Milk prices: October PPI sees significant drop
The mix of commodities exported by Ornua now returns a milk price equivalent to 29.98c/l excluding VAT, assuming 6.5c/l processing costs.

The Ornua purchase price index (PPI) for October has dropped by 3.5% to 106.5, down from 110.4 in September.

The mix of commodities exported by Ornua now returns a milk price equivalent to 29.98c/l excluding VAT, assuming 6.5c/l processing costs.

The PPI value is now significantly below last year’s level having held steady last month. It is now on a similar level as it was in 2014.

A spokesperson for Ornua said the October index “reflects weaker returns, specifically for fat”.

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Milk prices: PPI stalls in September

Listen: New Zealand deputy prime minister criticises Fonterra performance
Winston Peters described Fonterra’s performance as not nearly good enough and has hinted at major changes on the way for the dairy co-op.

New Zealand deputy prime minister and minister of foreign affairs Winston Peters has said Fonterra’s recent financial performance is not nearly good enough.

Speaking to the Irish Farmers Journal in Dublin this week, Peters said the New Zealand government was reviewing the Dairy Industry Restructuring Act (DIRA), which led to the creation of Fonterra. The review could result in major changes at Fonterra, the world’s largest dairy exporter.

“Fonterra’s performance has simply not been nearly as good as it should have been. They can make every excuse they like but there has been lost opportunity of somewhere between $1.5bn and $1.6bn by Fonterra,” said Peters.

Listen to "Winston Peters, Deputy Prime Minister of New Zealand" on Spreaker.

He added that Fonterra has failed to move more milk into added-value products and is still reliant on bulk commodities. Peters also warned of New Zealand’s dairy industry being reliant on one company and one market.

“The dairy industry is dependent on one product – milk; one company – Fonterra; and one market – China. There are inherent dangers in all three propositions,” he said.

Kerry co-op board fails to find support
Kerry shareholder backing for the co-op board's strategy proposals is lukewarm .

Only one in five Kerry shareholders want Kerry Co-op to try to buy Kerry Group’s agribusiness, a co-op shareholder consultation has revealed.

Similarly, there is little appetite among shareholders to find strategic partnerships with other co-ops or milk processors.

Lukewarm response

It is a lukewarm response, with a higher proportion of respondents calling for the co-op to be dissolved with a full spin-out of it’s €2.2bn shareholding in Kerry Group.

The co-op surveyed the 6,700 A (milk producing) and B (recent milk producer) shareholders in the autumn by way of a postal consultation.

Shareholders were not asked to approve the exercising of the option to purchase Kerry Group’s agribusiness, but merely whether they approved of the co-op exploring that option. Only 308 of the 1,507 respondents supported this proposal – only one in five, or 20%. Worse still, it is only 5% of the total number of A and B shareholders, as less than one in four returned the consultation document. The option must be triggered by the end of January

The second proposal, that the co-op should pursue a merger, joint venture, or other strategic alliance with another milk processor or co-op, was slightly better received. Still, only 336 (23%) of respondents supported this.

It is the clearest indication yet of the level of support the board has for its view to change the direction of the co-op, which currently solely exists to represent milk suppliers with Kerry Group in respect of milk price and other issues. The co-op’s asset base is its 13.7% shareholding in Kerry Group, worth over €2.2bn.

Trading co-op

Co-op chair Mundy Hayes and his board believe that in order to remain relevant to members, the co-op must once again become a trading co-op with milk processing facilities.

In direct opposition, the Shareholders Alliance, which emerged during the summer, wants the co-op dissolved, with a small proportion of money assigned to the setting up of a new co-op for milk suppliers only. Currently, only one in four shareholders are active milk producers, and an estimated 500 Kerry milk suppliers have no shareholding.

There are 13,269 shareholders, over half of whom are C (dormant or dry shareholders). They would receive €165,000 on average if a full spin-out occurred. Until now, both the board and the Shareholders Alliance say they speak for the silent majority of shareholders who don’t attend meetings or engage in co-op politics. The Shareholders Alliance will surely be happier with this outcome.

Strategy

Kerry Co-op says the consultation process forms only a part of their strategy formulation, but it certainly is far from a ringing endorsement of their stated aims. They also point out that it was not a vote or ballot, but simply a sounding board exercise. The sound being heard is predominantly a mixture of indifference and outright opposition to their plans.

Irish firms exhibit at Eurotier 2018
The scale of feeding equipment at the Eurotier event in Germany was phenomenal. Jack Kennedy reports.

Eurotier 2018 took place this week in Hannover in northern Germany. Considered by many to be the best livestock show in Europe, it takes place every two years.

The show is a mix of breeding and feeding technology for all livestock with machinery and also lots of equipment for milking and cooling milk on display.

The level of automation in the pig and poultry enterprises is exceptional and some of the indoor production systems for dairy and beef are quickly heading in that direction.

Companies like Lely, Trioliet, and Schuitemaker are almost fully automating the feeding of livestock from the silage pit to the cow. It was interesting to note that most companies had new versions of many of these feeding tools on display and many were now electrically powered.

Milking companies like GEA, DeLaval, Lely and Dairymaster are also very close to automating the milking process.

GEA had a version of its robotic rotary on display. At €45,000 per place and a minimum size of 28 places on the rotary, it’s a cool €1.26m at entry level. The largest robotic rotary GEA installed like this is an 80-point rotary in Canada.

Lely now has a waiting list of over seven months for the monobox robotic parlours in Ireland. Over the last five years, Lely has modified the robots so that they are more efficient with lower running costs.

The scale of the feeding equipment at Eurotier was phenomenal and most of the feeding machinery and slurry equipment on display was targetted at large-scale operators or contractors.

One American farmer with 6,000 cows on the Trioliet stand was looking to automate his whole feeding process as there is little variation in his daily feeding routine, and labour in America is getting harder to get.

There was a big move towards digital farming and using information from machines and equipment to try and save time and reduce documentation. Many of these devices were aimed at smart tracking of feedstuffs and detailed measurement and analysis that many of the pig and poultry systems need on the continent.

An initiative by Nestlé and Lely was launched at Eurotier to introduce the Lean approach for dairy farmers. Lely CEO Alexander van der Lely told the Irish Farmers Journal that he feels applying a Lean approach to dairy farming can help farmers meet increasing consumer demands to produce safer and better quality food.

He said: “Lean is all about reducing waste and higher standards so it can only be beneficial.”

Irish company Dairymaster won a Silver award for innovation for a tool called Mission Control that optimises the efficiency of a rotary milking parlour. There were over 30 people working on the Dairymaster stand with the majority from Ireland.

Another Irish exhibitor was Ian Lahiffe from Gort, Co Galway, who was working with Allflex. Ian is based in Beijing for Allflex and his key objective is to get more Alllfex products into a Chinese market that has huge scale at farm level, but, again like many production systems suffers from high costs that make profit margins for the farmer very low. Enterprise Ireland had a stand with Herdinsights and Cheetah on the stand attempting to get a European foothold for products.

On the livestock side, the large genetics companies such as World Wide Sires, Eurogenetics and Masterkind, had cattle on display, with clients coming to meet staff and hear what sires are performing well on farm and on paper.

Eurotier 2018, a huge show with something for everyone in a purpose-built venue that is linked to all transport options, is worthwhile visiting if only to get a feel for how global agriculture is evolving.