Friday, March 29, 2024

EDITORIAL: Lots of news is all good

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It has been a big week if you’re a rural journalist.
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First, the Overseas Investment Office gave a tick to the Shanghai Maling bid to buy half of Silver Fern Farms.

After two votes, a shareholder revolt and sustained pressure from various political parties the majority of SFF shareholders have got their wish.

The co-operative’s bosses assure us this is the deal that will allow them to really progress their strategy.

Opponents lament the loss of Kiwi control of the company.

On paper, the deal looks great. SFF gets the cash boost it could not find in NZ, either from its shareholders or through sustained profits. It also gets a partner with direct access to the colossal Chinese market.

But the marriage won’t play out on paper and like all partnerships there are likely to be quarrels and disagreements. Will it mean improved returns to farmer shareholders? Time will tell.

Also last week Fonterra finally got its wheel turning, announcing a pretty massive profit on the back of improved returns from its value-add business.

Of course that strange paradox – infuriating to farmers – where the low milk price gives better margins on high value products is part of the reason for the strong result.

That margin is realised to farmers as a dividend and this year shareholders look likely to benefit to the tune of 50-60 cents a share.

That’s great news and that fact Fonterra is turning less milk into more money is what everyone, not just farmers, wants to hear.

The Waikato catchment plan that will soon dictate land use there is a clear sign regulators think the days of unbridled dairy expansion are over.

The hoops a hopeful new dairy farmer will have to jump through in Waikato will be numerous.

Dairy farmers are just starting to see the light at the end of the tunnel. This result will add to their growing optimism, as long as it rewards them where it matters – in the bank.

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