No easy ride for struggling sheep farmers
Stubbornly high farm input costs, a slow Chinese recovery and a flood of Australian lamb onto the global market are the main factors contributing to the tough times being faced by NZ's sheep farmers.
Agriculture product sales growth in US, China and South America enabled Skellerup to increase its agri division earnings despite the slightly softer New Zealand market, says chair Sir Selwyn Cushing.
Skellerup Holdings made $21.9m after-tax profit in the last financial year; NZ, Australia and North America generated about 25% of the revenue, followed by Europe then Asia. The agri division which makes dairy rubberware, animal hygiene products and technical footwear recorded pre-tax earnings of $22.1m, up by 2% on flat revenue of $80.5m.
"Our focus on international markets enabled the agri division to record an increase in earnings and overcome the impact of a reduced contribution from a NZ market buffeted by lower dairy pay-outs," says Cushing in the annual report.
"Significant growth was achieved in the US, China and South America. Although results in NZ were slightly softer than in the prior year, sales of dairy rubberware during the winter peak, when much of the onfarm and shed maintenance work is done, were relatively solid."
Cushing says the demand for protein remains a key driver of the global dairy industry and that demand should continue for the medium term.
"While world prices for dairy commodities remain volatile and are presently below the levels of recent years, long-term prospects for the industry are good," he
says. "US milk production continues to increase, as does the demand for dairy products in developing countries."
He says deregulation in the dairy market in Europe and the inevitable removal of the sanctions on Russia will provide new opportunities for growth. Many countries in South America are continuing to develop their dairy capability also.
Cushing says a highlight of the year is the excellent progress being made at its new Wigram plant; $15m has been spent on the project this year and $25m more is earmarked to complete the construction and fitout.
"As shareholders will appreciate, our Woolston factory has been the cornerstone of our agri division for some 75 years. The new facility sets us up to stay at the forefront of dairying best practice for the next 75 years and beyond."
Agri division general manager Guy Keogh says with the new dairy rubberware development and manufacturing facility being built at Wigram they had the opportunity to lay out the ideal design. "Our business has changed significantly over that time and, while we've continued to manipulate and adapt the current site for our needs, a purpose-built facility is going to provide opportunities that will benefit customers and staff."
Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.
Shipping disruption caused by Houthi rebels in the Red Sea has so far not impacted fertiliser prices or supply on farm.
The opportunity to spend more time on farm while providing a dedicated service for shareholders attracted new environmental manager Ben Howden to work for Waimakariri Irrigation Limited (WIL).
Federated Farmers claims that the Otago Regional Council is charging ahead unnecessarily with piling more regulation on rural communities.
Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.
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