Volume 99, No. 39

October 6 - 12, 1999

Agribusiness

Agreement on Dairy Share Principles

The country's three largest dairy companies have agreed on the principles for a share structure for the proposed mega merger of the Dairy Board and dairy industry. Directors of the NZ Dairy Group, Kiwi Co-op Dairies, and Northland Dairy Co-op, reached the agreement at a full weekend meeting in Auckland. It was called after merger negotiations between the NZDG and Kiwi hit a snag over the share structure issue and threatened to hold up the mega co-op planning process. NZDG was pushing for a 2-tier structure, but Kiwi wanted a single share issue, reflecting the companies' differing views over the best way of keeping the mega company and farmer-control intact. The chairman of the mega co-op establishment board, Graham Calvert, said the meeting agreed there would be fair conditions for farmers wanting to leave or join the mega co-op, that the mega company would own both the ingredients and consumer parts of the business, and the co-op would maintain 100% farmer ownership and control. (RNZ Rural Report)

$1 billion and Counting

Rural banker, Rabobank, is about to lend its $1 billionth dollar and intends to double that in the next 5 years. The Dutch bank came to New Zealand, via Australia, 5 years ago and last year bought Wrightson's finance arm. Last month it changed its name from Rabo Wrightson Finance to Rabobank New Zealand. National rural manager, Bryan Inch, said the bank continued to have faith in the agricultural sector in spite of falling commodity prices and difficult international markets. The world population was growing, and people had to eat. Banking the food chain was a more reliable proposition than mining or commercial property. (The Dominion)

BoP Fertiliser Moving South

Bay of Plenty Fertiliser Ltd is making multi-million dollar plans to advance further south in the heartland of its Canterbury-based rival, Ravensdown. BoP Fertiliser will move its Christchurch service centre to a new site 30km south of the city, the general manager, Rex Symington, said in Tauranga. The move will cost $3 million. Over the past year, Ravensdown and BoP Fertiliser have crossed into each other's territories in an intensifying battle for farmer dollars. Last year, Ravensdown expanded its business into Bay of Plenty, Waikato and Northland. (Bay of Plenty Times)

Positive Outlook For Beef

Because of the fall in the value of the NZ$, rising world meat prices should feed through to NZ farmers' selling schedules, Richmond chief executive, John Loughlin, said. Asian economies had improved faster than expected and the new beef season should be positive, with steadily improving prices, he said during a visit to Northland. Restructuring had taken 17% out of fixed costs at 4 beef plants, 3 of them acquired from Lowe Walker, and the company now had no excess capacity. (NZ Farmer)

AFFCo Cuts Staff Numbers

AFFCo would have cut staff numbers by 265 shortly after Christmas, the chief executive, Ross Townshend, said. Appointed 13 months ago to turn the ailing giant meat processor around, he said the restructuring would cut salaried staff from 776 to 511. His goal was to save $50 million/year. Three meat plants were closed or sold in the past year, but no more plants would be closed, he said. AFFCo will post its 1999 result in early December, and Mr Townshend is predicting a modest profit. In May, the company announced a $4.8 million half-year deficit. (The Dominion)

Wrightson Pays Extra to Chief Exec

Wrightson paid its chief executive, Greg Kay, an extra $282,000 last year despite admitting his reforms for the rural services group had not worked. While benefits had been gained, the reforms included mistakes around client service and business operations that had had a significant impact on the business of Wrightson over the past 3 years, the chairman, John Palmer, had said in the group's annual report. Mr Kay left the company in December. He earned an annual salary of $350,000, but the annual report shows that in the year to 30 June 1999 he received payments worth $632,872, reflecting severance payments. (Evening Post)

Ernest Adams Improves

Baker, Ernest Adams, now being taken over by Goodman Fielder, reported a $353,000 profit in the 6 months to 26 September, on solid sales growth in New Zealand and overseas. It is an almost $1 million improvement over the loss of $569,000 for the corresponding period the year before. Sales revenue was up 6.9% to $31.47 million, from $29.45 million in the same period last year, boosted by the capture of greater market share for cakes, frozen meals and pastry. Export sales leapt 40% to $3.1 million from $2.2 million after strong gains in Australia and Japan. (The Dominion)

FMG Launches Syndicate

Rural financial services provider, Farmers Mutual Group, has launched a new investment vehicle - 3 commercial properties tenanted by the supermarket chain, Big Fresh. The total purchase price for the properties, in Mt Wellington (Auckland), Tauranga and Napier, is just over $25 million. Investors are forecast to earn 9.5%/year on their investment. (National Business Review)

Trust Approves Closed Structure

NZ Rural Property Trust will become a closed-end trust whose shares will trade on the secondary stock market. At a special meeting in Wellington, unit-holders in the 12-year-old investment trust, whose structure was declared unworkable and potentially inequitable in a PricewaterhouseCoopers report, gave 83% support to a management proposal to convert to a closed-end trust, removing all current and future redemption rights. (The Dominion)

Heinz Reorganises in US

H J Heinz is combining its US grocery and food service businesses into one US$5 billion, Pittsburgh-based, mega-company. Heinz's North American companies account for US$5 billion of its annual global sales of US$9 billion. (Christchurch Press)

Progressive Offering 4/kg For Lambs

Hastings-based Progressive Meats has joined South Island meat companies in offering $4/kg for early-season prime lambs at killable weights. The new export meat season began this month, but new season's lamb makes up only a small percentage of the kill at this stage. European Union demand for chilled cuts is strong, and lack of supply is becoming a problem because NZ production is still at the low point for the year. The US market is showing really good demand for chilled leg and middle cuts, and net returns have not been affected by the tariff imposed last month. (NZ Farmer)

Generator Sales Up

Farm machinery distributors report a heavy demand for electricity generators as farmers prepare for possible problems on the eve of the new millennium. David Chown, of David Chown Agricultural Centre, Huntly, said the demand for generators began to increase about 6 months ago, with the most popular being 37kVA and 38kVA models that work from a tractor power take-off. The biggest demand is from dairy farmers wanting to ensure that they have power for milking. (Farm Equipment News)

Richina's New Chief

Richard Yan, the strategist and entrepreneur behind the Chinese-New Zealand listed company, Richina Pacific, has moved from Beijing to Auckland to become managing director. Mr Chan built Richina on the remains of the formerly Christchurch-based Mair Astley. It owns the construction company, Mainzeal, and leather, hides, and venison processing businesses in New Zealand, and is

developing a huge tannery in Shanghai, now the world's largest shoe manufacturing centre. (Christchurch Press)

Trade

Trade Deficit Largest Ever

The August year trade deficit was the country's worst ever in dollar terms, Statistics NZ said. The deficit for the month of August was $433 million, compared to $246 million a year ago. The annual deficit has now swollen to $1.89 billion, compared with $1.75 billion a year ago, and $1.71 billion in the year to July 1999. The annual deficit in current dollars was the largest ever recorded, although as a proportion of export value there were larger deficits in the mid-1970s and mid-1980s, Statistics NZ said. Exports have continued to rise slowly for the August year they were $22.89 billion, up 3.5% on 1998, but imports continued to rise more strongly. For the year to August, imports were at $24.78 billion, up 10.2% on the previous August year. (NZ Herald)

Trade NZ Cautious Over Y2K

Trade NZ will not be issuing blanket statements on countries to avoid during the Year 2000 rollover, citing political reasons. Asia-Middle East general manager, Eugene Bowen, said Trade NZ had considered issuing country-by-country statements on Y2K readiness, but decided the politics involved were too delicate. Companies with questions and concerns should contact Trade NZ on its helpline - 0800 555 888. (InfoTech Weekly)

Lacklustre Month For Beef

It has been a lacklustre month for imported beef in the US market, Meat NZ says. Despite a seasonal decline in cow numbers, plentiful supplies of grain-fed cattle have resulted in more than adequate supplies of beef trimmings. With Indifferent demand, prices for domestic 90s drifted lower, dragging down imported beef values. Against this trend, surging demand from the restaurant trade for middle meats has resulted in much higher prices for premium beef cuts than a year earlier. US beef production during the last half of 1999 will remain at record levels. This, together with large supplies of pork and chicken at relatively low prices, is likely to limit any lift for manufacturing beef until next year. (Meat Matters)

$1.8 billion Payout in Australia

Australia's 13,500 dairy farmers will share in an 8-year, $1.8 billion restructuring package if State governments and the dairy industry proceed with market deregulation next July. Eligible dairy farmers will receive 46.23¢/litre for domestic market milk and 8.96¢/litre for manufacturing milk, based on 1998-99 deliveries. The plan, funded by an 11¢/litre levy on retail sales, will include tax-free payments of up to $45,000 each for farmers who decide to leave agriculture. NSW farmers will receive close to $190,000 each from the compensation package. (NZ Farmer)

Livestock

Board Cuts Cattle Tb Levy

The Animal Health Board has reduced the bovine Tb control levy on the slaughter of cattle from $8.71 to $7.20. Board chairman, Don Linklater, said the decision to reduce the levy recognised that beef farmers had contributed more than their share of Tb control funds in recent years. Because of very high cattle kills, mainly due to drought, the Board had collected a disproportionate amount from beef farmers. The Board's accumulated beef levies, including interest, stood at $14.2 million at 30 June, 1999, a level which, he said, was too high. Reducing the levy would reduce the accumulated beef levy by nearly $6 million by June 2001. (Nelson Mail)

Antibiotics Report

The Animal Remedies Board will consider recommendations next week on whether to remove some antibiotics used in some animal feeds from the market. The Board launched an investigation in April in response to international concerns that the use of antibiotics for farm animals was contributing to growing antibiotic resistance in humans through the food chain. Antibiotics are used in stock feeds to prevent disease and to promote growth. In New Zealand they are mainly used in the pig and poultry industries. (RNZ Rural Report)

Animal Welfare Legislation Passed

Parliament has passed animal welfare legislation which has been several years in the making and replaces statutes nearly 40 years old. The Animal Welfare Act imposes obligations on owners and those in charge of animals to ensure that their physical health and other needs are met and that pain and distress are alleviated. It also allows welfare codes to be established which will contain minimum standards and recommendations for the best care of animals. The legislation applies to all animals considered capable of feeling pain including all mammals, birds, reptiles, amphibians, fish, crabs, lobsters and crayfish. (Otago Daily Times)

New Approach Important, Says Minister

New Zealand's approach to animal welfare, as demonstrated in the new Animal Welfare Act, showed a strong sense of ethical commitment, and contrasted with the more heavy-handed Government intervention that occurred in some other countries, the Minister for Food and Fibre, John Luxton, said. Animal welfare was an important strategic marketing issue and of growing importance in international trade. New Zealand enjoyed a good reputation, which must be protected. (Manawatu Evening Standard)

Vets Welcome New Act

The New Zealand Veterinary Assn was delighted to see progressive, long overdue animal welfare legislation passed, said Dr Murray Gibbs, NZVA chief executive. The new Act sent an unequivocal message that New Zealand was serious about animal welfare. Increasingly, importing countries, particularly the Europeans, were demanding high welfare standards. With the next World Trade Organisation round of negotiations beginning in Seattle next month, New Zealand's welfare standards might be under the spotlight. (Southland Times)

Deer Levies Reduced

Clive Jermy, chairman of the Game Industry Board, has announced a reduction in the Board's venison and velvet levies. The new levies, from 1 October, are 10¢/kg of venison, 7¢/kg of fallow venison, $2.50/kg of velvet, and 50¢/kg of fallow velvet. The animal health levies will be 3.7¢/kg of venison and 40¢/kg of velvet to meet the industry's obligations to Tb eradication. Two years ago the venison levy was 22¢/kg and the velvet levy was $3. Mr Jermy said the Board had cut its expenditure heavily - from $8.4 million in 1997-98, to $6.7 million in 1998-99, and a forecast $4.8 million for 1999-2000. (GIB Newsletter)

Society Wants Better Market Focus

The beef industry needs to focus on the end market to elude the commodity trap, says Salers Society president, David Caldwell. He believes there are niche markets to be developed for grass-fed beef, but the industry needs to be focused on what the end market is before producers can gear production toward it. Mr Caldwell farms at Peel Forest, South Canterbury. He said the Salers Society was set up well for the changes ahead and was looking to create links with processors. (Straight Furrow)

Meat Classification Voluntary

Mandatory beef, lamb and mutton carcass classification at NZ meat works ended on 1 October, but the classification system is still being used in a different form, and meat companies may develop their own systems over time. The new version was designed by, and will be audited by, Asure NZ, a State-owned enterprise that replaced MAF Quality Management. The Asure NZ system has been registered as a trademark by Meat NZ, and processors who use it will pay for Asure NZ's services. (NZ Farmer)

NZ Horses Cleared

All of the horses tested for the exotic disease equine infectious anaemia in New Zealand have been cleared. The virus disease has no known treatment and is not present in this country. A brood mare imported from New South Wales in early June tested positive for the disease and was destroyed. Trace-back established that 11 horses on 4 properties had been in direct or indirect contact with the mare. The horses were isolated for 60 days and were tested twice in that time all with negative results. All restrictions on the horses and their premises have been lifted. (Straight Furrow)

$4000 Tops at National Sale

A buoyant bench of buyers pushed prices up to $4000 at the Wrightson National Dairy Bull Sale in Hamilton. The top price was made at the Holstein Friesian sale and went to John Lynch, Kerepehi, for Lyncrest Cel Samual, a 2-year bull with a breeding worth of 74. The yearling Jersey bull, Ferdon Eves Symbol, from the Ferguson family, topped the Jersey bull sale at $3550. (NZ Farmer)

New Goat Council Member

Ian Stuart, of Cable Bay, Nelson, has been appointed to the New Zealand Goat Council. The chairman, Allan Billington, said increasing interest in farming goats had encouraged the council to split the Northern South Island region into 2 areas. Ian Stuart will represent Nelson, Marlborough and Buller, and Wayne Pearce will represent Canterbury. (Meat Matters)

Horticulture

Growers Count Frost Cost

Two field days have been held to advise kiwifruit growers in the Te Puke and Katikati districts of Bay of Plenty on how to recover from frosts that have devastated their crops. At least one orchardist is understood to have suffered a total crop loss, another estimated that up to 70% of his potential green kiwifruit had been destroyed, while others were talking of losses of 2%-15%. About 300 claims are expected on Kiwifruit NZ's frost and hail insurance. Successful claimants will receive $2/tray for conventional kiwifruit and $3/tray for Kiwi Gold. KNZ chairman, Doug Voss, said the impact had been serious for several growers, mainly in low-lying areas, but a bumper crop was still expected for the next selling season. (Bay of Plenty Times)

Processing Changes at Gisborne

There will be job losses and a reduction in vegetable processing in Gisborne as a result of restructuring moves announced by the processing companies, Heinz-Wattie and Cedenco. However, Gisborne will keep a processing facility and continue to supply the higher-value organic and super-sweet segments of the corn market in which the district has a competitive advantage. Heinz-Wattie will close its old plant and Cedenco will relocate the operation to its site where it already processes fruit and vegetable powders and purees. Cedenco will process and pack conventional and organic sweetcorn and peas under contract to Heinz-Wattie. The restructuring will mean the loss of 20 full-time jobs and up to 130 seasonal jobs. (RNZ Rural Report)

New Standards For Wine Industry

The NZ Wine Institute is about to introduce a new standards system for the NZ industry, after some scandals in the wine trade last year brought matters to a head. Although the pending election has delayed passage of the legislation required to make them legally enforceable, the institute will press ahead with the changes rather than wait for the incoming Government to legislate, institute deputy chairman, Peter Hubscher, said. The recommendations include the need for a new system to set, audit and discipline breaches of industry standards, including statutory recognition for an industry code of practice. Mr Hubscher said one of the first moves would be to require winemakers from 1 December to introduce a new record-keeping system for export wines. (The Independent)

Old Varieties to Combat Pests

Some of the world's oldest-known apple varieties are being used at HortResearch Havelock North in a programme to breed pest and disease resistance into new varieties. Scientist, Vincent Bus, is looking for genes resistant to black spot, fireblight, powdery mildew and woolly apple aphid. He is using seeds from old apple varieties, crab apples and wild apples from Kazakhstan. Some of the crab apple varieties were imported from France, some from the US, but most originated in Russia, China and Japan. (Hawke's Bay Today)

Vineyards Missing the Bus

Auckland's wine industry has been warned that it risks missing out on lucrative tourist dollars during the America's Cup campaign because of a lack of organised tours. Launching a new regional marketing group at Waimauku's Matua Valley Wines, Tourism Auckland chief executive, Lance Bickford, described wine tourism as the "missing link" in what Auckland had to offer, and few New Zealanders seemed to know the wineries even existed. However, the new marketing group, Winemakers of Auckland, is moving on the problem and has produced a new wine-trail guide and is working on improved road signs. (Evening Post)

More Viticulture Land Identified

Another 95ha of land near Gibbston in Central Otago has been identified for viticulture development and work could start next September if planning consents are given. The valley is already a hub of Central Otago viticulture development, with several vineyards and wineries. An Environment Court panel is hearing an appeal against a Queenstown-Lakes District Council proposed district plan decision which includes the blocks of land. (Otago Daily Times)

Seats on Board Popular

14 pipfruit growers have put their names forward for 2 seats on the pipfruit industry's new regulatory authority, the Apple and Pear Board. The board, to be set up by 1 November, will comprise 2 grower-elected members, 2 nominated by Pipfruit Growers of NZ, and an independent chairman. (The Dominion)

Soil, Land, Water, Arable

Another Drought Threatens Otago

Otago could be heading for another dry summer and farmers are being advised to conserve water. The situation is particularly bad in North Otago, where rainfall last month was 50% below average in some areas, and rivers are running well below normal levels. Raineffects hydrologist, David Stewart, said the situation was deceptive. Grass was green on farms that in autumn had been drought-grey bare, but moisture levels were low and did not go far into the soil. Otago Drought Committee chairman, David Shepherd, said farmers were concerned that they could be heading into another dry spell,but the spring had been kind and they had a bank of feed they did not have at this time last year. They were going into the summer with low stock numbers, so hopefully they would be able to get through, he said. (Otago Daily Times)

Drought Fears Eased in Sth Canterbury

Good falls of rain this week have eased fears in South Canterbury of another drought. More than 15mm of rain fell in some parts of the region, which has been warned to expect more La Nina weather drier conditions with north-east winds. (Christchurch Press)

Bread Prices Not Farmers' Fault

Farmers were not responsible for the recent increase in bread prices, Federated Farmers' grains council said. Council chairman, Neil Barton, said the rise must not be blamed on wheat prices, because wheat prices had dropped substantially. Prices paid to NZ farmers for milling wheat had dropped from an indicative price of $285/tonne in 1997-98, to $262/tonne in 1998-99. NZ growers were offering millers and bakers a variety of high quality milling wheats at prices that were more than competitive with the cost of imported wheat, he said. (Ashburton Guardian)

More Price Rises

Allied Foods, bakers of Tip Top, Burgens, Ploughman's and North's breads, will raise its prices between 4¢ and 5¢ in the next month. This follows the announcement that Goodman Fielder was raising its bread prices by 5¢/loaf. Allied Foods blamed a range of causes, including the exchange rate, an 18% rise in petrol prices, and higher energy, labour and packaging costs. Both companies said that although spot wheat prices had fallen, they were not enough to offset a 3% increase in labour costs and the fall in the value of the NZ$. (The Dominion)

Monsanto Terminates Seed Plan

Monsanto says it will not commercialise a controversial "terminator" gene technology which sterilises seeds. It told the Rockefeller Foundation it had decided not to develop the gene after seeking comment from the foundation and other groups. The technology prevents plants from producing fertile seeds. Environmentalists and farmers have protested that the technology could give multinational corporations the power to control food supplies by preventing farmers from saving seeds from each harvest for planting for their own use. (Evening Post)

Government Refuses Inquiry

A Green Party petition calling for a moratorium on growing or selling genetically engineered food has been presented to Parliament with 91,000 signatures. However, the Minister of Health, Wyatt Creech, ignored a request from Greens co-leader, Jeanette Fitzsimons, to review the Government's policy on GM foods. Mr Creech said the Government had well established systems of control to manage any risk associated with GM foods and organisms. GM food could not be sold legally in NZ unless it had been assessed as safe by the Australia New Zealand Food Authority and been approved by the Food Council, he said. (Otago Daily Times)

Foreigners Focus on South Island

Overseas investors are buying up large in the South Island, according to Overseas Investment Commission figures. For the 6 months to 30 June, almost half of the land that was approved by the Commission for foreign ownership was in the South Island. The Commission received 224 applications from foreign investors totalling more than $3.5 billion. The Commission considered 77 applications for freehold land covering an estimated 20,236ha, with about 48% of it in the South Island. (Otago Daily Times)

Kiwi Ploughmen on Hard Row

Rob Mehrtens, from Timaru, finished 14th at the World Ploughing competition in Reims, France, last month, and Alan Begg, Ashburton, was 25th. Top place was a draw between Martin Kehoe, Ireland, and Georg Menitz, Austria. (Christchurch Press)

New Company to Control Pests

The Canterbury Regional Council has approved a business plan for a company it is establishing to handle animal pest control in Canterbury. The council-owned local authority trading enterprise (LATE), to be known as Target Pest Enterprises, will start business on 1 November. (Christchurch Press)

Industry

Minister of Rural Affairs

The Labour Party is promising more political representation for rural people with its plan to create a Minister of Rural Affairs portfolio. Labour announced its rural policy with a commitment to spend an extra $20 million on the sector. Key elements of the policy include easing off on producer board reform, and allowing boards to keep their statutory powers if that is what their respective industries want. It would also upgrade border biosecurity, support the idea of Government-accredited labelling of organic produce, and provide more support for rural schools and health services. Labour's agriculture spokesman, Jim Sutton, said the party would also restore the designation of Minister of Agriculture instead of Minister of Food, Fibre, Biosecurity and Border Control. (RNZ Rural Report)

$20 million From Computer Boost

The NZ Dairy Board said it expected to boost profits by $20 million using a new computer model which balances hundreds of thousands of variables and constraints, including plant capacities, milk volume and market demand to give a monthly optimum production plan. The challenge was to match the production to global demand and prices for products. Its great strength was that it used pictures and diagrams, rather than a spreadsheet, consultant, Nick Shier, said. (Evening Post)

New Wool Board CEO

The Wool Board's new chief executive is its chief operating officer, Mark O'Grady, and previously its group marketing manager. He will take up the job later this year. (The Dominion)

Export Meat Production

In the 52nd week of the season, to 25 September, the number of lambs slaughtered for export was 24,422,858, down 5.4% compared with the same period last year; hogget production was down 34.6% at 40,341; mutton was down 12.4% at 4,336,907. The number of steers slaughtered for export was down 21.2% at 509,662; heifers slaughtered were down 10.3% at 148,537; cows slaughtered were down 14% at 755,487 and bulls were up 11.5% at 384,465. Total beef slaughterings for export were down 11.7% at 1,798,151. Bobby veal production was down 5.7% at 1,262,594, and goat slaughterings were down 0.8% at 139,004. (Meat Matters)

Aussies Take Shearing Test Match

The NZ-Australia shearing test at Tara, Queensland, last week was won by Australia with 217.613 penalty points against New Zealand's 221.874. The NZ team was David Fagan, Darin Forde, and Barry Taylor. The Australian win means a squared series for 1999, following New Zealand's win at Masterton earlier this year. New Zealand won last year's Australian test at Armidale, NSW, and holds a 3:2 advantage since the tests began at Fremantle in 1997. (NZ Farmer)

New Chairman For Sheep Council

Marlborough agri-businessman, Malcolm Taylor, has been elected chairman of the New Zealand Sheep Council. He replaces John Labes, of Lawrence, who stepped down after 3 years as chairman. Mr Labes was recently appointed executive officer of the Clutha Agriculture Development Board. (Meat Matters)

Pig Farmers in a Trough

Some pig farmers were walking away from their farms as cheap pork imports threatened their businesses, the chairman of the Pork Industry Board, Neil Managh, said. Mostly small operations had closed so far, in turn affecting others, including grain growers and meat processors, he said. In the last 10 years the number of pig producers had dropped from 2000 to about 450 -- down 250-350 in the past year. Mr Managh said pig farmers were frustrated with the Government's failure to move against cheap imports from Canada and Australia, but they had no intention of letting the issue drop. (Manawatu Evening Standard)

Forestry

FCF Changing Direction

Fletcher Challenge Forests is changing direction, away from its traditional business of growing trees and selling wood, to a world-class forestry management company with an emphasis on technology. Dr Bruce Burton, strategic development and planning director, said it would be a total turnaround from where the comapny was 4-5 years ago. A key part of the strategy is for FCF to become a global leader in the development and marketing of transgenic trees - those that have an extra gene inserted to make them faster growing, harder and healthier. FCF is part of a new company formed as a joint venture with a local biotechnology firm, Genesis Research, and multinational giants, Monsanto, Westvaco and International Paper. The joint venture will carry out research in New Zealand into Pinus radiata and eucalyptus trees. (National Business Review)

New Growth For Evergreen

Evergreen Forests has bought 3200ha of forest from Carter Holt Harvey for $20.9 million. The purchase will be funded by a combination of debt and the placement of up to 6.1 million 10-year zero coupon convertible notes at $1.06 each. The two forests near Gisborne were planted in 1978 and 1996 on freehold properties. Chief executive, Mark Bogle, said their harvest profile complemented Evergreen's existing estate and would increase the company's North Island East Coast holdings to 9579 stocked hectares. (Evening Post)

Opportunities in Brazil

The timber-rich NZ pine industry should set up joint ventures with more technologically advanced countries like Brazil to target Asia, according to a report by Brazilian forestry student at Canterbury University, Geraldo Suchodolak. New Zealand was missing a multi-million dollar margin of profit by not adding value to its products, he said. New Zealand had the resource, Brazil had the manufacturing industry. Brazil's furniture exports, mostly ready-to-assemble pine furniture, increased tenfold from 1990 to 1997 to NZ$765 million. However, by the time it reaches $1 billion, expected to be in 2004, Brazil is likely to face a shortage of wood. (The Dominion)

Accident Rate Too High

NZ forestry companies had to handle their accident rate or it would cripple their productivity in international markets, John Manz, a director of US-based forest company, Weyerhaeuser, told a safety conference in Auckland. "If you don't have good safety programmes you don't have good productivity," he said. Weyerhaeuser's lost-time injury frequency record of 0.9 had translated into a huge build-up in cash flows, and the company had hardly any insurance costs. NZ Forest Owners Assn chief executive, Rob McLagan, said foresters here have a base ACC premium of $6.32 per $100 of wages, compared with the average of $1.47, reflecting the high risk for workers in forestry. (National Business Review)

Moth Eradication "Mishandled'

Eradication of the painted apple moth in Auckland had been "grossly mishandled" by the Ministry of Agriculture and Forestry, its former chief forestry officer, Dr Gordon Hosking, said. As a result, the moth appeared to have invaded a wider area and would now be considerably more difficult to stop, he said. He believed the search of the site of the original outbreak at Glendene had been too narrow, and research into a pheromone to trap the moth had been started too late. However, the Ministry denied any incompetence, and forest biosecurity director, Dr Ruth Frampton, said the programme at Glendene was close to eliminating the apple moth in 20 of the 21 sites. (The Dominion)

Forecast Return Falls 4%

Nuhaka Forest Fund shareholders will get almost 30% less on their investments than they were promised 26 years ago. Established in 1973, harvesting of the fund's 2000ha of radiata pine forest is expected to take 10 years to complete .The administrator, Perpetual Trust, said the forecast return had dropped from 14% to 10%/year because of inflation which had been higher than expected. Most of the drop in return had come in the last 2 years with the fall in demand for logs, following the Asian economic crisis. (NZ Herald)

Korea Buys Nuhaka Logs

Nuhaka Farm Forestry Fund has accepted bids of about $993 a stocked hectare for the logs it has begun harvesting. The administrator, Perpetual Trust, said the initial prices accepted for the logs were in line with the most recent valuation, completed in March. The wood was valued then at $33.5 million, representing $993/stocked hectare. The trust's general manager, Stephen Eaton, said dividends would be paid twice a year to unit-holders over the next 10-12 years. (Christchurch Press)

Shareholders Unmoved

Major institutional shareholders opposed to Fletcher Challenge Canada's proposed C$3.6 billion buyout of Fletcher Challenge Paper have rejected the company's lobby efforts. Jade Hemeon, spokeswoman for Toronto-based Trimark Investment Management, which is among 9 institutional investors who have banded together informally to oppose the plan, said the group had not changed its position. (NZ Herald)

Costly Problem If Deal Fails

Fletcher Challenge Paper shareholders face a significant rights issue if the company fails to merge with Fletcher Challenge Canada, analysts say. Shareholders could be called on for $500 million to shore up FCP's over-geared balance sheet. Another implication is suspension or limiting of dividends. These scenarios are spelled out in an independent appraisal by Macquarie NZ, assessing the fairness of the proposed merger for FCP shareholders. It is one of 4 reports being sent to FCP and FCC shareholders. All the reports judged the merger as fair and reasonable. (Evening Post)

Improve Transportation Safety

Carter Holt Harvey says the key to improving the NZ forestry industry's accident record is to improve transportation safety. Chief executive, Jay Goodenbour, indicated that the company wanted a better road infrastructure to reduce crash rates. The company might ask contractors to identify stretches of road that could be improved, he said. It would also look at alternative forms of transport as log numbers increased. Through implementing safety techniques and line management, the company reduced its rate of incidents per 200,000 work hours from 7.18 in 1994 to 2.8 now. (National Business Review)

Five Fired For Drug Use

Five Fletcher Challenge Forests workers were fired after being caught on video tape inhaling cannabis oil smoke. A site manager at the company's Rainbow Mountain sawmill found equipment used to burn the cannabis oil in a smoko room during a safety check. A video camera was installed and the workers using the room were kept under surveillance for a week. (NZ Herald)

US Company Negotiating With Ngai Tahu

US-based company, Blakely Pacific, is one of several negotiating with Ngai Tahu to buy a 4600 ha forestry block at Herbert and a 5400ha block at

Geraldine. Ngai Tahu has until 1 December to decide if it wants to buy Crown-owned forests, including those at Herbert and Geraldine, set aside as part of last year's Treaty of Waitangi settlement. Ngai Tahu has the option of buying the land, trees, or both, or could sell the blocks. Since 1993, Blakely has bought about 10,000ha of forest in the Bay of Plenty, South Otago and Southland. (Otago Daily Times)

Forestry Dean Heads Review Panel

The Dean of Forestry at Waiariki Institute of Technology at Rotorua, Dr Margriet Theron, is to chair a review panel which will assess the work of the Ministry for the Environment's carbon monitoring project. The 5-member review panel has only one other New Zealander, forestry consultant, Colin O'Loughlin. The other members are soil scientist, Andy Whitmore, from Britain, and 2 carbon experts from the US, Keith Paustian and Sandra Brown. The main objective of the carbon monitoring project is to establish a system for measuring how much carbon is stored in native vegetation and the soil. (Rotorua Daily Post)'

GM Trees No Threat

Carter Holt Harvey says its proposed field trial of genetically modified pine trees would run no risk of cross-pollination. The company's application will be heard, along with public submissions, by the Environmental Risk Management Authority in Wellington this week. CHH business relations manager, Murray Parrish, said the trial, which would insert bacterial marker-genes into radiata pine, was simply a way of testing its scientific method. If it was successful, the company hoped to apply for other GM projects, including disease control. (RNZ Rural Report)

New CHH Director

Carter Holt Harvey's chief operating officer, Evans Heath, has been appointed to the company's board. Mr Heath joined CHH in May, after 27 years in management positions at Carter Holt's parent company, US-based International Paper. (Christchurch Press).