Archive for the ‘Dairy’ Category

Organic crossover

Sunday, November 15th, 2009

sircolLynne and I have been in the ‘tron for the weekend at the organics sector conference. The conference theme “Innovate: Go Organic”, aligned well with our motives; we were looking for clues that might help us down on the farm.

There was an impressive line-up of speakers: lots of senior bureaucrats and academics from Europe, and Sir Colin (Pine Tree) Meads (left) as after-dinner speaker. Col said his son had converted to organics a while back and while initially sceptical he’d been very impressed with the results.

Its true that locks are not usually selected for their brains, but neither are NZ sheep farmers noted for their gullibility or willingness to break ranks. So it is surely significant that Colin Meads fronted up to speak at an organic sector conference.

Other bits from the event:

  • The organic market in the USA has been experiencing double digit growth (18% in 2008) but it looks like 2009 will break this trend and come in at around 7 – 9%. Still damn good in a market where “flat is the new growth“.
  • Compared with conventional methods, organic agriculture sequesters much more carbon in the soil, but the science for measuring it is still deficient
  • On average, Swiss farmers get 43,000 Euros/year from the state to provide public goods such as a nice landscape, soil conservation, animal welfare etc
  • NZ’s organics industry organisation OANZ was lucky to score 3 years of government funding, which has now been cut.

Posted in Dairy, Innovation, Productivity | No Comments »

Chickens and Dairy

Friday, September 25th, 2009

An economist, possibly a moron, blunders into farming…

Entry into adjacent markets is a major source of innovation.  So is there a case for dairy farmers also running chickens? Chicken manure is nitrogen rich and could substitute for urea, which is derived from fossil fuel. Instead of spreading urea, a flock of chooks could move in after the cows, spread out the cow shit, and add their own nitrogen rich contribution. There’d be a few logistics to sort out, but is it possible to get enough nitrogen this way?

Answer: perhaps, but you’d need a hell of a lot of chooks.

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Fonterra’s Capital Structure

Monday, September 21st, 2009

Fonterra’s broadcast to farmers on Friday was pretty impressive I thought. Henry Chairman, Andrew CEO and Blue Farmer were interviewed by Dan Journo (“some of you may remember me from Country Calendar”). The broadcast was interesting from several perspectives: economics, sociology, and dairy farming.

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Fonterra’s Redemption Song

Saturday, September 12th, 2009

I’m looking forward to the next capital structure plan from Fonterra, due to be launched on Friday 18th September. The co-op has probably redeemed itself in the eyes of many farmer/shareholders by ruling out a sharemarket float which derailed the first attempt at reform. But I doubt they recognised any connection with the late great Bob Marley when they did so.

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Methane

Friday, September 4th, 2009

Seamus Hogan posed an interesting question about methane emissions recently. He didn’t see how this was much of a stock problem (if you’ll pardon the pun) because methane, while a particularly nasty greenhouse gas, doesn’t hang around up there for long. He says

I am puzzled about why we should worry about methane emissions, given that they result from a circular process whereby carbon in grass is converted into methane by cows, but then carbon is reabsorbed from the atmosphere to re-grow the grass.

BK Drinkwater, I think correctly, pointed to fertiliser extracted from the ground and used to grow grass which (once eaten by cows) generates extra methane emissions; this is not part of a closed carbon cycle. But Seamus then observed that

my memory from high-school science and geography is an important source of New Zealand’s advantage in agrigculture is that we don’t have need for nitrogen fertilisers (something to do with clover), just for superphosphate. And a quick Wikipedia search confirmed that while Carbon is present in urea (a typical nitrogen fertiliser), it is not present in super phosphate.

It is true that clover is a nitrogen fixer, so we can & do get nitrogen from including it in the pasture mix (the salad bar). Also cow piss is unbelievably high in nitrogen, so we also get lots like that (too much actually, but that’s another story). However the key point is that, notwithstanding these facts, it still makes economic sense to apply urea because doing so accelerates grass growth and at current prices the value of the resulting milk is worth the cost of the urea.

So (in my current state of ignorance) it seems that the policy implication may be to tax urea.

Posted in Dairy, Market Failure | No Comments »

Dairy Auction

Monday, August 10th, 2009

In what looks to be a confusion between process and outcome, Federated Farmers wants an economist to inspect Fonterra’s dairy auction (HT: RNZHerald).

Commodity auctions are pretty straight-forward. They are not like a spectrum auction, where the value I attach to one chunk can depend on what other chunks I own. You’d have to be pretty incompetent to screw up the design of a commodity auction.

It looks to me as though the Feds mainly don’t like the fact that dairy prices have been falling since the auction started (apart from the last round when the price went up). They are not alone; the Europeans have a similar complaint.

There must be a fair chance that the market is working properly and demand is just weak (GFC anyone?). While it would be excellent economist-geek fun to get an inside look at the dairy auction process, I would not be holding my breath when looking for poor design.

Posted in Dairy | 4 Comments »