Ouch!
OPINION: Your canine crusader notes that the Reserve Bank forecasts that more than 80% of beef and sheep farmers would be unprofitable if any future emissions pricing on carbon dioxide equivalent hit $150 per tonne.
Dairy remains a key risk to New Zealand’s financial stability says the Reserve Bank.
The bank is reviewing the capital commercial banks must hold as sufficient provision for the dairy industry’s debt.
And it is concerned about housing market vulnerability and bank funding pressures.
Auction prices for whole milk powder have increased 69% since July and Fonterra has raised the farmgate forecast to $6/kgMS, which is likely to return the average dairy farm to profitability, says Reserve Bank governor Graeme Wheeler in his six monthly financial stability report.
“Nevertheless, parts of the dairy sector remain under significant pressure,” he adds.
“In aggregate, dairy farms have reduced costs, but there is significant variation in cost structures across farms. Even with the improvement in dairy payouts, some farms may struggle to achieve profitability, especially given that 20% of farms account for about 50% of overall dairy debt.”
Debt levels have been stretched further as dairy farms have borrowed working capital to absorb operating losses over the past two seasons. High debt levels leave the sector vulnerable to any weakness in dairy prices.
With recent price improvements, credit losses are likely to be lower than suggested by the more severe scenarios in stress tests of banks’ dairy exposures last year, Wheeler says. Nevertheless, problem loans are likely to increase further, as losses take time to materialise.
Therefore, he says, banks should ensure provisions and other buffers are appropriate for expected losses.
Two major red meat sector projects are getting up to a combined $1.7 million in funding from the New Zealand Meat Board (NZMB).
Angus Barr and Tara Dwyer of The Wandle, Lone Star Farms in Strath Taieri have been named the Regional Supreme Winners at the Otago Ballance Farm Environment Awards in Dunedin.
OPINION: The distress that the politicians and bureaucrats are causing to the people of Wairoa and the wider Tairāwhiti is unforgivable.
Dairy
Rural banker Rabobank is partnering with Food Rescue Kitchen on a new TV series which airs this weekend that aims to shine a light on the real and growing issues of food waste, food poverty and social isolation in New Zealand.
Telco infrastructure provider Chorus says that it believes all Kiwis – particularly those in the rural areas – need access to high-speed, reliable broadband.