Prices continue to drop in the latest Global Dairy Trade auction, with a 4.1 percent decrease across the board.
It is the largest decline this calendar year, following a 1 percent dip from the previous auction, and is the fourth consecutive event where the average price has decreased.
The Country's Jamie Mackay explains further.
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Speaker 1 (00:09):
You're listening to a podcast from News Talk zed B.
Follow this and our wide range of podcasts now on iHeartRadio,
The Rural Report with MSD Animal Health, Home of selve X,
and plus b Ends It's only Salmonella Vaccine.
Speaker 2 (00:24):
Jamie McKay, host of the Countries of the Fello Jamie.
Speaker 3 (00:27):
Hello, Either, I don't think you'd catch nicol or welli's balling,
would you?
Speaker 4 (00:31):
M Nah?
Speaker 2 (00:32):
I don't think so. No, I think, And you've just
struck on something there that we've been discussing in the shows.
Takes a certain woman to cry, I think. But listen,
tell me what's your understanding of why Land Corp. Gets
into funny things like milking deer. Are there rules that
force them to do that or do they just do
it because I think it's a fun idea.
Speaker 3 (00:50):
No, I think they've kind of got a mandate And
I don't know if this is a written mandate or
in legislation to be a bit of a guinea pig
for farming for the nation. And they are doing some
good stuff, they're probably doing some stuff I disagree with.
And I think my good friend Grant McCallum, Laura told
me he's suggesting they should be having a profit at
(01:11):
two hundred million, which is what ten percent of the
a ten percent return on their asset value of I
think nearly two billion. I think Grant might be being
a wee bit tough on them there, simply because there
would be a number of farming benures. In fact, not
many would make a ten percent return on capital invested.
Speaker 2 (01:29):
What is a standard return, let's say on assets? Right,
a return on assets? What would be standard?
Speaker 4 (01:34):
Oh?
Speaker 3 (01:34):
Look, I mean she's five or six percent. I would
say if you could do that in farming, you would
be doing pretty well. I mean you might get that
in a dairy farming operation. The kiwi fruit might be
a bit higher, but sheep and beef traditionally have been
lower than that, at like two or three percent.
Speaker 4 (01:51):
But Palmu or land Corp.
Speaker 3 (01:53):
I get confused, what they call themselves these days are
way below that, and there is a question on whether
they're relevant and whether they're a good use of our
tax payer money.
Speaker 4 (02:04):
But there is an issue with selling them.
Speaker 3 (02:05):
Of course, if we did sell Parmu would effectively flood
the landmarket and probably make farmers across the board properties less.
Speaker 4 (02:15):
But certainly at the moment.
Speaker 3 (02:16):
They would argue they're having a better a year this year,
but I would question their farming profitability and weather during
these tough times. And I just heard you talking about
deficits and what have you. Whether the government needs to
be in the business of farming, because let's face it,
the government isn't as good at doing business as private enterprise.
(02:36):
So ultimately, I don't think we should be in the
business of land corpor palm. Who remember it was lands
and surveys back in the days, and they used to
settle young farmers on ballot blocks.
Speaker 4 (02:48):
Maybe they need to go back to something like that.
Speaker 3 (02:50):
I don't know, but even that heather is effectively a
subsidy for the farmers who were settled.
Speaker 2 (02:55):
You worried about the dairy price.
Speaker 3 (03:01):
I've got to weave a skin in the game myself,
And you know, like commodity prices are always cyclical.
Speaker 4 (03:07):
In ten dollars, where.
Speaker 3 (03:08):
We are at the moment and where we will finish
up for this season when they finally announce it in September,
it'll be ten dollars. It might even be a wee,
but more is a really good price. And I just
think you can't defy gravity forever. I'm involved in a
dairy farming partnership and I know that we fixed a
thirty percent of our milk at nine point fifty and
(03:30):
I was happy with that. So I'm I'm a big fan,
Heather of taking the taking the things you can't control
into your own control eye fixing milk price and fixing
interest rates, because it cuts out a couple of the
things you can't control, because you can't control international commodity
(03:50):
prices and you can't control the weather when you're farming.
So look, I did hear expert comments commentary yesterday from
someone on ENZX saying, no, this is just a bit
of a blippe's this time of the year when there's
a lot of milk coming on in the Northern Hemisphere
in there and Fonterra. I spoke to Anna Pellaree, the
chief operating officer on yesterday's show, and she said to me, no,
(04:14):
we're still good with ten bucks, so they probably know
more about it than me.
Speaker 4 (04:17):
But you know, a bird in the hands worth two
in the bush. Jamie, good to talk to you.
Speaker 2 (04:22):
Look after yourself, Jamie McKay, host of the Country. Look,
I'll just talk you through return on assets, right so
at the moment, the return on asset that you would
get that this is basically what we were just talking about, Jamie.
And know how much money, how much money these guys make,
given that they've got twelve assets of two billion dollars
as Land corp Standard return in the good years, a
(04:42):
return on assets for a dairy farm would be six
to eight percent. Some say they can get it up
to twelve percent, but let's just let's be conservative and
be fair. So you're looking at six to eight percent,
and this is in the good years, and we are
in the good years right now, right, and sheep and
beef farms you should be in the good years doing
about five percent. So dairy and remember land Corp's doing
all this right So, sheep and beef good year you
(05:04):
should be getting about five percent, Dairy you should be
getting about eight percent. Corp is getting about three percent.
So they are quite obviously underperforming and can do better.
How much better, I don't know. Probably don't hold out
hope for the slot.
Speaker 1 (05:20):
I think for more from News Talks at b Listen
live on air or online, and keep our shows with
you wherever you go with our podcasts on iHeartRadio
You're listening to a podcast from News Talk zed B.
Follow this and our wide range of podcasts now on iHeartRadio,
The Rural Report with MSD Animal Health, Home of selve X,
and plus b Ends It's only Salmonella Vaccine.
Speaker 2 (00:24):
Jamie McKay, host of the Countries of the Fello Jamie.
Speaker 3 (00:27):
Hello, Either, I don't think you'd catch nicol or welli's balling,
would you?
Speaker 4 (00:31):
M Nah?
Speaker 2 (00:32):
I don't think so. No, I think, And you've just
struck on something there that we've been discussing in the shows.
Takes a certain woman to cry, I think. But listen,
tell me what's your understanding of why Land Corp. Gets
into funny things like milking deer. Are there rules that
force them to do that or do they just do
it because I think it's a fun idea.
Speaker 3 (00:50):
No, I think they've kind of got a mandate And
I don't know if this is a written mandate or
in legislation to be a bit of a guinea pig
for farming for the nation. And they are doing some
good stuff, they're probably doing some stuff I disagree with.
And I think my good friend Grant McCallum, Laura told
me he's suggesting they should be having a profit at
(01:11):
two hundred million, which is what ten percent of the
a ten percent return on their asset value of I
think nearly two billion. I think Grant might be being
a wee bit tough on them there, simply because there
would be a number of farming benures. In fact, not
many would make a ten percent return on capital invested.
Speaker 2 (01:29):
What is a standard return, let's say on assets? Right,
a return on assets? What would be standard?
Speaker 4 (01:34):
Oh?
Speaker 3 (01:34):
Look, I mean she's five or six percent. I would
say if you could do that in farming, you would
be doing pretty well. I mean you might get that
in a dairy farming operation. The kiwi fruit might be
a bit higher, but sheep and beef traditionally have been
lower than that, at like two or three percent.
Speaker 4 (01:51):
But Palmu or land Corp.
Speaker 3 (01:53):
I get confused, what they call themselves these days are
way below that, and there is a question on whether
they're relevant and whether they're a good use of our
tax payer money.
Speaker 4 (02:04):
But there is an issue with selling them.
Speaker 3 (02:05):
Of course, if we did sell Parmu would effectively flood
the landmarket and probably make farmers across the board properties less.
Speaker 4 (02:15):
But certainly at the moment.
Speaker 3 (02:16):
They would argue they're having a better a year this year,
but I would question their farming profitability and weather during
these tough times. And I just heard you talking about
deficits and what have you. Whether the government needs to
be in the business of farming, because let's face it,
the government isn't as good at doing business as private enterprise.
(02:36):
So ultimately, I don't think we should be in the
business of land corpor palm. Who remember it was lands
and surveys back in the days, and they used to
settle young farmers on ballot blocks.
Speaker 4 (02:48):
Maybe they need to go back to something like that.
Speaker 3 (02:50):
I don't know, but even that heather is effectively a
subsidy for the farmers who were settled.
Speaker 2 (02:55):
You worried about the dairy price.
Speaker 3 (03:01):
I've got to weave a skin in the game myself,
And you know, like commodity prices are always cyclical.
Speaker 4 (03:07):
In ten dollars, where.
Speaker 3 (03:08):
We are at the moment and where we will finish
up for this season when they finally announce it in September,
it'll be ten dollars. It might even be a wee,
but more is a really good price. And I just
think you can't defy gravity forever. I'm involved in a
dairy farming partnership and I know that we fixed a
thirty percent of our milk at nine point fifty and
(03:30):
I was happy with that. So I'm I'm a big fan,
Heather of taking the taking the things you can't control
into your own control eye fixing milk price and fixing
interest rates, because it cuts out a couple of the
things you can't control, because you can't control international commodity
(03:50):
prices and you can't control the weather when you're farming.
So look, I did hear expert comments commentary yesterday from
someone on ENZX saying, no, this is just a bit
of a blippe's this time of the year when there's
a lot of milk coming on in the Northern Hemisphere
in there and Fonterra. I spoke to Anna Pellaree, the
chief operating officer on yesterday's show, and she said to me, no,
(04:14):
we're still good with ten bucks, so they probably know
more about it than me.
Speaker 4 (04:17):
But you know, a bird in the hands worth two
in the bush. Jamie, good to talk to you.
Speaker 2 (04:22):
Look after yourself, Jamie McKay, host of the Country. Look,
I'll just talk you through return on assets, right so
at the moment, the return on asset that you would
get that this is basically what we were just talking about, Jamie.
And know how much money, how much money these guys make,
given that they've got twelve assets of two billion dollars
as Land corp Standard return in the good years, a
(04:42):
return on assets for a dairy farm would be six
to eight percent. Some say they can get it up
to twelve percent, but let's just let's be conservative and
be fair. So you're looking at six to eight percent,
and this is in the good years, and we are
in the good years right now, right, and sheep and
beef farms you should be in the good years doing
about five percent. So dairy and remember land Corp's doing
all this right So, sheep and beef good year you
(05:04):
should be getting about five percent, Dairy you should be
getting about eight percent. Corp is getting about three percent.
So they are quite obviously underperforming and can do better.
How much better, I don't know. Probably don't hold out
hope for the slot.
Speaker 1 (05:20):
I think for more from News Talks at b Listen
live on air or online, and keep our shows with
you wherever you go with our podcasts on iHeartRadio
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