Volume 99, No. 43

November 3 - 9, 1999

Agribusiness

GPG Protects Wrightson Bid

Sir Ron Brierley's Guinness Peat Group has moved to protect itself from ambush in its bid for control of Wrighson Ltd, setting the regulatory groundwork for increasing its stake. GPG, which now holds 18.68% of Wrightson after a quick raid this week, said on Friday that it might wish to buy more shares for a price of up to 40¢. This notice allows GPG to acquire up to 100%. The move will allow GPG to act quickly if another party moves into the market. Before it began its lightning raid, GPG held a 4.78% stake in Wrightson. Wrightson's chairman, John Palmer, said his board was encouraged by GPG's investment, did not believe the approach to be hostile, and nor were they seeking the assistance of any other party. (The Dominion)

Another Suitor in the Wings

Rural services company, Wrightson Ltd, said it had been in talks with an alternative suitor to Guinness Peat Group, but it was unclear whether a bid would be forthcoming. Wrightson said it had been approached by the other party before GPG's buy-in and had conducted brief discussions regarding the possible purchase of a significant shareholding. Wrightson had since had further discussions with the 3rd party, however it had indicated to Wrightson that it did not currently intend to take any action to acquire a significant shareholding in the near future. Wrightson intended to progress discussions with that party as soon as practicable, but it was unclear whether it would result in a competing offer being made, Wrightson said. (NZ Herald)

Drought Halves PPCS Profit

A 2nd consecutive year of drought across much of the South Island's east coast halved Dunedin-based meat processor PPCS's pre-tax profit to $14.6 million in the year to 31 August. The result, which compared with $28.7 million the previous year, had been anticipated, the chief executive, Stewart Barnett, said. The company had deliberately kept its schedules higher than normal because of the pressures on farming communities, and budget predictions had been revised down, he said. Provided there was not another drought his year, he predicted a return to normal profitability patterns in the new financial year. Group turnover improved 1.6% to $882 million ($868 million previously). (Otago Daily Times)

Loss For Richmond

Hastings-based meat company, Richmond Ltd, has announced a loss of $852,000 for the year ending 30 September, compared with a $4.6 million profit the previous year. The chief executive, John Loughlin, said the company had a trading profit of $5.9 million, but restructuring costs related to the consolidation of beef processing and the centralising of lamb cutting caused the loss. The 2nd half of the year reflected a very much improved performance and the company had carried that through into the first weeks of the new season. Mr Loughlin expected the changes in the way Richmond operated to produce a positive turnaround in the 1999-2000 year. (RNZ Rural Report)

Dairy Foods Sale Possible

The mega company that would be created from a proposed dairy industry merger would be prepared to sell at least part of the domestic milk retailer, NZ Dairy Foods, to satisfy Commerce Commission concerns. This would be one of 4 key areas covered in a new application to the Commission, merger establishment board chairman, Graham Calvert, said. The issues the establishment company had to deal with included selling some of the domestic businesses within the merged company to satisfy Commission concerns about a lack of competition in some domestic markets; revamped governance rules for the merged company; a proposed share structure; and an outline of the company's milk pricing arrangements with farmer suppliers. Mr Calvert said he was working to a deadline of 17 December to get the issues sorted out. (Otago Daily Times)

Merino Wool Prices Slide

Merino wools of 17 microns and finer slipped by up to 2% at Thursday's Christchurch auction. Merino fleece made up 19.4% of the catalogue of 9611 bales (1161 clean tonnes). The fine wool indicator fell 6¢ to 896¢. The medium indicator fell 5¢ to 408¢. Crossbred fleece rose 1.5%-2.5%. (Otago Daily Times)

Landcorp Profit Rockets Up 87%

State-owned enterprise, Landcorp, announced an 87.5% jump in annual profit to $10.5 million for the year to 30 June 1999, citing improved beef and deer prices. The result was its strongest profit since 1993-94. It compares with a $5.6 million net operating profit before interest and tax for the previous year. The chairman, Alison Paterson, said livestock operations were ahead of their average performance over the past 5 years, despite severe droughts in parts of the South Island and widespread outbreaks of facial eczema in the North Island. Group net profit after tax was $16.5 million, compared with a loss of $3 million previously, giving the Crown a 4.3% return on shareholders' funds, although no dividend will be paid. (NZ Herald)

W&K Takes Fruitfed Supplies

Williams and Kettle has lifted its holding in Fruitfed Supplies to 95%. It declared its bid for the horticultural industry supplier unconditional this week after receiving acceptances which took its stake to 95.12%. Chief executive, Gerald Weenink, said the offer was now unconditional and acquisition would be completed by the end of the month. Fruitfed has 20 branches around the country and 170 staff. No redundancies were expected. While the 2 businesses were completely different, the acquisition would give W&K a national network, he said. (The Dominion)

WRONZ Posts Record Profit

The Wool Research Organisation of New Zealand has recorded a 7th consecutive year of record turnover. Turnover for the 1998-99 year was $14.4 million, the managing director, Garth Carnaby, said. The chairman, Lochie MacGillivray, said the record had been achieved in spite of the chaos in the wool industry. The next 12 months promised to be the most crucial the industry had ever faced, he said. (Southland Times)

Trade

Moore Warns of Derailment

World Trade Organisation Director-General, Mike Moore, has warned that unless WTO Ambassadors meeting in Geneva and their governments showed some willingness to compromise soon, the expected new trade liberalisation effort, the Millennium Round, could be derailed. Ambassadors meeting just 3 weeks before the WTO Ministerial meeting in Seattle, have made little headway in removing differences over biotechnology and electronic commerce. The envoys have been struggling for 3 months to try to agree on the text of a declaration to be issued by the Ministers at the end of the Seattle meeting. An original 12-page draft has been expanded to 32 pages, but none of it has been agreed to (NZ Herald)

Formal Approval For Spreadable Butter

Spreadable butter exports to Europe can resume after the European Union this week introduced new legislation, the Minister for International Trade, Lockwood Smith, said. A new EU Council regulation overturned a 1996 decision that spreadable and ammix butters were ineligible for entry into the EU under New Zealand's 77,000-tonne butter quota. Customs officials imposed heavy tariffs on spreadable butter, halting sales of about $100 million/year. (Evening Post)

Board May Try to Recoup Losses

The NZ Dairy Board may move to gain millions of dollars in compensation from the EU for its costs and losses since losing its spreadable butter market in Europe in 1996. Board spokesman, Neville Martin,

said that in the 4 years since the high-value butter was excluded from New Zealand's low-tariff butter quota, competing companies had moved into the market with similar products. The Board was under no illusions that it could win the market back. (NZ Herald)

Board's Strong Brand Profile

Three of the NZ Dairy Board's brands have been named in the top 50 consumer brands in Asia. Anchor achieved 24th place in a list that covered not only the food and beverage sector, but also airlines, apparel, hospitality, informaion technology and the media. Anlene was in 42nd position and Chesdale 46th. The 3 NZ Dairy Board brands were the only NZ brands to be ranked on the list, which was compiled by a leading consultancy, Interbrand. (Dairy Board Issues)

Beef Prices Soften for Thanksgiving

Poultry and ham have begun to take the focus in the US fresh meat market, as retailers focus on the approaching Thanksgiving Day, 25 November. Beef supplies remain plentiful, and large supplies of pork and poultry are available. As a result, wholesale prices for fresh domestic beef have softened. Trading in imported manufacturing beef has been quiet, with most buyers attending a conference in Chicago; prices have also declined during the summer. There may be some limited scope for improvement later in the month as buyers prepare for the pre-Christmas shopping period and holiday season, when eating out increases. (Meat Matters)

Board Targets Budget Milk Trade

The NZ Dairy Board is tapping a $2 billion market the world's poor children. After introducing 2 budget milks in Venezuela and the Philippines this year, the Board is expanding sales into other parts of Asia and Latin America. The milks are a blend of buttermilk, cream and wholemilk or skim-milk powder fortified with vitamin A, iodine and iron. (The Dominion)

Maersk Moves in at Timaru

Danish shipping giant, Maersk, will be making its 7th port of call in New Zealand when it starts a fixed-day fortnightly service in Timaru early next year. The move signals a bid by the company to gain a bigger share of the dairy exports trade. Maersk uses Singapore as a hub, and now has weekly services to Auckland, Tauranga and Napier, and fortnightly services to Nelson, Lyttelton and Port Chalmers. The addition of Timaru to its schedule may force other lines to follow suit, depending on the volume of dairy products available. (NZ Herald)

Credit Rating Steady

New Zealand's credit rating outlook is stable and unlikely to alter with a change of Government, according to Moody's Investors Service. The international rating agency downgraded New Zealand's foreign currency debt rating from Aa1 to Aa2 last year. Moody's said polls suggested there could be a change of Government this month, but it believed the country's overall policy stance was unlikely to shift significantly. (Evening Post)

Toyota Offends Aussie Farmers

The NZ-made Toyota "Bugger!" TV advertisement has got up the noses of South Australian farmers and it has been forced into a later viewing slot. The rural council at Elliston, on the Eyre Peninsula, lodged a formal complaint with the Australian Advertising Standards Board saying the advt was insulting rather than amusing, and it also wants the National Farmers Federation to sue Toyota for slander. Elliston councillor and retired farmer, Richard Ridgway, said such advertisements portrayed farmers as intellectually inferior. (The Dominion)

Sri Lanka Largest Powder Market

The small South-east Asian state of Sri Lanka is the NZ Dairy Board's biggest export milk-powder market. The country's small dairy industry is unable to meet the demand for milk from the 18 million population. Around 80% of the country's milk is now supplied by imported milk powders, with the NZ Dairy Board supplying about 65%. The Board exports 30,000 tonnes of full-cream milk powder and 1000 tonnes of non-fat milk powder a year to Sri Lanka. (Dairy Board Issues)

Livestock

Calves Fetch $260 in North

Livestock are maintaining relatively high prices and are consistent across the various districts around the top half of the North Island. The Far North has seen good cattle sales with 7000-8000 head traded during the past 2 weeks. The Bay of Plenty has been doing good business with bull calves, which are being snapped up by Hawke's Bay buyers. Some 100kg calves have sold for $250-$260 and the trading

is just getting under way, with plenty of inquiry. The Far North is experiencing similar demand for bull calves, with good-conditioned well-marked lines making $260-$270. (NZ Farmer)

Velvet in Demand

Deer farmers withholding velvet from sale to take advantage of continuing rising prices could force buyers into finding product offshore, says Wrightson's national velvet manager, Philip Irwin. Velvet was worth twice as much now as it was at the same time last year, but buyers were unhappy at the number of farmers holding on to velvet because of its rising value, he said. Top grades started out at $95/kg and had increased to 118/kg, with most Korean grades increasing by $5/kg at each corresponding sale. (NZ Herald)

Vendor Declarations Essential

The chairman of Federated Farmers' Meat and Fibre Producers, Chris Lester, said buyers of store cattle should demand National Vendor Declarations on any livestock purchased from now on, for their own protection. They would be ill-advised to buy stock for fattening without the declarations, he said, and farmers wanting to send cattle to slaughter after 1 December might be unable to find a buyer if they could not provide an animal health declaration in good faith. From 1 December, the status declarations required for cattle and deer sent for slaughter must cover growth promotants, veterinary medicines, animal remedies and Johne's disease vaccinations, and some companies intend to incorporate a current Tb declaration requirement. (Manawatu Evening Standard)

Professor Seeking Overseas Funding

Otago University Professor, Frank Griffin, is canvassing overseas science institutions for funding to save the Tb quarantine deer farm at Table Hill, Milton. AgResearch recently cancelled its Tb-resistant deer breeding programme on the farm. Prof Griffin, who heads Otago University's Deer Research Laboratory, is in Europe trying to raise the several hundred thousand dollars needed annually to save the farm and run the research programme. A university spokesman said the quarantine farm was unique in the world. Maintaining its biosecurity, which includes pest control, costs $50,000/year. About 100 deer, bought for a genetic programme which was later cancelled, are still being fattened on the farm. (NZ Farmer)

Farmers Appalled By Decision

Otago Federated Farmers is appalled that funding for the quarantine Tb deer farm at Table Hill, Milton, is to end. The president, Lindsay Alderton, said the Government undervalued agricultural research and the Table Hill farm was a classic example of decisions being made by people who had lost touch with the reality of farming. (Otago Daily Times)

Horses Increase Show Entries

An increase in entries for the Canterbury A&P Show next week has come from horses, not traditional livestock, says assn chief executive, Mike Vernon. Total entries are up slightly on last year, continuing the trend of the last 5 years, with rises of just over 12%. Horse entries have lifted 62% in the same period. There had been a slight improvement in beef cattle entries, but all other traditional livestock classes were drawing fewer entries. Mr Vernon said modern technology and highly accurate performance records had reduced the importance of the older eye-appraisal system of evaluating stock. (Christchurch Press)

21 Brandenburg Cases

The incidence of reported salmonella Brandenburg in the past month tapered off as lambing got under way, Labnet Invermay reported. Only 21 cases were confirmed in Southland and Otago, compared with 60-70 in each of the previous 2 months. Labnet also reported that in October, 5 cases of salmonella Brandenburg were confirmed in cattle and one in a pup. (Southland Times)

Shearing Record Set

Rakaia shearer, Grant Smith, set a new world Merino wether shearing record at Ryton Station, Lake Coleridge, on Thursday. He shore 418 sheep in 9 hours, surpassing the old record of 405. He averaged a sheep every 77.5 seconds. (Otago Daily Times)

High Performance Gains

High performance, early lambing systems will generate increased returns provided the sheep are well fed, farmers at the AgResearch Poukawa elite lamb field day were told. Scientist, Dr Paul Muir, has demonstrated major benefits in lamb growth rate from using top-quality sires and dams. Using Finn-cross ewes gave a 9% increase in reproductive efficiency; using top-quality sires gave a 7% increase in lamb production; and using ewes with high levels of milk output increased lamb growth by 16%. (NZ Farmer)

Scientists Urge Antibiotic Curb

Drs Neil Macgregor and Max Turner, of the Institute of Natural Resources at Massey University, are concerned that New Zealand could be facing a human health crisis because of what they consider is an excessive use of antibiotics in animal feeds. They said there was an urgent need to ban a wide range of antibiotics which they believed were being prescribed by veterinarians for use as animal growth promotants. The continuing such use of antibiotics could have an impact on our export trade in animal-based food products, but even more important was the potential risk to human health through the production of antibiotic-resistant organisms. They said the issue was more serious than the general public realised. (Manawatu Evening Standard)

Goat Meat in Comeback

The increasing value of goat meat is renewing confidence in the goat industry, says Cambridge goat farmer Phil McGovern. A few years ago it was hard to get someone to take cull goats, with returns as low as 50¢/kg. Now, several companies, including Richmond, were committed to year-round killing, with prices of $2.50-$2.80/kg. Like mohair, the long-term prospects for goat meat looked good, with companies reporting that demand exceeded supply and was growing. (NZ Farmer)

Possum Fur Wanted

Possum fur traders are having difficulty buying enough fur to meet the demand for garments made from a blend of possum fibre and Merino wool. The export market had hardly been touched, said Hokitika possum-fur trader, Peter Gray. It takes about 20,000 possums to produce 1 tonne of fur, and his company had orders for 1200 tonnes of fur this year. (Greymouth Evening Star)

Horticulture

Sun Sprout Spreads to Australia

Auckland-based salad maker, Sun Sprout, has bought the leading Australian salad producer, Brian Hussey Ltd. Melbourne-based Hussey is an established exporter, with 30% of its product sold in Japan, Hong Kong, Singapore, Taiwan, Malaysia, Saudi Arabia and the UK. (Export News)

Glass Prompts Wine Recall

Montana Wines has recalled 3 products from its sparkling wine range after glass particles were found in bottle at its Glen Innes winery, Auckland. October batches of the 1.5 litre Lindauer Special Reserve Millennium magnum, 750ml Lindauer Special Reserve and 750ml Bernadino have been recalled. (The Dominion)

Growers Sleep in Asparagus Beds

Some Hawke's Bay asparagus growers have been sleeping in their fields to warn off crop thieves. Growers at Eskdale, just north of Napier, said that by sleeping in the asparagus beds they had been able to carry out 24-hour patrols. Local constable, Craig Skeet, said crop thefts had cost growers thousands of dollars. The thefts were well organised and were not the work of one or two individuals helping themselves to a feed. (Hawke's Bay Today)

Restrictions on Bulbs Lifted

Japan has lifted restrictions on NZ lily bulbs, opening up a market with the potential to earn millions in exports. The breakthrough came after 2 years of negotiations between the bulb industry and the NZ and Japanese Ministries of Agriculture. Spokesman for the industry group, Bulb Export NZ, Arend Smilde, said bulb exporters believed sales to Japan would be worth at least $5 million within the next 5 years. The first trial shipments were sent in September last year and exporters were confident that at least 20 varieties of NZ lily bulbs had great potential for export to Japan. New Zealand has a distinct advantage against its main opposition, Europe, in being able to supply fresh, vigorous bulbs in the Northern off-season. (Export News)

Charges Laid Over Wine Labelling

The Ministry of Health has laid charges under the Food Act against a company and 2 people, after it investigated allegations of mislabelling of wine. The parties involved sought and were granted an order in the Auckland District Court for interim name suppression. Four charges have been brought; these relate to selling an article under such a name as to lead a purchaser to believe the article complies with regulations; and selling food in a package that has a false or misleading statement or word purporting to indicate the composition. (The Dominion)

Record Entries For Wine Show

A record 1142 wines were entered for the latest Air New Zealand Wine Show. Sixty-six gold medals, 155 silver, and 392 bronze were awarded. The champion wine was a 1998 vintage Pinot noir from Auckland's Wither Hills Vineyard, using grapes from Marlborough. It is the first Pinot noir to be named champion wine. (NZ Herald)

World Honey Institute

A World Honey Institute has been formed by the New Zealand, UK and US honey industries, arising from New Zealand's initiatives with manuka honey. The 3 countries have agreed to a joint research programme, based in New Zealand, with the primary objective of establishing international standards for honey trading. A major issue for honey in international trade is the adulteration of honeys with other sweeteners. These are sold for less than pure honeys, but drag overall prices down. Bill Floyd, manager of the NZ Honey Advisory Service, said honey needed to be taken out of the commodity market and sold as a premium product. (Export News)

SA Backs Deregulation

The South African apple industry has had a poor season, but few growers would want to go back to the days of single-desk selling, Robin Starey, a fruit grower and director of the South African research company, Hortec, said in Hastings. South African growers had been hit by the world over-supply of apples, but those with newer varieties did better than those relying on older ones. New varieties gave NZ growers an advantage over South African growers, but SA was also developing new varieties. Deregulation had made a huge difference. Growers now had choices and had to accept responsibility for their fruit, rather than slipping it into the pool and letting someone else worry about it. (Hawke's Bay Today)

Export Deal Moves Closer

A multi-million-dollar deal to export millions of plants from Otago to China has come a step closer. Dunedin businessman, Bill Christie, plans to export about 120 million plants/year to the Minhang district of China from early next year. A delegation from Shanghai, including the deputy Governor of Minhang district, has been in Dunedin and Otago at the weekend to select plant species. 15 November has been set as the deadline for final confirmation of the project, Mr Christie said. 32 species of plants, including flowering shrubs, miniature roses, ornamental grasses and NZ trees were selected by the delegation. (Otago Daily Times)

KiwiGreen Field Days

Kiwifruit NZ is holding a series of presentations of the KiwiGreen 2000 On-Orchard programme. KG2k is "an environmentally and ethically responsible production system that ensures safe fruit for the consumer," KNZ says. The presentations are at Paengaroa, 23 November; Kerikeri, 25th; Motueka, 29th; and Gisborne, 30th. (KNZ Kiwiflier)

Land, Soil, Water, Arable

Farmers Support Trial

South Canterbury grain and seed farmers will give conditional support to proposed field trials at Lincoln of Roundup-ready wheat. International chemical company, Monsanto, is planning to grow the wheat on a 22m x 32m test site at Lincoln. At a meeting in Timaru, the branch supported a submission made by the federation's head office to the Environmental Risk Management Authority, but they also called for strengthened controls, including a 24m buffer zone planted with normal wheat. After the trial, the zone would be sprayed with Roundup to identify "volunteer" plants. They also wanted the plot inspected 2 years after the trials end. (Timaru Herald)

Seed Promotion Council Reviewed

The future of the NZ Seed Promotion Council looks uncertain, with the 4 different groups involved reviewing its future. Agricom managing director, John McKenzie, told South Canterbury arable farmers that the shareholders would decide over the next year if the council had a future. The council promotes NZ pasture seeds and amenity grasses at home and overseas and has been funded by levies from the Federated Farmers herbage sub-section. (Timaru Herald)

Farm Sells For $5.6 million

A South Otago farm has been sold for $5.625 million to buyers who will focus on intensive cattle production to supply niche Asian markets with high quality meat products. The 1440ha Ranch Farm at Awamangu, Clutha Valley, has been sold by the Cochrane family to the Wistaria Co Ltd, a 50:50 NZ-Thai partnership. Parts of the farm not suited to livestock production will be planted in forests.

(Southland Times)

Weather Favours Disease

Weather conditions in most areas of the South Island favour the development of disease in crops. Regular monitoring of crops will ensure that fungicide applications are both well-timed and kept to a minimum, Food and Crop Research says. Stripe rust is widespread in cereals, but infection is generally not severe because of the combination of fungicide use and cultivar resistance. (Christchurch Press)

Industry

Winebox Shadow Over Wool Board

The Wool Board is facing having to pay at least $2 million more in tax. The Court of Appeal this week declared that Inland Revenue could reassess the Board for tax after hearing about a redeemable share deal in the so-called Winebox inquiry. The Wool Board had invested $100 million of farmers' reserves in Capital Markets Finance shares and considered them as tax exempt. (Evening Post)

Possible Casein Plant For Southland

A new casein plant may be built at NZ Dairy Group's Southland factory at Edendale, with the potential for casein whey to be railed to the Clandeboye milk factory near Timaru. Clandeboye site manager, Peter Cross, said there was a strong possibility the plant would go ahead, although it had not yet been formally approved. Significant increases in milk production in the South is forcing expansion of one or other of the plants. Edendale has already surpassed is peak capacity of 4 million litres of milk/day, and the excess, about 300,000 litres/day, is being trucked or railed to Clandeboye. (Timaru Herald)

Agricultural Employment Increases

The Minister for Food and Fibre, John Luxton, has highlighted improved primary sector employment figures. The Household Labour Force Survey showed that 22,000 jobs were created in 'Agriculture, Forestry and Fishing' over the 12 months to September 1999. There were now more people employed in the sector than at any September quarter since records began in 1985, he said. Of the 24,500 jobs created in New Zealand over the last 12 months, 22,000 of them were in the primary sector, showing once again that the food and fibre industries were the engine-room of the economy. (Bay of Plenty Times)

25 Years of Meat Industry History

The first comprehensive review of the modern meat industry in New Zealand will be released in early December. Meat Acts, written by Mick Calder and Janet Tyson, covers the meat industry during the 25 years from 1972-1997, a time of particularly dramatic change and development in politics, structures, products and markets. (Meat Matters)

NZDG Holds Some Payout

NZ Dairy Group is holding back some 40¢/kg of milk solids from the NZ Dairy Board's advance payout of $2.90/kg. NZDG has increased its payout by only 10¢, from $2.40 to $2.50/kg. Kiwi Dairy Co-op is not passing on any of the increase; its advance payout is $2.34/kg. Other companies are paying the full amount. Whether companies pay any or all of the increase at the time is a commercial decision for each company during the season. (Southland Times)

Organic Ice-cream

Southland dairy foods company, Southern Fresh Milk, is testing the export market for ice-cream mde from organic milk. The company has sent 2 trial 2-tonne shipments of the ice-cream to Japan over the past 6 weeks. (Southland Times)

Export Meat Production

In the 3rd week of the new season, to 23 October, the number of lambs slaughtered for export was 817,809, up 22.2% compared with the same period last year; hogget production was down 54.9% at 906; mutton was down 0.1% at 114,439. The number of steers slaughtered for export was up 2.8% at 15,518; heifers slaughtered were up 63.6% at 6048; cows slaughtered were down 2.8% at 20,167 and bulls were up 28.9% at 10,415. Total beef slaughterings for export were up 9.5% at 52,148. Bobby veal production was down 33.5% at 88,585, and goat slaughterings were up 52.5% at 3714. (Meat Matters)

Halal Recruits

30 Muslim slaughtermen have been recruited from Fiji and Malaysia for NZ freezing works this season.

They will join 150 Muslims already in New Zealand providing Halal slaughter facilities for meat exports to Muslim countries. (Evening Post)

Forestry

FCC Says No

Fletcher Challenge Canada shareholders have rejected a merger with Fletcher Challenge Paper. A group of dissenting institutional shareholders blocked the merger at a vote of minority shareholders in Vancouver on Wednesday. They complained that cash-rich Fletcher Canada was paying too much to its debt-laden parent. The plan failed even before a formal vote, based on proxies already counted. (Evening Post)

Failed Merger Cost $37 million

Fletcher Challenge spent $37 million on legal and related fees for the FCP-FCC merger. Fletcher chairman, Bill Wilson, told more than 600 shareholders at the AGM in Auckland that directors had ruled out resuscitating the failed merger. Fletcher remained committed to separating its paper division from the Group, as it was in the best interests of all shareholders. A new 3-pronged strategy would aim to improve the financial performance of the paper operations before they were sold. (Otago Daily Times)

Overseas Earnings Boost CHH

Equity earnings and dividends from Chile-based Copec and Australia-based Sancella joint ventures have helped Carter Holt Harvey's half -year result. They provided $65 million in earnings for the half-year to 30 September. After $9 million of NZ losses were deducted, bottom-line profit was $56 million, against $10 million in the corresponding period last year. After a run of dismal results during the past 2 years, CHH chief executive, Chris Liddell, was optimistic, saying the company was on a positive path. Prices were lifting in its commodities and the Asian crisis was well behind it. (The Dominion)

Whangarei Plant to Proceed

Carter Holt Harvey has announced that it will go ahead with a proposed $132 million laminated veneer timber plant at Marsden Point. It expects the plant to be commissioned in December next year, creating 110 full-time jobs and construction work for 220 tradesmen. The plant would produce 42,000 tonnes/year of laminated veneer 18 months after commissioning. 60% of the mill's output would be exported to Australia where Carter Holt already supplies around 85% of the market. (Evening Post)

Log Exports Fully Recovered

Carter Holt Harvey has reported that the September quarter of this year provided a record 424,000 tonnes of log exports, with orders now back to pre-Asian crisis days. Forests earnings before interest and tax for the half-year to 30 September were $55 million, up from $41 million in the previous corresponding period. (The Dominion)

Controversial US Tariff Plan

A controversial US proposal to slash tariffs on forest products is predicted to lead to more logging in New Zealand, Australia and several other major forestry countries. The White House claims its initiative to speed up tariff cuts world-wide on paper, wooden furniture and other forest products would have little impact on the environment, but environmental groups say it is flawed and have called on President Clinton to abandon it. The proposal calls for the US, the EU, Canada, New Zealand, Finland, Australia, Singapore, Japan and South Korea to remove most tariffs on pulp, paper, and printed products by next January, with developing countries following 2 years later. Washington hopes to give the initiative a boost at the WTO meeting in Seattle, 30 November. (Evening Post)

Norske Looking at FCP?

Norwegian newsprint giant, Norske Skog, is reported to be looking at buying Fletcher Challenge Paper. In the wake of the collapse of FCP's proposed merger with Fletcher Challenge Canada, Norske's chief executive, Jan Reinaas, is reported to have said the company was looking to buy or merge with a similar-sized newsprint company. Analysts said Norske was well positioned to do a deal wih FCP. Last month Norske sold off a big part of its non-newsprint assets by exiting its lumber business, giving it a very strong balance sheet. Its main interest would be in FCP's Australasian and South American assets. (NZ Herald)