TheDairySite Newsletter - 20 April 2012

Welcome to this week's newsletter

Editorial: Chinese Invest in NZ Dairy Farms, Fonterra Invests in China

This week, New Zealand has given the thumbs up for Chinese investors to purchase the former CraFarms.

The topic has been one of controversy in New Zealand, with concerns over large scale overseas investment particularly in farmland.

Today, after nearly a year of discussions, the New Zealand government has approved a new recommendation from the Overseas Investment Office (OIO) to grant consent to Shanghai Pengxin to acquire the 16 Crafar farms, in the Central and North Island.

Shanghai Pengxin will run the 16 farms (covering 7,892 hectares), through Milk New Zealand Holding Limited, a wholly owned subsidiary of Pengxin.

New Zealand Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman have said that the consent comes with stringent conditions.

“Twenty seven conditions have been imposed to ensure Milk New Zealand’s investment delivers substantial and identifiable benefits to New Zealand,” Dr Coleman said.

The conditions require Milk New Zealand to invest NZ$16 million into the farms and to protect and enhance heritage sites.

“The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial.”

Back in February, the government had to reconsider its approval of the sale after the High Court said that there was no real economic benefit from the sale to New Zealand.

Overseas investments of land, involving more than five hectares of farmland, must be approved by the OIO.

It is reported that Shanghai Pengxin put in a bid of NZ$210 million for the farms, whilst a New Zealand bidding group, Crafar Farms Purchase Group bidded NZ$171.5.

The decision is likely to be challenged by the Crafar Farms Purchase Group.

"It's a bad day for New Zealand," said Sir Michael Fay, a member of the bidding group. "Three out of every four New Zealanders are against selling these farms into foreign ownership."

Bruce Wills, Federated Farmers President said that the ongoing purchases of farmland from foreign investors is worrying New Zealanders.

"Many fear they will become tenants in their own land."

However, he said there were larger concerns, including the growth on forestry and lifestyle blocks.

“Given there’s 1.6 million hectares of dairy farms, overseas investors over that time bought less than one per cent. Even with a spike in the first quarter of 2012, less than 1.3 per cent of dairy land was consented to go into overseas hands.

“We are also missing the bigger picture by focusing on the former CraFarms farms. Landcare Research shows 873,000 hectares of farmland are now in less productive lifestyle blocks. That’s equivalent to 110 Crafar farms being taken up by our expanding cities.

“This is the big picture we should be looking at in this debate,” Mr Wills concluded.

Had the government not approved the deal, there are concerns about what affect it may have had on NZ-Chinese relations. China is currently New Zealand's second largest exporting nation and New Zealand seems keen to invest there.

Last week, Fonterra (a New Zealand owned co-operative) announced plans to develop two new large-scale dairy farms in the Hebei province. With two additional units, Fonterra has committed investment to five farms in the Hebei Province, in the north east of China, with two currently operational.

Combined, the five farms will have a herd size of around 15,000 milking cows producing 150 million litres a year.

Chief Executive Theo Spierings said the success of Fonterra's farming operations in China, and their future growth would not be possible without the support of local Government.

Charlotte Johnston

This Week's Feature Articles

We have 4 new features this week:

Epigenetics: A new Challenge in the Post-Genomic Era
While controversial, epigenetics does appear to offer potentially significant value to livestock genetic programmes. Oscar Gonzalez-Reico from the Instituto Nacional de Investigación y Tecnología Agraria y Alimentaria, Madrid, Spain looks at the challenges faced in dealing with epigenetics.

Methane Digester Helps Farmer Convert Manure into Money
The anaerobic digester that Steve Reinford installed on his Pennsylvania dairy farm three years ago cost a million dollars, but he can already count the ways it pays for itself. Energy from the digester, which turns cow manure into methane, powers about 100 homes in the Central Pennsylvania valley where Steve raises his 500 dairy cows, writes Rona Kobell for the Chesapeake Bay Journal.

Waste of Processed Product at Retail and Consumption Level
Roughly one-third of the edible parts of food produced for human consumption, gets lost or wasted globally, which is about 1.3 billion ton per year. Food is wasted throughout the food supply chain, from initial agricultural production down to final household consumption, writes Dr Ashleigh Bright from the Farm Animal Initiative.

Diagnosis of Experimental H-Type and L-Type BSE in Cattle
Researchers in the UK have reported on their observation of two clinical syndromes and the diagnostic challenges presented by these two atypical forms of bovine spongiform encephalopathy (BSE). Difficulty rising was a consistent feature of both disease forms and they recommended modification of the usual diagnostic method in order to distinguish between typical and atypical forms of the disease.

Market Reports

» USDA National Dairy Products Sales Report
» USDA Livestock, Dairy and Poultry Outlook - April 2012

Company News

Combating Uterine Disease in Dairy Cattle
EU - Four European academic research groups, together with Pfizer Animal Health, have forged a new research consortium to combat uterine disease - a problem that costs the EU dairy industry about €1.4billion annually.

Make the Most of Calf Vaccinations
US - It’s often said that the most expensive vaccine is one that fails to work. And with current calf prices, it’s crucial that producers protect their calf crop just like any other investment — starting with guarding against summer pneumonia at branding or summer turnout, writes Michael Nichols,DVM, Cattle and Equine Technical Services, Pfizer Animal Health.

Don't Just Treat Parasites at Housing
UK - As cattle are being turned-out across much of the UK, leading animal health company Merial is urging farmers to keep on top of parasite control.

Groundbreaking Ceremony for Premix Plant in Viet Nam
VIET NAM - On 4 April 2012, BIOMIN Viet Nam held the groundbreaking ceremony for a new premix plant at Viet Nam – Singapore Industrial Park 2 (VSIP 2) in Binh Duong province.

Global Dairy Cattle Industry News