September 23, 2025 • 8 mins
Tom Shallard of Craigs Investment Partners looks at recent financial happenings in the rural landscape.
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Episode Transcript
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Speaker 1 (00:01):
I've well and the must have financial segment brought to
you by Craig's Investment Partner's Gore. This information is general
in nature and is not financial advice. Craig's Investment Partners
Limited Financial Advice provided disclosure statement can be found at
craigsip dot com slash tcs.
Speaker 2 (00:18):
Please our lovers joining us in studio from Craig's Investment
Partners talking all things investing, investment and all to do
actually with the rural industry. From a money viewpoint is
Tom Shallard, Good afternoon and welcome once again.
Speaker 3 (00:33):
Good afternoon, Andy, and great to be back in the studio.
And finally it same spring has arrived.
Speaker 2 (00:39):
But has it? Do we still need to keep it
like bumps clenched and fingers crossed thinking what's up next
door to you? Are you pretty confident?
Speaker 3 (00:46):
Probably best to keep their fingers crossed for another couple
of weeks, Sandy, not out of the words yet.
Speaker 2 (00:50):
This is South for mate. The weather's like the rugby team.
It's got its ups and it's got its downs. Look,
we look at the situation at hand at the moment GDP.
The results came out, they weren't flash but in general
though from a market commentary perspective, what would you say
about things at the moment?
Speaker 3 (01:04):
Yeah, Look, and globally it's been exceptional few months across
the markets, and that's been supported by strong corporate earnings,
particularly in the United States and the promise of further
economic stimulus. So to put that into context, the S
and P five hundred, the NASTAK one hundred, and A
six two hundred are all hovering atra around record highs,
(01:28):
and golds continue to march higher. Gold tends to be
an effective hedge against currency deplacement that occurs as a
result of massive government spending and cornta of easing. So
we've seen that push higher over the last couple of
weeks with a first rate cut by the Federal Reserve
in the United States and then just on the currencies
(01:52):
and particularly re relevant you know, for US as an
export nation, the key we is trading it at five
year lows against seven all major currencies, including the British
pound and the Euro, so potentially a bit of upside
there for tourism and their export receipts.
Speaker 2 (02:09):
Eighty eight cents against the Australian that's come back quite
strongly recently.
Speaker 3 (02:13):
YEP yeah, it does look to be quite range bound.
But yeah, it was earlier in the year, was around
ninety two ninety three, So that's probably more a factor
of our rate cutting path versus the Australian one.
Speaker 2 (02:28):
Do you ever see New Zealand being on par with
the Australian dollar?
Speaker 3 (02:31):
We can create never never say never, Andy, but there's
just probably a bit more strings to the Australian economy
then we've got here in New Zealand and now, I
mean the local market, it's been pretty flat. That GDP
print was very underwhelming, although not surprising. I think last
(02:53):
time was on the show, I sort of made a
call for some more aggressive rate cuts and I think
they will materialize.
Speaker 2 (03:02):
How would you compare to the Kiwi economy to the
Australian economy overall? Though? Are we that far behind?
Speaker 3 (03:09):
I guess you've just got a much more diverse economy
in Australia with that resources sector.
Speaker 2 (03:16):
Yeah, especially the mining situation and that that just drives
things right.
Speaker 3 (03:22):
Yeah, No, like in a resource boom, you know, Australia
can print him seriously impressive numbers which we just don't
don't have that here. I mean, we've got a very
strong dairy economy, but and agricultural economy in general. But
we probably don't have that as much as Shane Jones
would like it. That drill baby, that resource.
Speaker 2 (03:45):
The lamb forecast is how everybody's got their crystal balls
out thinking what are we going to do? It's like
over ten bucks of the moment, hallelujah. May that last forever,
but it's not going to where do you see it's
ending up.
Speaker 3 (03:57):
That's all looking pretty positive for lamb at the moment,
which all farmers will be pleased to hear. I think,
and having having looked at looked at some reports from
the major processes, if I was to put a price
on a on a late November or early December new
season lamb, I'd have it starting with a nine, and
(04:17):
I'd like to see it sort of between nine dollars
and nine to twenty five. But that'll that'll It'll depend
on how how what plays out in the currency markets
from from now until then, and.
Speaker 2 (04:28):
Supply and demand will come into mix as well into
the max. Sorry, because when these figures come out in
late November regarding the lamb crop, it's going to be back.
It's always back, considering the amount of carb and farming
that's going in. So there has to be a correction
of the lamb price.
Speaker 3 (04:41):
Right I'd like to think, so andy, and it has
to be sure, yeah, yeah, No, basic supply and demand
would would say, you know, a lot less lamb in
the market would would command higher prices. But we export
ninety five percent of our lamb and buyers are obviously
global buyers. So it depends a lot on what what's
going on in global markets, currencies and even just the
(05:05):
supply into UK and Europe.
Speaker 2 (05:07):
But the fact is, starting with the nine as you're
alluding to, that's got to be a good thing though, right.
Speaker 3 (05:11):
Yep, yeah, no, very very positive and well that's my
view in any case, So yeah, I'll stand by that.
Speaker 2 (05:18):
A frontierra though this capital return with them selling off
their commercial they're two dollars return, ow's the farm and nothing.
Speaker 3 (05:28):
Yeah, it's pretty exciting for Fontier farmer sheerholders. So yeah,
the sale Mainland Group to French giant Lactalis for what
a workout to be about four point two to two billion.
Speaker 2 (05:39):
Still to be ratified. We'll just put them.
Speaker 3 (05:41):
Yeah, yeah, and I should add that the Craig's investment
banking team in Auckland took the lead on that deal
and worked tirelessly over about eighteen months to put that
deal together for Fontierra and their Farmer shoeholders, and there
would have been a few late nights and those officers
I suspect andy, but look at all in all, it
was an incredibly complex deal in terms of separating out
(06:04):
these brands from the wider business and it is one
of the largest, if not the largest transaction in New
Zealand corporate history, which is pretty exciting. So the sale
reflects Fonterra consolidating its operations, so they're now focusing on
(06:24):
high performing ingredients and food service division. Farmer shareholders looking
to get back about two dollars a year as a
capital return and at the moment that's indicatively lined up
for mail due next year. So we've been having a
lot of conversations with our dairy clients. Many are in
the fortunate position of having a pretty robust balance sheet
(06:46):
and for them it presents a once in a generation
opportunity to diversify and a vest of farm So some
are even framing the opportunity to use the capital return
as part of succession they made, for instance, invest the
capital return off farm, combined with perhaps an equity release
from the dairy business, which might be done by taking
(07:08):
on a bit of additional leverage, which will set up
so the retiring generation with a great nest egg off farm,
ultimately funding their retirement. And I guess it helps to
keep the next generation honest as well. And I think
the prudent thing to do is probably look at your
look at your wider business and and and talk to
(07:28):
your professionals, your accountants and you know. Some people the
prudent thing today will be to pay down debt. But
for but for others maybe to invest invest off of farm.
Speaker 2 (07:40):
Well, investing on farm makes a lot of sense as well,
just diversifying of the funds.
Speaker 3 (07:44):
Yeah, yeah, no, investing off farm is a prudent thing
to do. Diversify your exposure to different markets. I mean,
particularly in the dairy business. You spend your life exposed
to mainly one one agricultural commodity being the fat price,
and your your value of your balance sheet rises and
(08:06):
falls essentially with the fortunes of the dairy business. So yeah,
good opportunity to get some exposure to the other industries.
Speaker 2 (08:13):
For sure, it is time now the team at Craig's
Investment Partners. How do we get in touch?
Speaker 3 (08:17):
One twenty main Street, Gore, Andy or craigsip dot Com.
Speaker 2 (08:21):
Good on your time, Always good to catch up. Thanks
Andy burnon Ring on Time show out of Craig's Investment
Partners based right here and Gore, you're listening to the
buster up next to net McIntire from Rural Women, New Zealand,
The Ring of Fire, The Ring
I've well and the must have financial segment brought to
you by Craig's Investment Partner's Gore. This information is general
in nature and is not financial advice. Craig's Investment Partners
Limited Financial Advice provided disclosure statement can be found at
craigsip dot com slash tcs.
Speaker 2 (00:18):
Please our lovers joining us in studio from Craig's Investment
Partners talking all things investing, investment and all to do
actually with the rural industry. From a money viewpoint is
Tom Shallard, Good afternoon and welcome once again.
Speaker 3 (00:33):
Good afternoon, Andy, and great to be back in the studio.
And finally it same spring has arrived.
Speaker 2 (00:39):
But has it? Do we still need to keep it
like bumps clenched and fingers crossed thinking what's up next
door to you? Are you pretty confident?
Speaker 3 (00:46):
Probably best to keep their fingers crossed for another couple
of weeks, Sandy, not out of the words yet.
Speaker 2 (00:50):
This is South for mate. The weather's like the rugby team.
It's got its ups and it's got its downs. Look,
we look at the situation at hand at the moment GDP.
The results came out, they weren't flash but in general
though from a market commentary perspective, what would you say
about things at the moment?
Speaker 3 (01:04):
Yeah, Look, and globally it's been exceptional few months across
the markets, and that's been supported by strong corporate earnings,
particularly in the United States and the promise of further
economic stimulus. So to put that into context, the S
and P five hundred, the NASTAK one hundred, and A
six two hundred are all hovering atra around record highs,
(01:28):
and golds continue to march higher. Gold tends to be
an effective hedge against currency deplacement that occurs as a
result of massive government spending and cornta of easing. So
we've seen that push higher over the last couple of
weeks with a first rate cut by the Federal Reserve
in the United States and then just on the currencies
(01:52):
and particularly re relevant you know, for US as an
export nation, the key we is trading it at five
year lows against seven all major currencies, including the British
pound and the Euro, so potentially a bit of upside
there for tourism and their export receipts.
Speaker 2 (02:09):
Eighty eight cents against the Australian that's come back quite
strongly recently.
Speaker 3 (02:13):
YEP yeah, it does look to be quite range bound.
But yeah, it was earlier in the year, was around
ninety two ninety three, So that's probably more a factor
of our rate cutting path versus the Australian one.
Speaker 2 (02:28):
Do you ever see New Zealand being on par with
the Australian dollar?
Speaker 3 (02:31):
We can create never never say never, Andy, but there's
just probably a bit more strings to the Australian economy
then we've got here in New Zealand and now, I
mean the local market, it's been pretty flat. That GDP
print was very underwhelming, although not surprising. I think last
(02:53):
time was on the show, I sort of made a
call for some more aggressive rate cuts and I think
they will materialize.
Speaker 2 (03:02):
How would you compare to the Kiwi economy to the
Australian economy overall? Though? Are we that far behind?
Speaker 3 (03:09):
I guess you've just got a much more diverse economy
in Australia with that resources sector.
Speaker 2 (03:16):
Yeah, especially the mining situation and that that just drives
things right.
Speaker 3 (03:22):
Yeah, No, like in a resource boom, you know, Australia
can print him seriously impressive numbers which we just don't
don't have that here. I mean, we've got a very
strong dairy economy, but and agricultural economy in general. But
we probably don't have that as much as Shane Jones
would like it. That drill baby, that resource.
Speaker 2 (03:45):
The lamb forecast is how everybody's got their crystal balls
out thinking what are we going to do? It's like
over ten bucks of the moment, hallelujah. May that last forever,
but it's not going to where do you see it's
ending up.
Speaker 3 (03:57):
That's all looking pretty positive for lamb at the moment,
which all farmers will be pleased to hear. I think,
and having having looked at looked at some reports from
the major processes, if I was to put a price
on a on a late November or early December new
season lamb, I'd have it starting with a nine, and
(04:17):
I'd like to see it sort of between nine dollars
and nine to twenty five. But that'll that'll It'll depend
on how how what plays out in the currency markets
from from now until then, and.
Speaker 2 (04:28):
Supply and demand will come into mix as well into
the max. Sorry, because when these figures come out in
late November regarding the lamb crop, it's going to be back.
It's always back, considering the amount of carb and farming
that's going in. So there has to be a correction
of the lamb price.
Speaker 3 (04:41):
Right I'd like to think, so andy, and it has
to be sure, yeah, yeah, No, basic supply and demand
would would say, you know, a lot less lamb in
the market would would command higher prices. But we export
ninety five percent of our lamb and buyers are obviously
global buyers. So it depends a lot on what what's
going on in global markets, currencies and even just the
(05:05):
supply into UK and Europe.
Speaker 2 (05:07):
But the fact is, starting with the nine as you're
alluding to, that's got to be a good thing though, right.
Speaker 3 (05:11):
Yep, yeah, no, very very positive and well that's my
view in any case, So yeah, I'll stand by that.
Speaker 2 (05:18):
A frontierra though this capital return with them selling off
their commercial they're two dollars return, ow's the farm and nothing.
Speaker 3 (05:28):
Yeah, it's pretty exciting for Fontier farmer sheerholders. So yeah,
the sale Mainland Group to French giant Lactalis for what
a workout to be about four point two to two billion.
Speaker 2 (05:39):
Still to be ratified. We'll just put them.
Speaker 3 (05:41):
Yeah, yeah, and I should add that the Craig's investment
banking team in Auckland took the lead on that deal
and worked tirelessly over about eighteen months to put that
deal together for Fontierra and their Farmer shoeholders, and there
would have been a few late nights and those officers
I suspect andy, but look at all in all, it
was an incredibly complex deal in terms of separating out
(06:04):
these brands from the wider business and it is one
of the largest, if not the largest transaction in New
Zealand corporate history, which is pretty exciting. So the sale
reflects Fonterra consolidating its operations, so they're now focusing on
(06:24):
high performing ingredients and food service division. Farmer shareholders looking
to get back about two dollars a year as a
capital return and at the moment that's indicatively lined up
for mail due next year. So we've been having a
lot of conversations with our dairy clients. Many are in
the fortunate position of having a pretty robust balance sheet
(06:46):
and for them it presents a once in a generation
opportunity to diversify and a vest of farm So some
are even framing the opportunity to use the capital return
as part of succession they made, for instance, invest the
capital return off farm, combined with perhaps an equity release
from the dairy business, which might be done by taking
(07:08):
on a bit of additional leverage, which will set up
so the retiring generation with a great nest egg off farm,
ultimately funding their retirement. And I guess it helps to
keep the next generation honest as well. And I think
the prudent thing to do is probably look at your
look at your wider business and and and talk to
(07:28):
your professionals, your accountants and you know. Some people the
prudent thing today will be to pay down debt. But
for but for others maybe to invest invest off of farm.
Speaker 2 (07:40):
Well, investing on farm makes a lot of sense as well,
just diversifying of the funds.
Speaker 3 (07:44):
Yeah, yeah, no, investing off farm is a prudent thing
to do. Diversify your exposure to different markets. I mean,
particularly in the dairy business. You spend your life exposed
to mainly one one agricultural commodity being the fat price,
and your your value of your balance sheet rises and
(08:06):
falls essentially with the fortunes of the dairy business. So yeah,
good opportunity to get some exposure to the other industries.
Speaker 2 (08:13):
For sure, it is time now the team at Craig's
Investment Partners. How do we get in touch?
Speaker 3 (08:17):
One twenty main Street, Gore, Andy or craigsip dot Com.
Speaker 2 (08:21):
Good on your time, Always good to catch up. Thanks
Andy burnon Ring on Time show out of Craig's Investment
Partners based right here and Gore, you're listening to the
buster up next to net McIntire from Rural Women, New Zealand,
The Ring of Fire, The Ring
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