Volume 99, No. 42

October 27 - November 2, 1999

Agribusiness

Board Raises Payout Prediction

The NZ Dairy Board has increased its predicted 1999-2000 season milk solids payout by up to 10¢/kg to between $3.15 and $3.20/kg, compared with its June estimate of $3.10. The increase represents an extra $3000-$6000 to a dairy farmer with average milk production of 59,000kg. Board chairman, Graham Fraser, described the lift as a modest improvement that would be achieved through higher export earnings. He said there was more reason to be confident about dairy product earnings this season, with a slight increase in demand from Asia and a better outlook in the Russian and Latin American markets. Dairy Farmers of NZ chairman, Charlie Pedersen, said the increase was very welcome, considering the tough weather predicted for the bulk of the season. (The Dominion)

$60 million Deal to Southland

Invercargill company, Southern Fresh Milk, has won a $60 million contract to make and export ice-cream to Asia and Australia. The company, which has 22 farmer-shareholders, has closed the deal with international food giant, Swiss-based Movenpick. The gourmet ice-cream will go initially to Australia, Japan and Singapore, and later move into Korea, China and Hong Kong. At least 40 new jobs will be created at the company's plant. Movenpick Asia-Pacific director, Chris White, said it looked at all the options in Asia-Pacific, including Australia. Southland had the very high quality milk it needed and the best technical expertise, also. (Southland Times)

Reid Farmers Posts $4m Profit

Dunedin-based rural servicing company, Reid Farmers, has posted a $4 million after-tax profit for the year to 30 June, 10.8% up on the previous year. Directors increased the year's fully-imputed cash dividend by 12.5% to 4.5¢/share, and were confident the higher payout was sustainable. All divisions, except wool, traded ahead of budget in the new financial year's first quarter. The chairman, Bill Baylis, said that dealing with the downturn in wool-based activities was a huge challenge, and the company was assessing various options to restore an appropriate level of profitability to its wool operations. (Southland Times)

Tasman Ag to Sell Some Farms

Corporate dairy farmer, Tasman Agriculture, is selling some of its smaller farms to focus on extracting higher returns from its larger ones. A 5-year business plan had confirmed profitability and economies from the larger farms were more suited to the company's operating structure, the chairman, Chris Alpe, said. The company has 73 NZ properties. Two of the farms to be sold are in Otago, 3 in Southland, and 3 in Canterbury. Most were no more than a quarter of the size of the group's average of 580 cows. (Otago Daily Times)

Aussies on NZ Dairy Trail

One of Australia's biggest dairy manufacturers, National Foods, says it wants to spend up to NZ$500 million buying one of New Zealand's 2 main domestic sellers of dairy products. It wants to buy either the Mainland company, owned by Kiwi Co-op Dairies, or NZ Dairy Foods, owned by NZ Dairy Group.

National Foods managing director, Max Ould, said his company was holding talks with both dairy groups after selling its juice business to Berri Ltd for A$75 million. NZDG chairman, Henry Van Der Heyden, said an information memo on Dairy Foods was being prepared, but no decision had been made on its sale, nor was the company involved in formal talks with any other parties. (Christchurch Press)

Differences at Wool Sales

Strong demand for crossbred wools, which dominated the Napier wool auction on Thursday, and mixed prices for Merino wool, which made up much of the Christchurch sale, produced marked differences between the 2 sales. Nationally, the strong indicator for wool of 32 microns diameter and stronger lifted 5¢/kg to 374¢. The index for medium wool - 25-31 microns - also lifted 7¢ to 413¢/kg. But the fine indicator, for 24 microns and finer, slumped 15¢ to 902¢, driven by the 20% of the sale made up of Merino fleece. The lambswool indicator rose 10¢ to 326¢ on relatively small volumes. A total of only 17,377 bales (2064 clean tonnes) was offered at the 2 sales, with 8% failing to meet growers' reserve prices. (The Dominion)

GPG Takes Bigger Stake in Wrightson

At the close of business on the NZ Stock Exchange on Monday, Guinness Peat Group (GPG) had taken a 17.1% stake in Wrightson in a sudden move on the company. GPG director, Tony Gibbs, said his company stood in the market to buy Wrightson stock at 40¢/share. The offer remained open for today, Tuesday. The company wanted to boost its holding from 4.9% to 19.9%, he said. (Evening Post)

China Nearly Ready For AFFCo

AFFCo is to see the first stock killed at its Chinese joint venture plant in the New Year and is predicting more joint ventures in China. As well as contributing its brand and marketing skills, it is playing a big part in the technology transfer needed to run what will be the only US Department of Agriculture-licensed plant in China. 13 Chinese workers are being trained at AFFCo's Imlay plant - 5 as beef slaughtermen and 8 as beef boners. 8 AFFCo staff will go to China next month to begin training the 220 workers who will work the double shifts at the plant. (NZ Farmer)

Ravensdown to Drop Prices

Ravensdown Fertiliser Co-op will drop prices on 3 of its prime products from 1 December. The chairman, Jim Pringle, said urea, DAP, and granular ammonium sulphate prices will all drop because of further savings within the company and falling commodity prices. Urea will be $10/tonne cheaper, DAP prices will drop by $77 (18%), and GAS by $36/tonne. (Christchurch Press)

Agribusiness and Food Congress

The future of primary producer co-operatives, biotechnology, and industry deregulation are 3 topics that are bound to create controversy at the 2nd NZ Agribusiness and Food Congress in Christchurch, 8-9 November. Discussion of the merits of co-operatives or corporate structures for the future of agribusiness will be a feature. Organising committee chairman, Mick Calder, believes it will a very frank discussion. (National Business Review)

Pet Yoghurt For US Pets

Biofarm, the Manawatu-based producer of organic yoghurts and pasteurised whole milks, has developed a new yoghurt range catering specifically for US family pets. The yoghurt petfood range is a joint venture between Biofarm and NZ petfood manufacturer and exporter, Country Pet. The initial shipment was exported in July. Biofarm produces close to 1 million litres of milk on its 162ha farm; all of it is processed into product on the premises. (Export News)

Trade

Fears For WTO Meeting

World Trade Organisation Director-General, Mike Moore, has warned that the meeting in Seattle in November to set the scope for a new international trade round might be dubbed a failure if differences festered. Mr Moore was speaking at a gathering in Lausanne, Switzerland, of Ministers from 25 key nations helping to prepare for the Seattle meeting, 30 November-3 December. Unless there was more flexibility in the position of WTO members, the Seattle outcome could be reported as a failure, he said. (Otago Daily Times)

Minister in Geneva

The Minister for International Trade, Lockwood Smith, has been in Switzerland for informal meetings in Lausanne and Geneva of Trade Ministers working on the start of a new Round of World Trade Organisation negotiations next month. The new Round was very important to New Zealand, he said,

and it was crucial for New Zealand's interests to be advanced in achieving better market access for agricultural products, as well as for industrials and services. Earlier, he opened new offices for the NZ Mission to the WTO and UN in Geneva. (The Dominion)

Trade Deficit Up

The 25% jump in the estimated trade deficit for September of $544 million from August, came despite export growth. The annual trade deficit is $25.303 billion, up 12.3%, or $2.764 billion, on the previous 12 months. There was still fairly strong demand for imports and, if anything, the stronger economy seemed to be supporting demand for consumer goods and intermediate materials, ANZ chief economist, Bernard Hodgetts, said. Although there was an export recovery, it needed to strengthen a lot to close the trade balance and return it to a more healthy surplus position. (Christchurch Press)

NZ, Australia V US on Lamb Tariffs

New Zealand and Australia have formally asked the World Trade Organisation to create a panel to probe US tariffs on lamb imports which they say violate free trade rules. The requests were filed at a meeting of the WTO Dispute Settlement Body. The US resisted the creation of the panel, leaving a final decision until a further session in November when, under WTO rules, it can no longer resist. The panel would have 6 months to make a ruling. (Evening Post)

Safe Beef Ruling For Britain

The European Commission's top scientists have given British beef a clean bill of health, unanimously rejecting evidence which France said supported an import ban over fears of BSE. After days of cross-channel tension, the ruling was a major victory for Britain. European Food Safety Commissioner, David Byrne, said France and Germany should now fall into line with the rest of the EU and lift their bans on British beef. The Scientific Standing Committee was unanimous that it did not share the French Food Agency's concern about the safety of meat and meat products exported by the UK, the Commission said. (Evening Post)

Bid to Revive Free-trade Plan

The Minister for International Trade. Lockwood Smith, expects to know within a week if he succeeded in putting a 5-country mega deal back on the table during high-level talks in Washington on Friday. Dr Smith said the Pacific Five proposal for a free-trade zone spanning Australia, Chile, New Zealand, Singapore and the US had lost momentum in recent weeks. He made the case to US officials that the deal could prove a catalyst for a successful start for the new round of world trade talks in Seattle 30 November. (The Dominion)

'Bribery' Part of the Market

China's wool buying system is partly based on bribery and corruption, says Wools of New Zealand's China manager, Al Ross. The problem was further complicated by the involvement of government departments in the issuing of licences to import wool and of import quotas. The NZ Wool Group, the Wool Board's main trading company, has also criticised the Chinese bureaucratic wrangling in quota allocations as causing a crisis for NZ wool exports. (Timaru Herald)

NZ Low in Bribery Stakes

New Zealand is still seen as one of the least corrupt countries, according to Transparency International's latest survey. It ranks 3rd-equal with Sweden, Denmark and Finland among the 99 countries in Transparency International's annual corruption perception index. TI also ranked 19 leading exporting countries (New Zealand was not included) on their perceived likelihood to pay bribes. The Swedes, Australians and Canadians were judged the least likely to pay bribes the Chinese (including Hong Kong), South Koreans and Taiwanese were judged the most likely to pay. In New Zealand, legislation that would make the bribery of foreign officials an offence was introduced into Parliament last month but is in limbo because of the Election. (NZ Herald)

Greymouth Shipping Trial

A direct shipping service from Greymouth to Auckland and Australia will come closer to reality early next year when the cargo ship, Maasmond, visits on a trial run. An 1100-tonne capacity cargo vessel, it is a little larger than the Titoki and Totara, which were regular visitors to Greymouth between 1950 and 1970. Port manager, David Stapleton, said the ship runs from Australia to Auckland every 5 weeks, and the owners were interested in including Greymouth in the schedule. (Greymouth Evening Star)

US Farmers to Get NZ$17 billion

President Bill Clinton has approved a record US$8.7 billion (NZ17.1 billion) in emergency aid for farmers and has told Congress to fix the farm safety net to avert another bail-out next year. A thorough review of US farm policy is slated to begin in January in the House Agriculture Committee. The latest aid package is split between US$1.2 billion for disaster relief, and US$7.5 billion to make up for lost sales.

The bulk of that economic aid would be US$5.54 billion in cash paid directly to farmers. (Christchurch Press)

'Foreign Muck' Off the Menu

French livestock products at the centre of a health scare in Britain have been removed from the menu in schools across Kent, south-eastern England, after the local authority said it did not want to take any risk with school meals. Councillors decided to impose a ban after claims that some French cattle, pigs and poultry had been fed stockfeed containing human and animal sewage. Catering contractors have been ordered to remove any French livestock products from Kent's 600 schools immediately. (The Guardian)

Thailand Struggling With GM Crops

Thai authorities are struggling to protect billions of dollars worth of exports as countries with restrictions or bans on genetically modified crops start to reject Thai food products. The trade impact is such that the Thai Government is considering a proposal to set up a special agricultural zone to produce non-GM crops for export and local consumption. Not only are some GM crops being grown in Thailand, but large quantities of GM grains, beans, and stock feeds have been imported both legally and illegally. (Sydney Morning Herald)

Livestock

National Vendor Declarations

NZ Meat and Fibre Producers (Federated Farmers Meat and Wool Section) is cautioning all meat producers that from 1 December, all cattle and deer consigned for slaughter at licensed processing plants must be accompanied by a declaration provided by the consignor. From 1 October 2000, the scheme will be extended to sheep, goats, pigs and horses. The declaration will specify animal status in relation to growth promotants, veterinary medicines, animal remedies and Johne's vaccinations. The declarations are designed to fulfil New Zealand food safety obligations to international trading partners. (Otago Daily Times)

Blanket Ban Not Justified

There was no evidence to support the claim that the use of antibiotics as growth promotants in livestock in New Zealand was causing antibiotic resistance in the human population, said Dr Murray Gibb, chief executive of the NZ Veterinary Assn. There was a perception that antibiotics were routinely used in farming in New Zealand and that this was contributing to the Superbug problem in hospitals. It was just not true, he said. All the evidence pointed to over-prescribing in human medicine as being the main culprit, particularly in hospitals. Most NZ farm animals were reared on pasture and were never exposed to antibiotics. (Manawatu Evening Standard)

NZ Bloodlines Win at Melbourne

Champion Hampshire ram and ewe at the Royal Melbourne Show this year came from New Zealand bloodlines by way of Tasmania. Winner, Rod Summers, Marananga Stud, Evansdale, Tasmania, on a visit to NZ, arranged to have semen imported from Holmedarran 4/93, bred by Richard Gould, Pleasant Point, South Canterbury. He took 5 of the progeny to Melbourne this year and won from 32 entries. (NZ Farmer)

Australia to Try Again

Australia will send a trial shipment of live sheep to Saudi Arabia next month in a bid to recapture a market lost, mainly to New Zealand, when the kingdom banned several boatloads of Australian sheep in the 1990s on health grounds. (NZ Herald)

Horticulture

Robust Result Maintained

Extremely strong revenue flows have propped up the forecast end-of-season returns to kiwifruit orchardists, in spite of the glut of cheap summer fruit in Northern Hemisphere supermarkets, Kiwifruit NZ said. It was holding to its forecast from last month of $399.2 million in net distributable returns to growers, or $7.32/tray, based on a submitted crop volume of 54.5 million trays, 14% down on the 1998 crop volume. The forecast was nudging last season's record result, the chairman, Doug Voss, said. KNZ had already exceeded the 3-year industry performance of 60% growth on orchard-gate return, achieving 71.4% in 2 years, he said. (Bay of Plenty Times)

Pesticide-free Hops Pay Well

The use of predator insects instead of chemical sprays to control 2-spotted mites on hops is opening up a huge potential market for NZ hop growers. Already one major international brewery has become a buyer. The control programme was developed by the Hop Research Group, led by Ron Beatson, at HortResearch's Nelson centre. Mr Beatson said hop growers in Europe had no alternative but to spray, usually 10-20 times/season. The costs for the predator programme were similar and there was extra work involved, but it was well worth the effort because of the premiums overseas buyers would pay for spray-free hops. (Export News)

Progress Payment Confirmed

Kiwifruit NZ has confirmed it will make a further progress payment on 15 November averaging $1.20/tray for Zespri Green fruit, 50% up on the 80¢/tray indicated last month. (The Dominion)

Positive Response to Restructuring

The chairman of Kiwifruit NZ, Doug Voss, says there has been a positive response from growers to the restructuring plan for the industry and the share allocation for Zespri Group Ltd, presented at a series of meetings in October. He firmly believed the end result would be a robust plan that would produce the commercial structure that the industry demanded. The final plan would be sent to the Minister of Food and Fibre, John Luxton, for his approval before final approval by growers through a referendum at the end of November; 75% grower support was required. The aim was to have the new structure operating by 1 April 2000, he said. (Bay of Plenty Times)

'Cowboys' Ruining Tangelo Market

'Cowboys' were 'stuffing up' the tangelo industry by picking their fruit too early, Makaraka grower, Clive Kingsbeer, said. His fruit had only just passed its maturity test for picking, but some other growers had harvested fruit a month ago. The early tangelos were marketed when they tasted like 'battery acid' and that was having a negative impact on sales, he said at a Kati Kist field day. Lance Eagle, marketing services manager for Kati Kist, said supermarkets were putting more emphasis on the quality of fruit and would be seeking brix tests and spraying histories, and that would put a stop to a lot of the 'cowboy' practices. (Gisborne Herald)

APMB Members Elected

Four of the 5 directors of the new apple export regulatory body, the NZ Apple and Pear Board, have been elected by growers. Hawke's Bay pipfruit grower and packhouse operator, Rupert Ryan, topped a poll of 13 candidates in direct grower elections. The 2nd-highest poller was Nelson grower, Alan Rowling. The two appointments to the Board by Pipfruit Growers of NZ are John Beckett and Ron Carpenter. The 4 members must now find a chairman, who must be independent of the industry. (NZ Herald)

Chestnuts Different, North and South

North Island chestnuts are different from South Island chestnuts, and a recent nationwide survey is providing important information for the commercial future of chestnut-growing in New Zealand. HortResearch scientist, Dr David Klinac, said the survey found significant differences in chestnut performance in the North and South Islands and between different regions in both islands. The single biggest, most important regional difference was the much lower incidence of internal rot in the drier producing regions. (Waikato Times)

Focus on Age

HortResearch is taking major steps toward understanding the importance of food, particularly fruit and vegetable extracts, in the anti-ageing equation for humans. A special sensory team has been set up, designed to work with people 60 years old and over. The team has put in place a 60+ sensory panel called AgeFocus that is benchmarking a number of key food and beverage categories. It is also developing a major collaboration with Dr James Joseph, at the Jean Mayer Human Nutrition Research Centre on Ageing in Boston, USA. (Manawatu Evening Standard)

Soil, Land, Water, Arable

Farmers Warned to Plan For Worst

Farmers in drought-prone areas are being warned to prepare to sell stock as parts of Otago and Southland head for another summer drought. Soil moisture levels in both provinces are drier than they were at this time last year, with the La Nina weather pattern expected to strengthen this spring. For some parts of Otago it would be the 3rd dry year in a row. A report to the Otago Regional Council says soil moisture levels throughout much of Central and North Otago are already below the point where

plants start to wilt. A former chairman of the Otago Drought Relief Committee, David Shepherd, has urged farmers to start planning for the worst, and in particular to secure stock water supplies. (Otago Daily Times)

Other Regions Seriously Dry, Too

Soil moisture levels are seriously below average in Central and Southern Hawke's Bay, Manawatu, Wanganui, and Marlborough, according to the National Institute of Water and Atmospheric Research. Mean temperatures were above average in most areas in October. The national average temperature was 13.4^oC, 1.3^oC above average, and the 3rd-warmest October on record. Rainfall was 50% of normal over much of the North Island, as well as parts of Nelson, inland South Canterbury and Otago. (The Dominion)

Small Is Best For Silos

Small is best for silage silos they can be filled quicker, fed out faster, and the air within them can be managed easier that is the view of Kansas State University silage specialist, Dr Keith Bolsen. With small silos there was better fermentation and less waste, leading to greater performance. According to Dr Bolsen, although NZ dairy farmers were making some good silage, there was room for improvement he put the average quality at 7 on a world-wide scale of 1-10. The biggest problem, he said, was that silage tended to be made with surplus grass and so was not valued, and was considered a nuisance. (NZ Dairy Exporter)

RHD Still Killing Rabbits

Two years after its illegal introduction, RHD continues to kill rabbits in Otago. Regional council pest services manager, Geoff Donaldson, said night counts on 11 farms throughout Otago in August showed rabbit numbers were still below pre-RHD levels, despite 2 exceptional breeding seasons. There were still some areas where more than 40 rabbits/km were being counted, and landowners would have to consider poisoning or other forms of control, he said. Nine out of 10 dead rabbits found by pest staff were young, confirming the view that natural immunity to RHD, which can develop in young rabbits, was temporary. (Otago Daily Times)

Industry

Farrant Leads Wool Group

Skeggs Group chairman and Securities Commission member, Ian Farrant, has been appointed to head the wool sector group overseeing the industry's latest development plan. The Wool Board's AGM gave approval for economic consultants, McKinsey & Co, to undertake a $1.7 million study of the struggling wool industry. Mr Farrant, who also heads Fulton Hogan and the New Zealand Refining Company, will chair the Independent Stakeholder Group that is supervising the study. The other members will include Wool Board area delegates, Federated Farmers, Merino NZ, the Federation of Maori Authorities, and wool exporters and processors. (NZ Herald)

Wool Board Directors Back

The deputy chairman of the NZ Wool Board, Tim Ensor, Cheviot, and fellow director, Lochie MacGillivray, Hawke's Bay, have both been returned for 3-year terms as wool-grower directors. Mr Ensor retains his place in the Northern South Island Ward, receiving 5762 votes against the 4687 and 2770 votes for the 2 Canterbury farmers who stood against him. Mr MacGillivray, received 7040 votes, well ahead of the 4802 votes cast for Ian Cresswell, the Wairarapa farmer who heads the lobby group, Meat and Wool Levypayers. (Christchurch Press)

Growers Show Their Support

Wool growers showed their continuing support for the Wool Board by an almost 2:1 margin in the results of no-confidence motions considered at the Board's AGM. The count included postal votes, proxies, and floor votes. The first no-confidence remit, which also called on the chairman and directors to resign, was lost 25,261 to 12,210. The 2nd such remit was lost 25,033 to 12,579. A remit urging that the statutory powers of the Board be withdrawn and the Government be asked to set up a taskforce to report on a body to replace the Board, was lost 26,661 to 9975. A remit calling on the Board to progressively reduce its current 5% levy in line with the commercial revenue growth achieved by its subsidiaries, was supported 20,281 to 14,474; however, the remit calling for the Board to reduce its levy to 4% in 2000-01 and to 3% in 2001-02, was was much more even 18,900 for, 17,589 against. (Southland Times)

Pig Farmers Out of Trough

Pig farmers say they are looking forward to a better season after the first signs of recovery for the

industry. South Canterbury pig farmer, Barney Clayton, believed prices could not get any worse than they were last season. The latest schedule prices showed the situation had improved, with farmers being offered about 2.75/kg for pork (carcass weight). At the same time last year, farmers were getting $2.80, which dropped to $2.20 in March this year. Mr Clayton said there had been an encouraging response to Pork Industry Board promotions to buy NZ pork. (Christchurch Press)

Training Grants for Young Farmers

North Island meat processor, AFFCo, is offering training grants to farmers and bursaries to university students in a bid to lift skill levels. The company has also completed a recruitment drive at 6 universities to restart its graduate training programme, attracting 150 applications. Chief executive, Ross Townshend, said 10 training grants of up to $2500 each, for tertiary study, would go to young farmers heading toward farm management or ownership. The 2nd scheme, with bursaries of up to $5000 for undergraduate university students, is expected to benefit mostly students with a rural background. (NZ Herald)

Young Farmers in Membership Drive

The Young Farmers Club could disappear in the next 5 years if membership does not increase, says Tasman regional chairman, Hamish Reid. The YFC's national membership has slumped from 10,000 in the late 1970s to an estimated 1600 today. The YFC movement was founded 66 years ago. Mr Reid said clubs should be promoted to non-farmers in rural areas, and there might be reason to change the name. (Nelson Mail)

Dairy Board Director

NZ Dairy Group director, Earl Rattray, has been appointed a director of the NZ Dairy Board to fill the vacancy left by the resignation of the former chairman, John Storey. Mr Rattray, 41, has been a Dairy Group director since 1995. (The Dominion)

Forestry

NZ Shareholders Back FCC Deal

Fletcher Challenge shareholders have approved the group's reorganisation plan which will see Fletcher Challenge Paper merged into Fletcher Challenge Canada in a reverse takeover. Approval was given at a special meeting on Monday. Fletcher Challenge Canada's shareholders vote on the move at a special meeting today, Tuesday. Analysts expected NZ shareholders to support the merger, but the meeting in Canada is not expected to be so straightforward as several key institutional shareholders have publicly opposed it. (The Dominion)

Korean Log Prices Rising

Better exchange rates for log exporters over the last month are more than offsetting increased freight rates. The won, the yen and the US$ have appreciated against the NZ$ by 3%-6% in the last 4 weeks. Korean prices have increased for logs, rising by US$2-US$3/metre. Combined with the better exchange rates, exporters have lifted their prices by $4-$5. With inventories in Korea rapidly building, October may well be the peak month for prices, Agri-Fax says. The Japanese log market remains flat, in both price and demand. Prices are back US$1-US$2, but have risen slightly in NZ$ terms. Indian importers are again showing interest, but their ability to pay the higher prices will be critical. (Christchurch Press)

Carter Holt Sharpens Its Axe

Carter Holt Harvey is likely to quit up to a quarter of its forest land as it drives to lift shareholders' returns. The chief executive, forests, Jay Goodenbour, said the company was aiming to lift the return on shareholders' funds by 8%-10%, from the industry's average of 3.5%-4%. The company has ceased tree pruning and has contracted out much of the forestry work done by staff. It expects to gain $40 million-$50 million/year from improved grading of logs. It will consider new sources of revenue, such as charging for recreational access to its forests. It will review the 450,000ha of forestry estate, and is likely to quit land remote from its processing facilities. The company expects to achieve two-thirds of its cost-cutting by the year's end. (Christchurch Press)

Forest Research Profitability Improves

Rotorua-based Forest Research is pleased with the improvement in its profitability in 1998/99, but its performance must improve, says the chairman, Devon McLean. Net profit after tax was $1.161 million, compared with $450,000 the previous year. Total revenue was $38.689 million, compared with $38.099 million previously. Revenue from traditional commercial sources slipped by more than $3.5 million, but had been largely replaced by revenue directly resulting from new investments or acquisitions. The

chief executive, Bryce Heard, said the impact of the Asian economic downturn had caused some major commercial clients to withdraw research and development support, but a newly appointed sales and marketing team had been active in securing new work, both domestically and from overseas. (FR Annual Report)

$60 million Profit Tipped For CHH

Carter Holt Harvey is being tipped to announce a profit of $60 million for its first 6 months. Analysts consider the 2nd half should be even stronger, with the full-year profit at $155 million-175 million, or even higher. In both 1995 and 1996, Carter Holt made net profits of about $450 million. It slumped to $62 million in the March 1999 year as the full impact of the Asian economic crisis hit. The company reported a modest $13 million profit for the first quarter of this financial year. (The Dominion)

Nuhaka and Opio Reduce Losses

Listed foresters, Nuhaka Farm Forestry Fund and Opio Forestry Fund, have reported reduced losses for the September year. Nuhaka, which was to have started harvesting last year but was affected by the Asian economic crisis, made a loss of $28,000, compared with a loss of $214,000 in 1998. Sales revenue amounted to $613,000. Opio's loss fell to $49,000 from $236,000 the previous year. (NZ Herald)

Carter Holt Fights Pricing Claim

Carter Holt Harvey faces a penalty of up to $5 million if it is found to have breached the Commerce Act in what could be a long-running court battle. The case, which began in Auckland last week, centres on alleged below-cost pricing by Carter Holt's building products group to force out a competitor. A division of CHH, Inzco, is alleged to have supplied its Wool Line insulation product at below cost. Commerce Commission lawyer, Brendan Brown QC, said the product was sold by distributors in Nelson and Blenheim at significantly reduced prices after a Nelson man, Lindsay Newton, who ran a business known as New Wool Products, launched a product known as Woolbloc in 1992. Mr Brown alleged Wool Line was sold at half the original price. (National Business Review)

Lift For Pulp Logs

With paper pulp prices lifting by US$50/tonne, there has been a small lift for logs being exported for pulping, Agri-Fax reports. MDF mills in Korea are also increasing their demand. Further price rises for pulp/chip logs are expected in 2000. (Christchurch Press)

Shelter Belts Aid Pasture Growth

After planting 40,000 pines and eucalypts on their property, Taranaki farmers, Ivan and Carolien Howe, are turning their attention to other types, such as poplars and acacias. The Howe's work has been recognised by the Farm Forestry Assn with the Peter Smail Award for farm shelter. Mr Howe said the benefits of planting trees had far outweighed the loss of the land required for them. The farm was growing more grass, the stock were healthier and more contented. Although the farm had 5km of shelter belts, it was growing more grass with less land, he said. (Taranaki Daily News)

Accident Compensation Savings

The privatisation of accident compensation has saved Carter Holt Harvey's forest division $4 million-$6 million/year, and improved forest safety, says the company's forests chief executive, Jay Goodenbour. Contractors with bad safety provisions would not be able to survive under the new regime, he said. (Christchurch Press)

Fletcher Canada Slips

Fletcher Challenge Canada has reported a slip in 3rd-quarter earnings, against the same period last year. But the company said the results were much better than in the 2nd-quarter of 1999, with improved demand for pulp and paper. Third-quarter net earnings were C$10.4 million, compared with C$14.8 million last year. (Evening Post)

Log Price Index Up

Helped by better pruned and Korean unpruned prices, the Agri-Fax log price index was up by $2 to $73/tonne this month. The index, which measures the whole forest price, has lifted by $4 (6%) in the last 3 months. (Christchurch Press)

Record Pine Poles For the Philippines

A shipment of record-length pine poles is on its way from Tauranga to the Philippines. Carter Holt Harvey had to work hard in recent months to scour its 130,000ha Kinleith Forest in search of 300 extra-long pine trees for the order. The customer wanted 27.4m trees for use as power poles; Carter Holt normally harvests pine poles at 18m. The Philippines order were the longest poles the company has ever produced, and their length and weight (4-5 tonnes each) required special handling for debarking and for transportation to the treatment plant at Oringi. (Bay of Plenty Times)

Demand For Timber Maintained

Timber prices in New Zealand have increased by up to 10%, a reflection of general shortages and better-paying export markets, Agri-Fax reports. Dry timber framing is in special demand. The Australian market is reasonably stable, although there is more potential in the better grades of timber because of a general shortage across the Tasman. The lucrative timber market in the US is entering its seasonal, winter retreat. The key 'mouldings and better' market has come back US$200 from a high of US$1400 6 weeks ago. The US, as well as being our biggest timber market, also gets considerable volume of our logs through remanufacture in Asia. (Christchurch Press)

Solution to Toppling

Severe winds within the first 3 years of planting can cause young radiata pine trees to topple, particularly on elevated and fertile ex-farm sites. The trees usually straighten, but a distinctive kink can form in the stem base, resulting in compressed wood, a serious quality defect. Forest Research has shown that 'crown lightening', whereby all branches in the top half of 2-year-old trees are reduced to 50% of their length, is highly effective in reducing toppling. Research is also being carried out nationwide to see how various establishment treatments affect the stability of young trees. (FR Annual Report)

Good Demand For Logs Locally

Agri-Fax reports that pruned logs have been in good demand on the local market over the past month as sawmillers satisfy the better-pricing markets. After some more good rises of up to $5/tonne in some regions, it is expected that prices will now stabilise, given that the US market has entered its quiet winter period. Unpruned logs with small branches have been well sought-after, with $2-$4 price rises in many regions, but larger-branched L-grade logs have weakened in price in most North Island regions. Pulp logs are in steady demand except for the central North Island, where there is an oversupply. (Christchurch Press)

Alliance Says 'No Logging, But'

Alliance Party leader, Jim Anderton, has outlined to West Coast local authorities the party's plans for development on the Coast, including a plan to increase jobs by 1200 over 3 years. In forestry, the Alliance would halt logging in the 130,000ha of Crown rainforests in the Timberlands West Coast estate. However, it would immediately move to plant the 2000ha of exotic timber originally agreed to in the 1986 Accord. If a campaign to transfer State-owned exotic forests on Crown land from Timberlands' control to a trust succeeded, that trust could require that pine trees were both harvested and processed locally. (Greymouth Evening Star)

South Port Looks to Forestry

South Port was poised to benefit from Southland's burgeoning forestry industries, shareholders were told at the AGM in Bluff. Chief executive, Mark O'Connor, said cargo levels for the first quarter of 1999-2000 were 8% above budget and 12% above the same period last year. Forest products accounted for 14% of the port's total cargo. Investment in extra storage space last year had encouraged forestry processors to channel more of their exports through Bluff. The new 4500m² warehouse was already being used for pulp and paper products from Carter Holt Harvey's Mataura mill, sawn timber from 5 lumber companies, MDF from Rayonier's new plant, and Southland Veneer's output from its new Kennington plant. (Southland Times)

Processing Companies Taking a Look

Representatives of 2 North American wood processing companies will spend 3 days in November touring Otago and Southland looking at possible joint venture opportunities. Otago and Southland local authorities went to Oregon to promote the South and its timber resources at a wood technology trade fair earlier this year. In a joint statement, the group said the American companies were interested in alternative resources of timber because of planned expansion of the market and declining native timber resources. Other companies were still planning for visits next year. (Otago Daily Times)