TE WHANGAI NEWSLETTER SPRING 2015

The year is getting away on us fast! Somethings never seem to change, around this time of year we have a prolonged period of settled weather and there is little inclination to head to the office and get in communication mode but the weather always breaks eventually and as we speak it is driving southeast rain, freezing cold and as Murphy would have it the MA ewes have just started lambing! Buggar

2015 will not be remembered favourably by many farmers.  The devastating and prolonged drought in Nth Canterbury and ironically the horrendous flooding in Taranaki / Wanganui / Rangitikei  have caused huge loss, headache and heartache.  Many other parts of the country have also been adversely affected but nothing like these areas. As fellow farmers we feel deeply for you and will help however we can.

On the home front we actually had a couple of ok months through December and Jan but then the wicked dry autumn ruined all that and it was back to feeding out grain and baleage, grazing out, destocking and adjusting down the expectations of production as stock peeled off condition.

Winter has statistically been colder over most of the country but maybe because it has been drier on this coast or maybe because of the 4 layers of wool I have had on for the last 3 months it doesn't seem to have been overly bleak here.

  What are we to expect next, with a reasonably steady El Nino in place, which was even forecast by the Moon Man, we are all wondering if we will get a dry version or a wet one.  Bay personally emailed NIWA to enquire about the correlation between ELNino and drought on the East Coast.  The response from NIWA was to provide the 10 strongest ElNino years since 1960 combined into a single shaded map which appears very dry, however closer inspection of each individual year shows that only 3 of the 10 were very dry years!  1997 had similar although stronger ElNino indices and of course 1998 followed with a drought but then 1989 was a shocking drought but not ElNino and the same with 2008 & 2013 & 2015 so who knows?  As always we need to be prepared, put the lines in the sand for events as they unfold and understand the consequences of whatever our decisions may be.

Meat industry reform: 

Well well what can you say about the proposed change to SFF?

It will certainly give a great deal of strength to what has been seen as a vulnerable and weak player in the industry, which in itself should signal a better outcome for all producers and will surely be the catalyst for all meat processor / exporters to 'leave less on the table'.

 The key to future possible non producer control will lie in the detail of the shareholders agreement, that is where the scrutiny of this deal should be focussed in my view.  Joint ventures can be very successful but they rely on trust and  transparency to ensure good supplier buy in. 

 We are certainly in for an interesting year and fortunately for exporters the NZD is giving us some long awaited relief and appears to buffering us from the supposed lack of demand for our lamb.

 Industry players who are innovative and have a well organised and committed supply base are surely the ones to model the industry on.

 Possibly the single biggest problem we have is that too many producers are more worried about whether the guy next door is getting 10c extra rather than worrying about whether their own operation is as efficient as it can be and that they are doing all they can to strengthen the supply chain by delivering to a commitment on time and to spec.  Surely that is a basic component of any business what ever the product is.

 We do need to be a bit careful what we wish for and be certain that we are pulling our weight as producer suppliers before we point the finger up the value chain. 

Wool the wild child: 

A pretty accurate barometer of the feeding level of your sheep is the micron and weight of your wool clip.

 Another tough year has seen the ram hgts average 30.5 microns and I was pretty happy with the sale price of 758c clean.

  I am glad I was sitting down when I received the ewe hgt wool price which was sold 2 weeks later on the 17th Sept and fetched $896 clean at 30.8 microns! and even the pcs made 622 cln.

 These are levels we have dreamed of and worked so hard to ensure we still have an industry left to drive the demand to achieve them.  Realistically our currency has been a huge help because in US dollar terms our customers have only been paying the same as they did last year although that could be changing at these new levels.

  We must not take our foot off the pedal in driving programmes to educate both consumers and retail sales staff alike about the benefits of wool and there is a lot of work going on behind the scenes developing a strategy to do that.

Just as with meat we need to be careful what we wish for now.  Any openly traded raw material that is in short supply (which wool obviously is) will force certain buyers with deep pockets to pay the required price to achieve a stockpile and then we know exactly what happens next!  If the consumer is not prepared to pay a higher price for the finished products then the mid stage processors, spinners, tufters, weavers and knitters etc will struggle and many will drop out  as we have seen before.

  Surely the experience of lamb in 2012 - 2013 and the recent dairy melt down must be a lesson to learn from

If the processor of what ever product we produce can settle their supply on a price that allows them to concentrate on innovation, efficiency and marketing and if we producers can also settle on that supply and price then surely we can concentrate on being more efficient, using better genetics and strive to meet commitments in full on time and to spec.

I am well aware that delivery to spec for a natural product like wool does have it's challenges but  they are not insurmountable.  One of the most common problems is VM and in particular thistle heads which are dynamite but they are avoidable.  If we want a reliable and sustainable price then we should be prepared to provide a reliable quality supply.  The costs for a carpet tufting business of having thistle heads in their yarn supply is huge and will have been a major factor in the demise of wool for use in carpets. Businesses that can produce  either wool or synthetic carpet have overwhelmingly headed the synthetic way because the yarn price is stable and there are no issues with the quality or consistency of it.  Once they have made the synthetic carpet they are naturally going to promote it and make up whatever porkies they can to sell it.

 I reiterate, we need to be careful what we wish for once prices attain a level that we consider acceptable 

Efficiency- all down to genetics: 

One very clear success story from last years feedback was an East Otago farmer who changed from a well regarded  gene source of  large framed sheep about 10 years ago, in an effort to raise his flock efficiency.

Based on the reduced ewe weight and raised scanning % he has lifted his scanning efficiency index by almost 20%.

 That is exactly what I would see as a measure of improved profitability...getting more for less.  Further to that his lambs left the farm weighing 32kg at weaning and were killed at 19.2kg in 6 weeks, and all that from ewes which have got smaller!

New chapter beginning:  

Last year I signalled the end of 30 years of the rams being sold from Bay and Shona's at Tukipo. 

The rams will always be bred and raised on the hills at Te Whangai for obvious reasons but the convenience of selling them from a central location fits well with our breeding programme and inevitably Wynne and I will follow them down to the new location on Lindsay Rd as Harry capably assumes the challenging role of managing the breeding operation.

Developing the new venue from a two wired dairy runoff with no sheep facilities back into a sheep farm has been a full on project and as I write we still have no yards or shed, largely due to the bureaucratic nit wits in council who find everything possible to create a problem and never look to offer a solution.

  By mid November we will be functional at 638 Lindsay Rd which can be accessed either immediately left on the nth side of the Tuki Tuki bridge at Waipukurau or off the Waipawa - OngaOnga Rd about 1km west of the old Lime quarry.

Enquiry turns to sales : 

 Early indications of demand for rams last year did eventuate and a record number moved to new homes. 

With several breeders ceasing to produce rams there is even more pressure on numbers so I am holding off accepting any further new clients until I know all existing requirements are met.  It would be most helpful if you could consider your likely needs for the coming year and reply as soon as possible. 

Always enjoy your stories and hope the seasons ends well, look forward to catching up soon.

Best regards,  Hamish Harry and Bay