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 (00:01):
The Rural Report with MSD Animal Health home of selve
XM plus b ends it's only salmonella vaccine.
Speaker 2 (00:07):
Jamie Mackay, Host of the Countries with a solo Jamie.
Speaker 1 (00:11):
Hello, Heather. I don't think you'd catch nicol or Willis balling,
would you?
Speaker 3 (00:15):
Nah?
Speaker 2 (00:16):
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 1 (00:34):
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
(00:54):
two hundred million, which is what ten percent of the
ten percent return on their asset value 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 ventures. In fact, not many would
make a ten percent return on capital invested.
Speaker 2 (01:13):
What is a standard return, let's say on assets? Right,
a return on assets? What would be standard?
Speaker 3 (01:17):
Oh?
Speaker 1 (01:18):
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 3 (01:35):
But Palmu or Land Corp.
Speaker 1 (01:37):
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 3 (01:47):
But there is an issue with selling them.
Speaker 1 (01:49):
Of course, if we did sell Parmu, it would effectively
flood the landmarket and probably make farmers across the board
properties less.
Speaker 3 (01:58):
But certainly at the moment.
Speaker 1 (02:00):
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.
(02:20):
So ultimately, I don't think we should be in the
business of land corpor palmu. Remember it was lands and
surveys back in the days, and they used to settle
young farmers on ballot blocks. Maybe they need to go
back to something like that. I don't know, but even
that heather is effectively a subsidy for the farmers who
were settled.
Speaker 2 (02:39):
You worried about the dairy price.
Speaker 1 (02:44):
I've gott to weave a skin in the game myself,
and you know, like commodity prices are always cyclical, and
ten dollars where 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
have be we but more is a really good price.
And I just think you can't defy gravity forever. I'm
(03:05):
involved in a dairy farming partnership and I know that
we fixed AOD of thirty percent of our milk at
nine point fifty and 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
(03:26):
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 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 blip. It's this
time of the year when there's a lot of milk
(03:48):
coming on in the Northern Hemisphere in there and Fonterra.
I spoke to Anna Pellore, the chief operating officer on
yesterday's show, and she said to me, no, we're still
good with ten bucks. So they probably know more about
it than me. But you know, a bird in the
hands worth two in the bush.
Speaker 2 (04:05):
Jamie, good to talk to you. 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 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. The
standard return in the good years a return on assets
(04:27):
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 of this
right So, sheep and beef good year you should be
(04:47):
getting about five percent. Dairy you should be getting about
eight percent. Land 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 3 (05:03):
I think for more from hither Duplessy Allen Drive. Listen
live to news talks.
Speaker 1 (05:08):
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio
The Rural Report with MSD Animal Health home of selve
XM plus b ends it's only salmonella vaccine.
Speaker 2 (00:07):
Jamie Mackay, Host of the Countries with a solo Jamie.
Speaker 1 (00:11):
Hello, Heather. I don't think you'd catch nicol or Willis balling,
would you?
Speaker 3 (00:15):
Nah?
Speaker 2 (00:16):
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 1 (00:34):
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
(00:54):
two hundred million, which is what ten percent of the
ten percent return on their asset value 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 ventures. In fact, not many would
make a ten percent return on capital invested.
Speaker 2 (01:13):
What is a standard return, let's say on assets? Right,
a return on assets? What would be standard?
Speaker 3 (01:17):
Oh?
Speaker 1 (01:18):
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 3 (01:35):
But Palmu or Land Corp.
Speaker 1 (01:37):
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 3 (01:47):
But there is an issue with selling them.
Speaker 1 (01:49):
Of course, if we did sell Parmu, it would effectively
flood the landmarket and probably make farmers across the board
properties less.
Speaker 3 (01:58):
But certainly at the moment.
Speaker 1 (02:00):
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.
(02:20):
So ultimately, I don't think we should be in the
business of land corpor palmu. Remember it was lands and
surveys back in the days, and they used to settle
young farmers on ballot blocks. Maybe they need to go
back to something like that. I don't know, but even
that heather is effectively a subsidy for the farmers who
were settled.
Speaker 2 (02:39):
You worried about the dairy price.
Speaker 1 (02:44):
I've gott to weave a skin in the game myself,
and you know, like commodity prices are always cyclical, and
ten dollars where 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
have be we but more is a really good price.
And I just think you can't defy gravity forever. I'm
(03:05):
involved in a dairy farming partnership and I know that
we fixed AOD of thirty percent of our milk at
nine point fifty and 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
(03:26):
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 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 blip. It's this
time of the year when there's a lot of milk
(03:48):
coming on in the Northern Hemisphere in there and Fonterra.
I spoke to Anna Pellore, the chief operating officer on
yesterday's show, and she said to me, no, we're still
good with ten bucks. So they probably know more about
it than me. But you know, a bird in the
hands worth two in the bush.
Speaker 2 (04:05):
Jamie, good to talk to you. 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 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. The
standard return in the good years a return on assets
(04:27):
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 of this
right So, sheep and beef good year you should be
(04:47):
getting about five percent. Dairy you should be getting about
eight percent. Land 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 3 (05:03):
I think for more from hither Duplessy Allen Drive. Listen
live to news talks.
Speaker 1 (05:08):
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio
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