Jamie's Weekly Sports Thought

Tim Shadbolt has written A Tale of Two Mayors. My literary offering is titled A Tale of Two Texters.

It came about because I was in Christchurch last Saturday supporting the Southland under-18 rugby team at the South Island tournament at Lincoln. A prior dinner booking with friends (made before the Air New Zealand Cup quarter-final draw) had to be honoured and meant relying upon text updates from Tauranga.

Having lost an expensive bottle of beverage to Graeme Smith (Chiefs board member and Ballance Agri-Nutrients GM of Sales and Marketing based in Mount Maunganui) in the Bay of Plenty round-robin clash, a return alcoholic wager was duly placed.

Like me, Lee Piper and Guy Taylor (CRT) had also suffered expensive losses to the cocky Smith and were confident the Stags would extract revenge and replenish our drinks cabinets.

Both Smith and Piper agreed to text updates. Suffice to say, they saw the game somewhat differently:

Smith (7:01pm) – Are you boys packing yourselves? Your team looks like they’ve already gone on the end of season trip today. Guess they have eh!!

Smith (8:07pm) – Due to unfortunate atmospheric conditions in the Bay of Plenty all mobile communication is suspended for the rest of the night. Unless things change of course.

Piper (8:15pm) – Still 14 to 8. [Player’s name - not publishable] is an idiot. 4 to go to half time.

Piper (8:20pm) – 21 to 8 to us. Half time.

Smith (8:21pm) – 21 to 8 to you at half time. We usually only have one half per game so it must be the second half tonight.

Piper (8:39pm) – King yellow carded. In some trouble on our own line. Still leading. Maybe not for long.

Piper (8:45pm) – 21 to 11. We infringing and been warned.

Smith (8:45pm) – 21 to 11. Use fullas are starting to cheat.

Piper (8:47pm) – And [expressive expletive] Walsh is killing us with his [expressive expletive] refereeing.

Smith (8:51pm) – 28 to 11 [expressive expletive].

Piper (8:56pm) - We up 28 to 11. Looking good. 17 to go.

Piper (8:58pm) - 35 to 11 to us with 15 to go.

Piper (9:01pm) – 38 to 11 … 13 to go.

Smith (9-04pm) - Yep, the top will be coming off your bottle just after we’ve finished Piper’s. Taylor’s after yours.

Piper (9:09pm) – 45 to 11 … we are killing them … 6 to go.

Smith (9:10pm) – 45 to 11. 6 to go. 5 quick tries under the posts and we’ll be right.

Smith (9:20pm) – Well done boys. I’m off to the bank for a loan.

A shameful tradition of tainted food

Taipei Times

In China, tasteless and colorless melamine has been part of the food chain for a long time. Its addition to Sanlu’s milk powder has now created a global panic over contaminated Chinese foodstuffs.

And this was not the first time.

In May last year, companies in China’s Jiangsu and Shandong provinces added melamine to wheat protein and barley protein powder, which caused thousands of pets in the US, Canada and other countries to fall ill or die.

More than 60 million pet food products were recalled. Feed for 20 million chickens, hundreds of thousands of cultivated fish and thousands of pigs was also contaminated with melamine.

The immediate reaction by the Chinese authorities to the allegations of poisonous animal food was strong denial, and it was only when the US insisted that it be involved and sent representatives to China to take samples that the scandal was exposed.

So what did the Chinese authorities learn from that incident? Nothing.

In the most recent crisis, local governments continued to offer denials even after New Zealand company Fonterra Co-operative Group used diplomatic channels to put pressure directly on the Chinese government. It is well-known within the Chinese industry that melamine is added to milk powder, vegetable proteins, processed food products and animal feed. The government knows it and tolerates it.

Melamine is one of many harmful additives, and even if the melamine problem were eliminated, other hazardous substances could be added to products.

On Wednesday, frozen green beans imported from China to Japan were found to contain 34,500 times the amount of pesticides allowed in Japan. The government immediately ordered a recall.

There is no end to all the problems with Chinese food products.

Importing countries must pressure China and demand that it meet its responsibilities by strengthening procedures to manage, inspect and ban contaminated food products and thus control the export of toxic food.

Taiwan’s Bureau of Standards, Metrology and Inspection and the Department of Health should meet their control responsibilities and implement stricter sampling of raw materials imported finished or semi-finished.

The government should amend the Commodity Labeling Act (商品標示法) to require that, in addition to listing manufacturing country, contents and nutritional value, labels also show the production process at the place of origin for raw materials to that consumers can make an informed choice as to the safety of a specific product.

Although China’s Taiwan Affairs Office spokesperson Yang Yi (楊毅) said China would handle the milk powder incident satisfactorily and demanded that Duqing Co in Shandong send representatives to Taiwan to investigate its export of dairy creamer here, he has kept mum on the issue of compensation to the victims, which displays a total lack of sincerity.

The milk powder scandal has had a serious economic impact on the companies involved as well as public health in Taiwan.

The Taiwanese government and private sectors must demand compensation from the Chinese government and manufacturers.

If China does not provide an adequate response to compensation demands in a timely manner, Chinese products should be boycotted and people should take to the streets to protest when Association for Relations Across the Taiwan Strait Chairman Chen Yunlin (陳雲林) visits Taipei.

Sanlu 'facing bankruptcy' after milk scandal

The Sanlu joint venture into which New Zealand dairy farmers have ploughed nearly $200 million in China may be wound up.

Dairy cooperative Fonterra has claimed it retains an estimated $62 million worth of its investment – written down $139 million last month – but the Shanghai Daily reported today Sanlu is "facing bankruptcy".

Industrial experts told the newspaper that it is unlikely a single company will be able to take over Sanlu as its debts total more than 700 million yuan (NZ$169 million) –not counting massive compensation claims.

Chinese newsagency Xinhua said yesterday that 5824 children were still receiving hospital treatment for kidney diseases caused by a milk contaminated with melamine, and six children were in serious condition.

Amid widespread dilution and adulturation of Chinese milk, infant formula produced by Sanlu contained the highest levels of an industrial chemical, melamine, at 2563 mg/kg or parts per million (ppm). Tainted samples were found among another 21 suppliers (other than Sanlu), but the concentrations ranged from only 0.09ppm to 619ppm.

Fonterra last month wrote down the book value of its investment in the Sanlu operation by 69 percent to reflect the cost of recalling product poisoned by melamine – added to diluted milk to make it appear to have a higher protein levels – and NZ farmers' anticipated loss of brand value in the company.

The Shanghai Daily reported that a meeting today of companies interested in taking over Sanlu may open the door for a joint purchase of Sanlu, but any acquisition won't proceed quickly.
No potential buyers have so far revealed concrete plans, possibly due to the heavy financial burdens to compensate victims who drank the melamine-tainted milk.

The domestic milk manufacturers who are interested in buying Sanlu's include Wahaha Group Co Ltd, Wondersun, Sanyuan Food Co and Heilongjiang-based Feihe Dairy, which is a wholly-owned subsidiary of New York-listed American Dairy Inc.

Inner Mongolia Yili Industrial Group Co, the nation's biggest dairy maker as well as another victim of the widespread milk scandal, also agreed to attend the meeting to discuss the future of Sanlu, according to Bloomberg News.

A marketing survey of Chinese milk consumers has shown that half of Sanlu's former customers say they will avoid the brand in future.

Fonterra chief executive Andrew Ferrier said last month the cooperative might be able to reconstruct Sanlu's assets and was not ruling out any changes at Sanlu that provided a "commercially viable" solution for Fonterra. But Fonterra has not replied to questions about how the latest moves affected the investment by NZ farmers.

Obama vs McCain On Their Plans For Agriculture

Farm Progress, a Rural Press/Fairfax Media subsidiary in the United States, posed a series of agricultural policy questions to the Obama and McCain camps. This is an extract of what the two men vying for the most powerful job in the world had to say about farming, fertiliser and fuel for American farmers.

What are your views on the food vs. fuel debate?

* Barrack Obama: "Corn-based ethanol has been an important transitional technology in helping make America more energy independent. However, it has limitations, and that's why I am committed to accelerating the transition to advanced biofuels. I support an array of policies to speed the transition away from corn and toward low-carbon, sustainable alternatives that do not rely on food crops. There are many flavours of ethanol - different feed stocks, different production approaches, different carbon footprints. In contrast, there is only one flavor of oil - expensive, polluting and largely imported. As president, I will work to phase in at least 2 billion gallons of cellulosic ethanol into the national fuel supply by 2013."

* John McCain: No response

What steps might you take as president to stabilise fertiliser prices, which have doubled and tripled?

* Obama: "A major key to stabilising fertiliser prices is addressing the skyrocketing costs of natural gas. Through my policies for continued domestic production combined with investments in efficiency, we will take some of the pressure off the resource and increase supply, bringing costs down."

* McCain: "I believe in promoting and expanding the use of our domestic supplies of natural gas. When people are hurting, and struggling to afford gasoline, food, and other necessities, common sense requires that we draw upon America's own vast reserves of oil and natural gas. Within the United States we have tremendous reserves of natural gas."

As we author trade agreements, are there ways to level the playing field in regard to individual countries' regulations, such as employee conditions and chemical use?

* Obama: "For too long, Washington has put the interests of free trade ahead of broader concerns about our economy and American workers. I will break from the failed trade policies of the last eight years. As president, I will ensure that our trade agreements include strong, enforceable labour and environmental provisions in the core of the agreements."

* McCain: "I believe that globalisation is an opportunity for American workers today and in the future. Ninety-five percent of the world's customers lie outside our borders, and we need to be at the table when the rules for access to those markets are written. To do so, the U.S. should engage in multilateral, regional and bilateral efforts to reduce barriers to trade, level the global playing field and build effective enforcement of global trading rules."

What would be your policy concerning greenhouse gases? How would it affect farmers? Would you pursue approving the Kyoto Treaty?

* Obama: "As a result of climate change… I support implementation of an economy-wide cap-and-trade system to reduce carbon emissions by the amount scientists say is necessary: 80 per cent below 1990 levels by 2050. This market mechanism has worked before and will give all American consumers and businesses the incentives to use their ingenuity to develop economically effective solutions to climate change. This will transform the economy, especially in rural America, which is poised to produce more renewable energy than ever before, creating millions of new jobs across the country. I will also develop domestic incentives that reward forest owners, farmers and ranchers when they plant trees, restore grasslands or undertake farming practices that capture carbon dioxide from the atmosphere, creating new opportunities for rural America to help solve the climate crises."

* McCain: "I will propose a cap-and-trade system that would set limits on greenhouse gas emissions while encouraging the development of low-cost compliance options. A climate cap-and-trade mechanism would set a limit on greenhouse gas emissions and allow entities to buy and sell rights to emit, similar to the successful acid rain trading program of the early 1990s. The key feature of this mechanism is that it allows the market to decide and encourage the lowest-cost compliance options."

If you're elected president, the most recent farm bill won't expire in your term. Would you do anything in the next four years to address any problems you see with the current legislation?

* Obama: "It's important to implement the 2008 Farm Bill in keeping with the intent of Congress. As president, I will work to ensure that the protections in the bill against gaming the system are properly enforced, and I will work with Congress to push for greater reform to ensure that payments are targeted appropriately."

* McCain: "I support a risk management program for farmers. When a farmer suffers from a natural disaster such as droughts or floods, we should assist them - this is a commitment we have made to our farmers, and I will honor it. As president, I will fight on behalf of family farmers to enact reasonable reforms to our crop insurance program and our system of countercyclical and direct payments."

Money Crisis Warning To Meat Industry

SOURCE: The Dominion Post

The meat industry should be wary of the flow-on effects of the international financial crisis, says Silver Fern Farms chief executive Keith Cooper.

Diminished spending power in the lucrative European and United States markets could hurt the sales of premium products, he said. "That describes most of our products."

The initial impact on meat exports was beneficial, with a fall in exchange rates, but Mr Cooper said he also had "caution rather than pessimism" about the possible flow- on effects.

"If banks are not lending money, what does this mean for small to medium-sized businesses?

"I use the analogy of a small printing business. They want money to buy a new press but can't get it. That means they don't employ an extra couple of people.

"What has this got to do with meat? Ultimately, if there's less money in the economy, less discretionary spending, people spend less on premium products."

One way of lessening this risk was to move away from reliance on traditional markets in Europe and the United States.

"And if you look at the financial scene, that's where the pressure is coming on. It's not on banks in the Middle East, or India or other emerging markets and that's where we should be diversifying to."

Those concerns aside, the market for lamb and beef in Europe and the US looked promising this coming year, he said.

Marketing manager Glenn Tyrrell had returned from Britain and France with good news.
Customers in France wanted increased chilled lamb and in Britain he expected to sell as much chilled lamb as last year. This meant a bigger proportion of this year's reduced kill would be sent in the more expensive chilled form while at the same time, prices would lift for the reduced portion of frozen lamb.

Mr Cooper said it was interesting to note that while lamb prices stayed high, its rivals – pork, chicken and beef – were lifting to meet it.

But New Zealand beef prices had eased from their peaks of a few months ago because of consumer resistance to high steak prices. Grinding beef in the US had also slipped back.
The Russian market had come under pressure from an influx of supplies from South America and Australia. Falling exchange rates had largely offset this and he expected prices to pick up again later in the year.

USNEWS.COM - The Story Behind China's Tainted Milk Scandal

Company feared going public with information as thousands of children were sickened

BEIJING — The crisis began August 2, when executives of the Fonterra Group, the world's largest trader of dairy products, arrived for a meeting at the headquarters of their Chinese joint venture company, Sanlu Group.

They were in for a shock. The Chinese company's powdered milk was found to contain melamine, a chemical used in producing plastics, and was sickening infants and young children around the country.

There is never a good time for that kind of news, of course, but the timing couldn't have been worse: It was just days before the start of the Beijing Olympics, just when Chinese authorities were hypersensitive to anything that might mar the nation's moment in the spotlight.

Over the next five weeks, according to a knowledgeable outside source, Fonterra and its Chinese partner engaged in a nerve-racking battle over what to do. All the while, unknowing parents went on giving their children the contaminated milk made by Sanlu, which is China's largest powdered-milk producer.

When the news eventually came out, parents rushed their ailing infants to hospitals: So far, some 54,000 children have been found to be suffering from kidney stones and four have died, according to official statistics.

Government testing soon discovered that the problem was not limited to Sanlu, which is headquartered in Shijiazhuang, the capital of China's Hebei province near Beijing. The products of 20 dairy companies around the country were found to be contaminated with melamine. Traces of melamine were found in one of China's most famous candies, White Rabbit, which is also sold abroad.

And if that wasn't bad enough, the chemical soon started turning up in the products of international companies, including giants such as Cadbury, Nestlé, and Unilever, leading to product recalls around the world.

How did this happen?

Some say the source of the problem is farmers caught between rising costs and a government cap on prices. The farmers, these critics say, added the melamine to boost the tested protein level of watered-down milk. Farmers, in turn, are blaming the operators of the thousands of milk collection stations scattered across the country, which purchase raw milk with little regulatory oversight.

Wherever the blame ultimately rests, this episode is a textbook example of how things can go terribly wrong in the opaque world of Chinese business and politics.

Some say the growing scandal—which has seriously damaged the reputation and business of major domestic and international companies—could be a wakeup call for foreign companies here, who have long walked a fine line to avoid offending their Chinese partners and the authoritarian government.

"China is a very murky environment in which foreign companies are frightened of having politics turned against them," says James McGregor, the chief executive of JL «syle is no periods»McGregor & Co., a China research firm, and author of One Billion Customers: Lessons From the Front Lines of Doing Business in China. "So they are way too deferential to their partners."

Fonterra executives had immediately urged a total recall of the milk powder from homes, shop shelves, and warehouses, according to the source knowledgeable about the incident.
However, their Chinese business partner refused. "Sanlu was afraid of a crisis, angry parents and farmers, and the loss of jobs that would result from the scandal," says the source.

But there apparently was an even bigger issue: The central government had sent out an order that nothing was to negatively affect the Olympics, which was to begin just six days after Sanlu told its foreign partners about the problem. Fonterra, a New Zealand company, came under intense pressure from its Chinese partner, and also from the local city government, which owned the remaining shares of the venture, to keep quiet. "You can't imagine the threats they faced from local officials," says the source.

In four different meetings, Fonterra repeated its demand and Sanlu deferred, insisting the information had been provided to the central government. Beijing later pleaded ignorance.
In the meantime, Fonterra executives are said to have agonized over what to do. They studied the history of previous such incidents, in which the central government repeatedly tried to cover up the truth, including the deadly SARS epidemic and a spate of product safety scandals in which whistle-blowers got in trouble. They were not sure whether or not they would be backed up if they went over the heads of the local Chinese officials.

They decided to try to "work through the system" while they awaited clearer information from lab reports and word from the central government. "They were between a rock and a hard place," says the source.

But when more weeks passed by and the Chinese partner continued to refuse to tell the public about the risk—though it did pull the product from shop shelves—Fonterra sought help from the New Zealand government. Wellington went through diplomatic channels to inform senior central government officials of the problem on September 11, two weeks after the Olympics ended, and a little over five weeks after Fonterra was first notified.

At that point, Beijing jumped to action, going public with the story, ordering a recall, and arresting farmers and Sanlu and Shijiazhuang officials.

Fonterra has since come under heavy criticism for not going public sooner, but it has said that it behaved responsibly. Fonterra officials have expressed the view that had they gone public immediately, the central government might have reacted angrily and might even have denied there was a problem.

Critics say that Fonterra was naive about the China market. Although Sanlu told the company that it only learned about the problem in early August, there had been rumors of the problem going back to last December.

Many Chinese reporters were hearing stories of infants being afflicted with kidney stones, but the central government had last year ordered the media not to report on anything negative in the run-up to the Olympics. The media wouldn't touch the story. Journalists turned to their blogs and began putting information out, but censors eventually erased much of this."What this proves is that you can't be clueless in China," says McGregor. "You have to know what your partner and employers are doing."

Fonterra has been criticized for opting to work through the system while lives were at stake, and for doing so in an attempt to save face in China and to avoid ruffling Beijing's feathers.

"If you have a product that's making people sick, or that is killing them, you should not care about your business here," says McGregor. "You should care about human life."

In an article, Access Asia, a China-based consulting company, blamed the incident on what it called "China is somehow different excuse-mongering." Access Asia said this attitude created an environment where foreign companies feel "culturally obliged to turn a blind eye to corruption, nepotism, and outright criminality that can leave the tiny gap in concentration that is all that is required for a disaster like this to happen."

Access Asia said the Fonterra-Sanlu scandal was a model of why it's time for foreign companies to stop treating China as special and to behave responsibly, as they do in other countries.

With China still averse to negative news of any sort, the chances are that there will be further product safety scares. As soon as the news broke, the central government ordered that the Chinese media use only the official spin provided by state news organizations such as Xinhua News Agency and the People's Daily. Websites began to erase any mention of the incident. Officials from the two companies declined to be interviewed for this story. Another dairy company that says its products were not contaminated confirmed that the government had ordered it not to speak with any media.

McGregor says the Chinese were sincere in wanting to deal with product safety issues, but they still had a dangerous tendency to limit information. "The Communist Party likes to discuss problems in the context of how they are solving, or have solved, them, rather than in terms of being a problem," he says.

"This is how they do things," he says. "But it lets problems fester longer than they should.”

Jamie's Weekly Sports Thought

At the time of writing I have absolutely no idea of the make up of the Southland Stags side to take on the Bay of Plenty Steamers in tomorrow night’s sudden death quarter-final in the Air New Zealand Cup.

By the time you read this however, David Henderson and Simon Culhane will have made public their favoured fifteen. It naturally follows, therefore, it could be deemed an exercise in futility offering the two wise men some free counsel, but what the heck, it’s never stopped me before!

The law of averages surely suggests the Stags are due for a big one. All season, if you exclude three 40-minute spells against Wellington, Counties Manakau and North Harbour respectively, plus the final 20 minutes against Bay of Plenty, there’s been plenty of frustrations.

Unlike some Southland teams of the past, this lot has the talent to win big games. Problem is, they just haven’t clicked yet and they haven’t won the big games.

They blew the best chance in 49 years to win the Ranfurly Shield and had to watch as the netballers showed them how to win a national title. The Otago game was criminally lost at the death, Wellington withstood a 40 minute onslaught that should have reaped more reward and, let’s be honest, we were never in the hunt against Canterbury.

But all is not lost. Indeed the rugby gods have been kind with the quarter-final draw. Qualifying fifth, we could not have got a better away game than Bay of Plenty. We’ve just got to get the best fifteen on the paddock.

One of Southland’s biggest problems is a lack of pace out wide. That’s why I’d put the two fastest blokes on the wings. Kendrick Lynn has genuine gas and the next quickest for mine, appears to be super-talented Robbie Robinson. Give him a roving commission and watch the boy-wonder go.

I’d leave Mark Wells at fullback – he catches and kicks well – and I’d persist with Blair Stewart because his goalkicking, if nothing else, will win tight games.

I’d also take the field at Bob the Builder’s Park with three big lineout men and persevere with Hoani McDonald at No.8. He’s a great athlete and I also reckon Daniel Ramsay is the goods at lock, even though that’s not always readily evident.

There can be no doubting Jason Rutledge’s selection at hooker. He’s been a revelation and will push Tim Boys hard for the player of the year title. His fire is a fine example of a big heart making up for a small hearth.

So here’s my team to take the Steamers to the dry cleaners!

Wells, Lynn, Saunders, Kawau, Robinson, Stewart, Jimmy Cowan, McDonald, Boys, Bates, Bekhuis, Ramsay, King, Rutledge and Mackintosh.

Death or glory awaits.

Effluent Advice On Offer To Waikato Farmers

Boosting farm profits, improving nutrient efficiency and creating a sustainable dairying operation are the focuses of upcoming effluent management field days for Waikato farmers.

DairyNZ, Environment Waikato, Federated Farmers and Fonterra are teaming up to offer detailed and practical effluent management advice at a series of field days around the Waikato region."

Using dairy shed effluent as a nutrient source is a good way to boost your farm's bottom line in a sustainable way, by significantly reducing a farm's demand for fertiliser," said Environment Waikato's sustainable agriculture coordinator Gabriele Kaufler, organiser of the field days.

"Farmers have reported payback for their improved effluent systems within one to two years. With fertiliser prices where they are now the nutrient value of effluent from 100 cows is about $3000 per year for an all-grass system and about $6000 per year on farms using feedpads and supplements," Ms Kaufler said.

The field days will be held on four farms across the region. Topics to be coveredinclude: practical tips to improve the day-to-day running of your effluent system; calculating the nutrient value of effluent and how to get the most out of it by selecting the right size and type of system for your farm.

DairyNZ business developer Mike Bramley said last year's effluent field days were appreciated by farmers who picked up tips from other farmers and the speakers at the day.

"It's a good chance for farmers who're looking hard at their budgets to see just how much potential is already there on their farm. We hope to help them unlock that potential," Mr Bramley said.

John Hutchings, Fonterra's General Manager of Sustainable Production, said effluent management is a critical part of the overall farm system.

"These field days allow farmers to keep up to date with new technology, review their system against others in the industry and ensure it is meeting the farm's requirements and regional council standards."

Waikato Federated Farmers' president Stew Wadey said it made sense to utilise the expertise on offer at the field days.

"We're all looking to produce milk in the most efficient manner possible. This day should benefit farmers looking to make informed decisions when managing their effluent and also when making changes to their effluent system or installing a new one," Mr Wadey said.

Australia: Going organic inevitable if Garnaut adopted

Organic farmers claim adoption of their methods will be unavoidable in the future, if the recommendations of Ross Garnaut's final Climate Change Review report are followed.

According to the Biological Farmers of Australia, the report's backing of biosequestration as a "tool with considerable potential" to reduce and store greenhouse gases, endorses organic farming systems.

Biosequestration is a biological process for handling greenhouse gases through growing trees and enhancing soil carbon in agriculture.

Michael Kiely, of the Carbon Coalition, says the fastest way for farms to "turbo-charge" carbon storage is to combine carbon farming techniques within the parameters of organic farming.

"Non-organic farmers can capture large amounts of carbon," Mr Kiely said.

"However, you can turbo-charge carbon uptake in soil if you protect the microbiological community below who manufacture it.

"Any use of toxic substances (e.g. synthetic farm fertilisers, pesticides and insecticides), disrupts this.

"It's about studying soil life, looking for gaps and inoculating the soil with those microbes which are missing."

He said the fastest way for organic farmers to increase soil carbon was to ensure they followed carbon farming principles which include minimising soil disturbance and ploughing.

Dr Andrew Monk, BFA standards chair, says organic producers were looking to employ methods to improve their soil's long-term carbon capture potential.

"The difference being, these methods have been a cornerstone of organic management for centuries," Dr Monk said.

"In its design and implementation, organic works with and not against nature – this has always been one of the primary benefits of organic production, which is only just beginning to get the environmental recognition it deserves."

Lessons China Can Teach Us

I went to China recently to visit some industrial plants, meet the staff and learn from them. As Fonterra's present predicament indicates, business in China is not always straightforward.
China has much to learn about the importance of rigorous quality control systems and provides plenty of cautionary lessons for those considering investing there.

However, China is an economic phenomenon that is still on the rise and it has many other startling, positive lessons, especially for New Zealand.

First, many staff in the factories are graduates. In one Australian-owned plant, half had tertiary qualifications. In contrast to many graduates in our part of the world, who too often want to start part-way up the tree, and who are typically not keen on factory work, those I met in China were fiercely ambitious but willing to start on the factory floor, learn the basics and then compete to move on and up.

The people we met were vibrant, enthusiastic and positive about their prospects. They clearly had considerable dedication and a great sense of purpose.

Competition among graduates was intense. The political correctness of the way we dumb down competition was nowhere to be seen. Indeed, the Government selects each year a large number of the most promising young people and puts them through the most demanding training and experience programmes where only the best make it to the top jobs. Merit is overwhelmingly important.

The interchange between the government and commercial sectors is extensive, with many senior people in the party ranks, the government and the business world having worked in all these sectors. We operate in silos by comparison. We have a huge number of bureaucrats willing to control our commercial operations with all manner of regulations, yet almost none of them have any business experience. Our business people rarely know much about the inner workings of the official world.

The Chinese Government, both centrally and at local level, works closely, often intimately, with the commercial sector in a way which is only occasionally seen here. The relationships are complex and the bureaucracy can be burdensome, but the interaction is much more extensive and positive than I have experienced in New Zealand.

Yet we are smaller and should be able to cooperate so much more easily. Instead, our governments are too often suspicious of business and fail to appreciate that we share many common goals.

The plants I visited were among the best in the world. We think of China too often as a manufacturing country that is so competitive simply because of its low wages. This is a myth. It is true that wages are lower than in New Zealand, but it is often not appreciated that plant efficiency is frequently superior. This is partly a scale issue, partly technology take-up, and partly simply being smarter than us.

Whereas our rate of productivity growth (real output per person) has been declining since 2000 (after a period of a dozen years up to that time when we were among the best in the Western world), China continues to achieve remarkable growth.

Despite the heavy involvement of government in all walks of life, the Chinese manage to get things done so much faster and more effectively than we can manage. They regulate many aspects of the commercial world, but nonetheless facilitate things moving much more rapidly than can be achieved here. Our regulations can at best be said to be well-meaning, but the bureaucracy now surrounding the regulatory processes makes for delays and higher costs.

The irony of all this is, of course, that China has a single- party, authoritarian government, supposedly of a strongly socialist orientation, not one that we would wish for, but which has learnt to live more comfortably with a vigorous fast-moving commercial world than any Kiwi government seems able to contemplate or even comprehend. The creation of wealth is celebrated and promoted. That is not a fashionable way to think here.

The depth and breadth of infrastructure was stunning, with user-pays widespread. Most new highways are funded by tolls. New car licences in Shanghai are auctioned to the highest bidders. Market mechanisms, much derided in New Zealand in recent years, are pervasive.

What should we do about these sorts of lessons if we are to benefit from them? A colleague suggested we could send all our ministers and senior officials to China for a year while the rest of us got on with life without the nanny state regulating our every move. He was only partly joking.

* Roderick Deane is chairman of Fletcher Building

Trouble with melamine and why trickery went unseen

SOURCE: The Dominion Post

What's this melamine, then? It's a white powder looking very much like flour or milk powder.

Where does it come from? Most melamine is a byproduct of the farm fertiliser urea. Fifty million tonnes a year of this chemical are made at gigantic industrial plants in 70 countries but mainly in China and India.

Industrialists can turn melamine into endless products such as concrete strengtheners, insecticides, printers' ink, fire retardants, detergents, glues, and a drug used for treating sleeping sickness. But a lot of it is turned into a very hard heat-resistant plastic that is used to make formica, counter tops, breadboards, garden ware, fabrics, wrapping plastics, tools, chairs, bins, dolls, picnic sets, chopsticks, and even Buzzy Bee cups and plates for kids. Melamine tableware once enjoyed a certain techno-panache and was quite expensive. These days you buy these lines at the $2 Shop.

Now we all know that unscrupulous Chinese milk suppliers have been adding melamine to watered-down milk on a colossal scale with catastrophic effects. Their trick went undetected for a long time because normal chemical checks on milk did not detect the adulteration.

To understand why, you must know that proteins, milk and meat pies contain large amounts of the element nitrogen. Technicians measure the amount of nitrogen in them as an indication of their protein content. Melamine also consists largely of nitrogen and, if sneaked into meat or milk, makes them appear to have more protein.

Alerted by the Chinese scandal, the New Zealand Food Safety Authority has rushed to test infant formula and other milk-derived products here. Using more sophisticated chromatographic analytical techniques, the authority has tested 72 samples of Heinz, Nestle, Holle, Babynat, Karicare, Wyeth's, Novalac and Probiotic baby milk formulas and found them all melamine-free. Other products tested include dietary supplements such as body- builders and geriatric formulas, sweets and components in animal foods. The authority has pulled Chinese White Rabbit Creamy Candies off store shelves because they contained too much melamine.

In recent weeks the authority has been exchanging information with similar agencies in the United States, Australia, Europe, Canada and elsewhere discussing how much melamine can be safely ingested. They have settled on 5 parts per million for food ingredients, 2.5 ppm for food in its final form and 1 part per million for infant foods. Any more melamine will trigger further investigation.

Among the many products sampled by the Food Safety Authority has been the pharmaceutical lactoferrin, which is made from milk. Minute amounts of melamine have been detected in the product but not enough to be a health hazard. Scientists at the authority are trying to work out how the lactoferrin was contaminated – possibly by leaching from plastic used in processing or packaging the product, or possibly from a farm pesticide residue.

So far, only trifling amounts of melamine, bordering on the limits of detection, have been detected in 116 samplings of New Zealand dairy products.

This is very reassuring, but a sharp eye must be kept on Asian imports.

Australian Lamb Production Hits Four-Year Low

Australian lamb production plummeted during August, declining 25pc year-onyear, as tight supplies, particularly of heavy lambs, underpinned historically high saleyard prices, according to the latest figures from the Australian Bureau of Statistics.

Meat and Livestock Australia reports that the ABS figures show lamb production during August only reached 27,400 tonnes (carcase weight) – the lowest monthly total since September 2004 and the fourth consecutive monthly decline.

The fall in lamb production during the month was driven by a 21pc year-on-year decline in lamb slaughter, to 1.4 million head, with a 5pc fall in average lamb carcase weights to 19.6kg/head.

The sharp decline in lamb numbers into August was largely a combination of increased turnoff earlier in the year and a poorer breeding season, which saw an overall decline in the number of lambs marked.

SA recorded the largest fall in lamb production during August – dropping 52pc year-on-year, to 3,718t cwt, as welcome August rains in the south-east of SA encouraged producers to hold onto stock.

Significant falls in lamb production were also recorded in Victoria (25pc) and NSW (16pc).
Lamb production in WA slipped 3pc, while production in Queensland and Tasmania increased 9pc and 19pc, respectively.

Jamie's Weekly Sports Thought

It’s good to see my fellow Southland Times columnist Jerrie Andrews putting her proverbials on the line by publicly declaring her intention to run the Luxmore Grunt.

I guess it’s apt then that I come clean with my sporting aspirations, as there’s nothing quite as motivating as putting your goals, aims and dreams into the public domain. Fear of personal failure is bad enough. Failure, and a whole lot of people knowing about it, is worse.

I vowed, swore and declared I’d never run another marathon after battling my demons during the last 7kms in New York last November. There in lies the problem. I knew I could do better after finishing the London marathon in much better shape 18 months earlier.

Doing the training for a marathon and getting the miles under your belt is never easy. But it’s easier than getting rid of the overhang over your belt.

I was 86kg when I ran London. I reckon the two extra kilos I carried from Staten Island, through Brooklyn, Queens and the Bronx really killed me when the pain came on in the run home through Manhattan’s Central Park.

I’ve got six months to knock myself into shape for the Boston marathon in April. How hard can it be? Mike Piper’s run over 100, surely I can complete three?

I jumped onto the bathroom scales yesterday morning and the number flashing back at me started with a nine! So I figure all I need to do is shed six kilos in six months and I’ll be in great nick for the infamous Heartbreak Hill at the 20 mile mark in Boston.

So there you go. I’ve made it public so now I’ve got to make it happen. Goodbye love handles and man boobs. Hello 84kg.

When you say it out loud it does sound dreadfully frightening for a middle-aged bloke who likes beer and liquorice all-sorts. And it also sounds frighteningly light compared to the players who’ll take the field tonight at Rugby Park Stadium in what is really a gladiatorial sport these days.

Back in the 1980s I was considered quite big for a back at about 86kg. At that weight I would have been five kilos heavier than the heaviest All Black back (Joe Karam 81kg) who took the field at Carisbrook in 1973 in the infamous loss to Eric Watson’s Junior All Blacks.

These days, 84kgs means you’re only qualified to run on and off with the kicking tee. And even then you’re lucky. Lucky they’ve dispended with the sand. Because you’d just get it kicked in your face!

NBR: Analysts fear PGG Wrightson deal is dead

Speculation is rife in the share markets that Craig Norgate’s PGG Wrightson and Silver Fern Farms partnership deal is a dead duck, killed by turmoil on world credit markets.
“It is hard to see how it can be resurrected,” one share market analyst said.

It seems the market has sighed with relief that PGG Wrightson may not be paying $220 million for 50% of Silver Fern, the country’s largest meat company, and thus adding to its already considerable debt.

That is because PGG Wrightson’s share price has risen 23c or 14% this morning, after plunging more than $1 in recent weeks since farmers narrowly voted yes to the deal on September 8.
Contributing to the plunge was Mr Norgate’s plan to sell some of Rural Portfolio Investment’s shares in NZ Farming Systems Uruguay to raise money for the Silver Fern deal.

The analyst was “reading between the lines” of last night’s surprise announcement that settlement has been deferred and that funding arrangements will be revisited.

“Completion of the proposal in its current form at the current time is not possible,” PGG Wrightson said.

“The delay is likely to be counted in weeks rather than days, but the failure of the administration’s bailout proposal to be approved by the House of Representatives and the resulting nosedive on Wall Street could not have come at a worse time.”

Mr Norgate said that the announcement was extremely disappointing for all those who worked so diligently on bringing it to fruition as well as to those Silver Fern Farms shareholders who supported it so well.

The analyst said such a proposed lengthy delay effectively meant going round the whole capital and finance raising trail again to get $220 million, in much less advantageous conditions.

“Therefore I would be surprised if it happens in the very risk-adverse climate,” he said.

A recent capital raising secured $78 million from related parties and institutions. This was to be followed by a $32 million underwritten retail offer.

However, the institutions that took part in the equity placement are understood to have been furious at a “money-go-round” deal that would have seen PGG Wrightson buy 14 million NZ Farming Systems shares from Mr Norgate’s Rural Portfolio Investments and PGG Wrightson director Murray Flett.

The proceeds were then to be given back to PGG Wrightson, to pay for Mr Flett and Rural Portfolio Investments’ part in its capital raising. The arrangement was announced on Friday and axed on Monday.

Westland sets new record dairy payout

Source: National Business Review

The tiny West Coast dairy cooperative, Westland Milk Products, has announced a record payout of $8.29/kg milksolids -- the highest in the nation and unlikely to be bettered for years.
Company chairman Ross Scarlett said today the figure included costs paid on behalf of suppliers (2c/kg milksolids) and an average colostrum payment of 5 cents/kg milksolids.

Industry giant Fonterra has paid its farmers $7.90 for the same season, and Tatua Cooperative Dairy Company yesterday announced a payout of $8.00/kg for its 112 farmers.
The Hokitika-based cooperative's distributable surplus was $356 million for the 2007-2008 season.

"Those figures add up to a company performance of $8.29 c/kg milksolids, a result ahead of projections the company has been making to suppliers during the season," Mr Scarlett said in a statement.

He said shareholders were likely to be "more than satisfied", even though the cooperative had retained 30c/kg for future investments. Fonterra retained 24c/kg and Tatua 37c/kg.
Mr Scarlett said a strong performance by the company played a significant part in the result, but added: "Obviously, buoyancy in international markets was chiefly responsible for the record payout".

EasiYo, a yoghurt company acquired by Westland Milk Products during the 2007-2008 season, was performing well ahead of projections and would be moving to new premises in Auckland, doubling its capacity. Forward sales projections were "most encouraging".

But the record payout was announced just as Westland was plunged into uncertainty over low-level contamination of at least one batch of its highest-priced product, lactoferrin protein powder.

Food safety officials are investigating whether the contamination is coming from the proprietory production process, which Westland acquired in 2002 from Tatua, where contamination has also been found, at levels as high as 4 parts per million. Checks are under way on lactoferrin produced by a third company using the process, Tatura, in Victoria, Australia.

Lactoferrin is highly concentrated, with 10,000 tonnes of milk required to make one tonne of the powder, which is used as a minor ingredient in baby formula and sports drinks because it is claimed to boost immune systems.

Mr Scarlett said the 2008 season's milk flows had finished 2.3 percent ahead of the previous year.

The soaring commodity prices which peaked during the year had since led farmers around the world to increase production, reduced dairy purchases by consumers.

He said the outlook for the current season is clouded by a number of uncertainties.

"It is yet too early to predict the effect which the impact United States financial crisis may have on the global economy," Mr Scarlett said. "But the situation is obviously worrying.

The kiwi dollar is expected to soften further, the costs of farm inputs will rise and commodity prices are unlikely to return to recent peaks any time soon.

Westland Milk Products is forecasting a payout in the $6.70-$6.95/kg milksolds for current 2009 season which will be reviewed at the end of the first quarter.

Fonterra last month trimmed its forecast for the current season's payout to its own dairy farmers, trimming it from $7/kg of milksolids to $6.60/kg, also blaming a downturn in international prices and demand.

This means the average Fonterra farmer is likely to earn $800,000 this year, down from $900,000 last season.

"With Fonterra's recent reduction in forecast for the current season, we may see our projections move down," Mr Scarlett said.