHPT and local iwi. Pond placement and orientation should also take into account potential slope instability, inundation from flooding, diversion of flood flows and stormwater inflows. In areas subject to actual or potential inundation, the pond base should be at least 1m above the highest known flood level if possible. If not, then specific engineering design should be undertaken. It is also preferable that long ponds be orientated along the floodplain rather than across it, and perpendicular to the prevailing wind to reduce the effect of wave action and potential spillage if the pond level is high.

DAIRY NEWS SEPTEMBER 13, 2016

ANIMAL HEALTH // 37

FE-tolerant bulls lead the charge facial eczema (FE) tolerant bulls is helping Whakatane farmer Richard Sisam to combat the disease on his farm. “We’ve been using semen from FE-tolerant bulls for six years,” Sisam says. “We know for sure our tolerance levels are increasing.” He also uses zinc on the farm. Sisam recognises FE for the scourge it is -- causing liver damage, depressing milk production and, in severe cases, killing animals. Liver damage is caused by sporidesmin toxin produced by the pithomyces chartarum fungus which thrives in hot and humid weather. Spore counts this year reached three million in some regions, the highest spore counts seen in a decade, and many herds had many cows with subclinical FE. CRV Ambreed global grazing product manager Peter van Elzakker says the company has this year sold tens of thousands of straws of semen from FEtolerant bulls, “around triple our sales last year, following the worst facial eczema season in years”. Sisam has seen how breeding for FE tolerance has benefited the sheep sector; the national flock is far more tolerant than three decades ago. Waipa sheep farmer Edward Dinger, winner of three Beef + Lamb New Zealand Sheep Industry Awards, says FE hit his district hard last season, with the spore count quadruple the levels seen in most years. “It was close to a million spores per gram of grass,” Dinger says. “Genetics is certainly part of the answer. I have been breeding FE-tolerant sheep for 31 years.” In similar conditions in 1981 Dinger lost around a third of his 2000 sheep, but last season he lost only about a dozen of his flock of 600. For six years CRV Ambreed has marketed FE-tolerant Crossbred, Friesian and Jersey teams of between six and eight

animals each. “The team approach helps manage the risk and creates options,” van Elzakker says. “Every year we challenge new prospect bulls and look for individual bulls with improved tolerance to increase overall tolerance in dairy herds.” More of CRV Ambreed’s 150 bulls have increased FE tolerance and semen from HolsteinFriesian bulls Glowing and Skylark are selling particularly well. “If we can select bull dams with high tolerance, that goes a long way to lifting the bar. We expect our FE-tolerant sires to be 25% less reactive to a dose of FE.” Dinger is watching CRV Ambreed’s progress in breeding FE-tolerant dairy cattle. “You can breed FE-tolerant cattle through progeny testing. It’s a bigger and more thorough process than what we did with sheep, but it takes longer.” Intelact vet and farm consultant Chris Pyke says there is no one solution completely effective against FE. “If you can breed animals more tolerant it becomes part of a package.” Te Awamutu vet Emma Cuttance, of VetEnt, this year completed her thesis on the management of FE. “Long term we need to think about genetics or pastures that reduce the risk of FE,” Cuttance says. “CRV Ambreed is rightly following the long term genetics option. In sheep it has been successful. While it is not 100% in high risk years, it is a massive step in the right direction. “Focusing on genetics in combination with pastures and crops that reduce the risk will hopefully reduce the need for zinc treatment or fungicide treatment. Long term, there will be a better solution for the environment.” She says farmers need to think 20-30 years in advance about the gains possible with genetics. CRV Ambreed R&D manager Phil Beatson

believes a genetic tool is essential to combat FE long term. “If global warming means we are going to get these sorts of devastating FE events more frequently

and over an increasing area of NZ, it’s going to become an even greater problem,” Beatson says. “It’s also possible the use of a heavy metal, zinc, may be restricted.”

Whakatane farmer Richard Sisam.

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DAIRY NEWS SEPTEMBER 13, 2016

38 // ANIMAL HEALTH

Freezing technology boosts pregnancy rates RICK BAYNE

NEW FROZEN embryo technology

could revolutionise dairy breeding techniques in Australia. The newly introduced process called vitrification uses ultra-rapid cooling of embryos produced by IVF to -196°C. This enables them to be stockpiled and transferred anywhere and at any time for use when convenient. The process has now been developed to where it consistently achieves pregnancy rates of 50% or more. Simon Walton, from the Australian Reproductive Technologies (ART) IVF, says this will be a “game changer” for dairy farmers and other producers. “I’ve had some clients tell me it’s been the single biggest increase in IVF technology since its inception,” Walton says. The process has been developed over the past eight years and stems from earlier human IVF work. “The pregnancy rate in human

IVFs from frozen embryos was awful, but they changed to a new method of freezing called vitrification, which uses ultra-rapid freezing, and it all changed,” Walton says. The pregnancy rate of cattle from embryos using the traditional slow freeze method was just as bad, usually less than 25% success. “I was fairly confident using the vitrification method was the right way to go about freezing the cattle embryos,” he says. ART along with visiting Vietnamese researcher Do Van Huong have been trying to perfect the system for eight years. “We started to see good results after 12-18 months but wanted to get more data behind us before we could announce things are working really well,” Walton says. “We’ve now transferred hundreds of embryos for consistent 50% pregnancy rates and better.” Walton says the ability to rapidly freeze embryos is a phenomenal change.

“Previously only being able to transfer fresh embryos meant we had to produce excess embryos to fill up numbers. We’d throw away 30% of embryos, which is huge waste of resources and genetics. “It means that unlike flushing embryos, IVF allows a much better utilisation of genetics in that there are no hormones used to synchronise.” Walton says that meant embryos can be produced from heifers before they reach puberty, resulting in a genetic gain. “Rather than wait for an animal to hit 18 months before we can start to breed from it, we can start producing embryos at 10 months. “We could just about have progeny on the ground by the time that heifer is ready to join.” The new system will allow dairy farmers to produce embryos during the non-breeding season, freeze them, store them and transfer them en masse during the breeding season to match milk demands.

Simon Walton working in the Australian lab. PHOTO: 7 NEWS

ART has secured a contract in Vietnam to produce 10,000 embryos. The process would be used to improve the genetics of the existing Vietnamese dairy herd. It would also be used to expand the

genetics of live beef cattle imports from Australia to Vietnam. Walton predicts this method of freezing embryos will replace the traditional method. “It’s been taken up quite strongly already.”

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ANIMAL HEALTH // 39

Special semen boosts fertility GETTING COWS in calf

quickly after the herd’s voluntary waiting period has never been more important for long-term economic viability of the dairy herd, says World Wide sires, importer of US genetics to New Zealand. Fertility, a major factor affecting efficiency, is a key area identified for improvement in many herds and often a principal selection criterion when investing in elite genetics. It says NZ farmers can use this tool available from World Wide Sires to help achieve more pregnancies. Scott Rossiter of Taunton Holsteins in Clarkville, Canterbury, milks 145 Holstein Friesian cows seasonally. Rossiter is passionate about breeding cows and uses WWS as his main source of high quality genetics. He has used the World Wide Sires mating service (WMS) for

20 years. The WMS service helps him breed a uniform line of cattle that fit his system. It also controls inbreeding and protects against any genetic recessives. Rossiter likes to breed for good type, production and fertility. He uses bull data on sire conception rate (SCR) as an indicator of bull fertility. SCR is an evaluation of male fertility and results are based on confirmed pregnancies. The SCR evaluation model is complex and takes into account variables relating to the herd, the environment, the fertility of the cow and numerous factors related to the fertility potential of the bull including the age of the bull, the year the semen was used, the inbreeding percentage of the service sire and the resulting offspring. SCR is expressed as a percentage difference

from an average of zero. World Wide Sires says it has more high SCR bulls than any other artificial insemination (AI) company. In 2015, Rossiter used a group of three high fertility bulls all above +2.5 SCR. He also used three bulls that were less than

+2.5 SCR. The three high SCR fertility bulls created more pregnancies than the other three bulls. Each high SCR bull created at least 70% or more pregnancies in proportion to the total number of straws used of that bull. Rossiter works with WWS breeding consultant

Hannah Wentworth who says looking at the SCR information on bulls gives Scott more confidence that using high SCR bulls will help create more pregnancies. WWS NZ general manager Hank Lina says WWS understands just how important fertility is in

NZ. “Alongside the SCR we have a focus on daughter pregnancy rate (DPR) and we have a strong focus on these traits when selecting genetics suitable for NZ farmers.” Ole Meland, PhD, past chair of the Council on Dairy Cattle Breeding, says

the SCR evaluation model uses data on 57 million breedings, collected from all over the US. The size of the database contributes to the precision of the model and is constantly reviewed to ensure its relevance, giving producers an accurate measurement of sire fertility.

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DAIRY NEWS SEPTEMBER 13, 2016

40 // MACHINERY & PRODUCTS

Two wheels better than four? MARK DANIEL markd@ruralnews.co.nz

WHILE LUV’S seen to be taking over from ATV’s, the humble two wheeler still features highly on the wish list of many landowners who want no-frills transport and don’t have any heavy loads to carry. Yamaha built a solid reputation in this sector when they launched the AG 100 back in 1973, which was revised after South Island testing in 1979, and is still in the pricelists today , alongside its bigger brother the AG 200E However as farms have got larger, some users are finding themselves with outlying areas or run-off blocks and needing a utility style steed that can be legally registered for the road, which is not the case with the AG100

The Yamaha XTZ 125 could be worth a closer look then, with great allround capability developed again in South Island high country properties, and offering some neat touches like electric start, a rear carrying rack and a low maintenance air cleaner system. Compared to the diehard AG 100 which offers us a 2-stroke, 5 speed, twin shock machine with drum brakes, the XTZ 125 is more refined with an air cooled 124cc, fuel injected, 4 stroke single engine, 6-speed transmission, a single shock swing-arm to the rear with drum brake, and a single disc set-up at the front . The suspension set-up will ensure a more comfortable ride, while a low seat height makes for an easy mount and dismount, particularly when “rugged up” in a full set of

wet weather gear. Upgrading to a “Farm Kit” for a modest $500, sees the addition of offroad tyres to tackle the rough stuff, but also with DOT approval for use on the road. An extended front mud-flap keeps things clean, a set of aluminium hand guards keep operators safe from rouge branches or wires, and reduced rear gearing allows slow speed progress and a top speed of around 80kph. Also as a nod to the tough conditions in which these machines operate on a daily basis, the inclusion of a DID 520 “O-ring” rear drive chain, with a motorcross heritage, should result in minimal maintenance. To get a better idea of how the machine performed in the real world we loaned a demo

Two-wheelers are still popular on farms.

machine to James King, who milks around 550 cows in the Central Waikato, and is a long term user of the Yamaha Ag series motorcycles, and still runs four units daily. After covering around 100 kms. over a few days King commented “the ride is far more comfortable than out Ag 100’s, and the low

seat makes getting on and off very easy. I also like the fact that the bike is light, so when you stop to open a gate it can be held between the knees, and doesn’t require me to put the stand down”. He also noted that then machine was very fuel efficient, offered superior braking, praised the elec-

tric start system, and the fact that it was also complimented by a traditional kick starter, while the headlight outshone the current steed by a country mile. On the debit side, he preferred the dual side stand layout on the Ag 100, which allowed more parking options in the

paddock, and stopped cows knocking bikes over, and for his situation where lengthy races head back to the milking shed, would have preferred slightly lower gearing to allow cows to be followed without slipping the clutch... both observations that can be easily rectified www.yamaha.co.nz

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DAIRY NEWS SEPTEMBER 13, 2016

MACHINERY & PRODUCTS // 41

Rotary now comes in more sizes A ROTARY dairy platform reckoned the world’s most technologically advanced is now available in a range of 40 to 84 stalls. Waikato Milking Systems’ 84-stall Centrus composite platform, and the smaller 54- and 60-stall units, have the size, strength and durability for large herds of large framed cows and 24/7 milking, says chief executive Dean Bell. “Demand from farmers across the spectrum of dairying, from small family farms up to the largest 24/7 operations, has led to an extension of the range.” Deck sections of Centrus platforms are made from multiple layers including Kevlar, bonded using high strength adhesive. The result is a platform 75% lighter and eight times stronger than concrete; they impose minimal wear and tear on support structures compared to traditional concrete rotaries. The company says this weight-to-strength ratio appeals to farmers, raising demand for the decks and leading to Waikato Milking Systems extend-

ing the range – now in 40, 50, 60 and 84 stall configurations. Each platform is produced to exacting standards in-house, for example, the manufacture and rolling of the platform ‘I’ beam has accuracy of +/- 1/16 inch, and the firm’s patented Pivot Roller maintains perfect alignment with the platform’s ‘I’ beam, resulting in 100% contact which enhances performance and decreases wear and tear. Positioned between two high-load pivot bushes, the self-lubricating cast pivot rollers are long-life but easily replaced when required. Micro adjustment of the roller assembly provides precise height settings and allows a degree of fine tuning and precision which is important because cow loadings constantly change, especially at the beginning and end of milking. Cow comfort is built into the design of the platforms, with stalls built for large-frame US cows and fitted with rubber matting underfoot.

The deck surface is impervious to most chemicals and cow effluent and does not cause the degradation commonly seen on concrete surfaces. Each platform arrives onfarm accompanied by

an installation team who oversee unloading, set-up and commissioning. Lasers are used to ensure the foundations and structure are true and precise.

Waikato Milking System has extended its Centrus composite platform range.

www.waikatomilkingsystems.co.nz

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DAIRY NEWS SEPTEMBER 13, 2016

42 // MACHINERY & PRODUCTS

Best-ever mowing job MARK DANIEL markd@ruralnews.co.nz

SHANE AND Marie

Donovan, of Taihape, needed to replace their combination mowers, insisting the replacements be able to handle steep, rough ground, reports machinery distributor Origin Agroup.

Shane Donovan (left), with Peter Detmar (TRC Tractors), Johannes Altmann (Pottinger), Kyle Britton (Origin Agroup) and Jason Fletcher (Donovan Contracting).

Their research led them to Pottinger, which looks like a smart decision. The 301 Alpha Motion front and Novacat 302 rear mower conditioners excel in such conditions, the Alpha Motion offering 600mm of vertical travel and 16o of lateral oscillation, which combines with superior headstock geometry to bring the weight

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Horizontal Milk Cooling Tanks with Iced Water Cooling – 50% more effective in cooling the milk compared to standard direct expansion systems without any risk of freezing the milk due to the water temperature of +0.5 > 1.0degC.

Highly suitable for AMS (Robotic Farming Systems) with low milk flows – Packo Milk Tanks

no risk of freezing the milk.

Energy Saving with Packo Ice Builders (PIB’s) – thanks to the ice energy store build-up during night time hours, a smaller refrigeration unit can be installed plus the potential savings of off-peak power rates. Water Saving with PIB’s – bore water pre-cooling is not necessary with the correctly sized PIB. This is ideal for drought prone regions or where water supplies are restricted.

Improved Milk quality through Snap Chilling = potentially a higher return PIB 25-160

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closer to the tractor for safe operation on steeper areas. At the rear, the centre pivot 302 unit supports its cutter-bar evenly over the entire cutting width, while benefitting from a 45 degree range of movement, which helps to achieve a clean finish on rough. Interestingly, typical forward speeds have increased by 4km/h, fuel consumption has decreased and higher daily work rates are being achieved, without compromising work quality. Origin managing director David Donnelly explains “this is down to the slim profile of the cutter bar, combined with the low profile discs, meaning a low drag resistance and smooth crop flow into the conditioner unit”. As an added benefit the cutter-bar layout has three drive teeth in constant mesh which offers high strength, long service and

low noise, meaning peace of mind and better conditions for the operator. The Donovans carefully though about the choice of conditioner unit fitted to the mowers, given the need to deal with high volumes of lucerne that needed gentle handling to avoid leaf loss, and the need to deal with hard river stones prevalent in the area. The Extra Dry tine conditioner chosen is fitted with rubber mounted, V shaped steel tines which flex if an obstacle is encountered, yet are rigid enough to provide an even, positive flow of crop against the adjustable conditioning plate to achieve the desired result. The Donovans sum up their switch to Pottinger saying “increased productivity, reduced running costs and customers are telling us this is the best mowing job we’ve ever had”. www.originagroup.co.nz

That new tractor smell again WET WINTER weather often leads to a build-up of mould and mildew inside the air conditioning systems of tractors, SUVs and commercials, causing foul smells that linger. Odor Buster Auto Fogger is a single-use solution to rid cabins of damp and smells, bringing back a breath of fresh air to everyday travels. “Mould and mildew can form in crevices inside a vehicle’s interior as well as the air conditioning system, and once trapped are difficult to remove,” says Tim Paterson, national sales manager of Griffiths Equipment. “The same goes for cigarette smoke and pet odours: once in the system they become ingrained and are constantly recirculated; you can’t seem to get away from them.” Developed in the US by TSI Supercool, the product is formulated to deal with moisture accumulation and odours in auto air conditioning systems; in particular it targets mould, mildew, pet smells and tobacco smoke; it’s simple to use and works in 15 minutes. Before use, start the engine, close all windows, open the air conditioning vents, then turn on the A/C, set the controls to recirculating and turn the fan up to maximum. Place the Odor Buster Auto Fogger can on the front passenger side floor and depress the valve at the top and leave it inside the car to get on with the job. The can will fully discharge in just under three minutes, but it should be left for a further seven-eight minutes to allow it to continue recirculating and complete its task. Then, with the A/C still running, all doors should be opened to allow it to vent for up to 15 minutes longer. Finish by wiping away any residue. Available from auto and hardware outlets. – Mark Daniel

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©2016 Bombardier Recreational Products Inc. (BRP). All rights reserved. ™, ® and the BRP logo are registered trademarks of BRP or its affiliates. Products are distributed in New Zealand by BRP NZ. Make sure that all laws and regulations, are respected. Ride responsibly. *Can-Am ready to ride offer valid untitl September 30th at participating dealerships only. Includes MY14, MY15 and MY16 models only. Outlander 650cc and above models eligible for $1500 rebate at time of purchase. Outlander 570 models eligible for $500 at time of purchase. Defender HD8 non power steer models receive $2000 RRP genuine parts and accessories at time of purchase. Defender HD8 DPS and HD10 DPS models receive $1000 RRP genuine parts and accessories at time of purchase. Defender Max Models not eligible for a rebate. ^3 year warranty covers MY13/14/15/16 Can-Am Outlander and Renegade, and MY16 Can-Am Defender models only. 2 year warranty covers MY13/14/15/16 Commander and Maverick models only.

Looking for technical tips & know-how? We’re here to help.

If you need technical support and advice our highly qualified team, which includes two nutritionists, two vets, four agronomists and 160 technical field reps, are ready to put their experience and knowledge to use to help you. It’s just one of the factors that help us offer an unbeatable combination of value and service. And if you need the level of experience and service that 160 years of business have given us, chances are one of our representatives are just down the road. We work with farmers and growers from all walks of life.

There’s only one name you need to remember. PGG Wrightson.

Freephone 0800 10 22 76

www.pggwrightson.co.nz

Helping grow the country