Wednesday, August 19, 2015

Profound ignorance or is that too kind



The chatterati fixation on the current lower prices for NZ Dairy exports reveals a need to find a process to turn the daily garbage produced by almost all those pontificating  into fertilizer, at least that would create something useful

Fonterra is a highly visible, high profile corporate in NZ, they suffer slings and arrows because of that fact and with so many included in the wide spread total scene as suppliers, process workers, tanker drivers, then add in the massive numbers involved in Dairy support farming, maintenance, construction and upgrading of farms, factories and freight down stream nearly everybody has some connection to someone involved.
That makes for many armchair experts, however their knowledge is based on more accurate information than much of the sheer guesswork and making stuff up that emanates from the aforementioned Chatterati

That however is the local scene and has so very little to do with what has been creating headlines for the media and attack lines for politicians both relying on the significant lack of understanding of that which goes to make the present trading price what it is. World dairy trade perhaps one of the most volatile and protected commodities that has storage and shelf life challenges.

Some facts:
Dairy  Trade in New Zealand is a minor  part of the nation's GDP. $16 billion out of over $300 billion around 2%.
Dairy product consumed locally is a very small segment of the total production at around 5%
Although NZ share of world cross border trade as a share of the total world dairy production is massive it is still subject to serious protectionist tariffs and competition from heavily subsidized production. US Farmers are paid around twice the world price largely made up with Federal subsidies. The EU is similar. Those farmers were granted protection to maintain post war production when the dependence on locally produced dairy was politically sensitive and having got used to the fixed price well above what the market dictated they were not  about to let it go.

Holding back some of what would have been offered in the latest auction might have had a minor influence in the  lift in the prices received but it would be totally laughable that those looking to trade would have been unaware that there are massive stocks in store in NZ and with the already commenced new season underway, storage space will be a growing concern for Fonterra.
A basic working knowledge of maths would destroy any hopes of keeping those facts secret
NZ trades most of its exports as commodity and changing that would be problematical as selecting the product lines require a plant adaption in almost all options. eg Blue cheeses cannot be produced in a space producing non blue cheeses.
As with wines product nomenclature is fraught with many traps around locality based names.
Trading in whey, whole milk, skim milk powders and infant formulae all make product stability reasonably simple, whereas butter and cheese require more sophisticated chilling systems for storage and transport.

Tatua have a secure product production and marketing process locked in but even then they suffer from the fluctuating world prices for base material - raw milk.

Much of the yoghurt, ice cream and prepared flavoured milk throughout the world  is reconstituted  from powder and the scary pronouncements from the Latte set are infantile.

Organic milk is a minute opportunity and with the dangers that such production can face from many challenges, to suggest converting larger quantities of the production to organic quickly could soon destroy the attractive price differentials.

English and his National mates are running with this current cyclical downturn in a measured and reasonable fashion and should the chatterati find something else to hit the "greedy farmers" and the "Key Government" around the head with, then they might actually stumble upon  something that they have a small understanding of.
World commodity trade, dairying and marketing are not even a small part of that.

2 comments:

Adolf Fiinkensein said...

Red

Well yeah. Like Clinton did not have sexual relations with that woman.

Redbaiter said...

Well, I doubt Clinton was ever that stupified that he posted on the wrong thread on his own blog.