EQUIPMENT & MACHINERY MANUFACTURERS TO INVEST IN CHINA

MAJOR world agricultural machinery manufacturers are ramping up investment in China, with CNH Global the latest to declare its hand.

Last week, the company announced it will build a new manufacturing plant in Harbin, northeast China, with an initial investment of $90 million.

Interestingly, the announcement came days after a report that China is planning to spend a lazy $160 billion this year to increase agricultural development.

The move is also focused on increasing farmers’ incomes, sending fleeting thoughts to cash-strapped WA farmers of a lifestyle move.

China’s finance minister Xie Xuren, said the majority of the money would be spent on water projects to increase water availability for irrigation.

“The central government has also urged financial institutions to increase lending to agriculture-related businesses through incentive policies,” Mr Xie said.

Apart from CNH Global, other major manufacturers, including AGCO and John Deere, are positioning themselves in China, obviously keen to expand production of tractors, headers and sprayers.

According to CNH, its plans include a new factory to produce high horsepower tractors, combine harvesters and other machinery featuring advanced technology.

With this investment, CNH will expand its manufacturing base in China, where it currently assembles high horsepower tractors and other agricultural equipment in Harbin, and operates a manufacturing plant dedicated to low and medium horsepower tractors in Shanghai.

CNH CFO Richard Tobin, who will take over as president and CEO later this month, said China was an important market for the company.

“We strongly believe in its potential,” he said. “CNH has invested in this country for more than 100 years, when the first International Harvester tractor was imported to China.

“We have since steadily developed our relationship with China and will continue to invest to ensure our customers have access to our best technologies and expertise.”

CNH is a Chinese market leader in high horsepower tractors and harvesting equipment through its two agricultural brands, Case IH and New Holland Agriculture.

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SO WHAT DO WE DO WITH THE FARM WHEN WE RETIRE?

BUYING the family farm has become just about impossible for young farmers and fewer people are taking over when their parents hit retirement age.

However, there are some young farmers, like Michael Nichols, who are still keen to pursue the farming lifestyle.

The 28-year-old farmer is managing his parents’ 600-hectare farm at Sisters Creek, Redbanks Farm, Tasmania.

“Working in a company structure is a lot easier than taking ownership of the land,” he said.

“It is big dollars to buy the land and most young people can’t go and ask the bank for a loan of several million dollars.”

Mr Nichols said there had been no expectation from his parents for him to take over the family farm, but it was something he’d always wanted to do – the farming lifestyle had been instilled in his blood from all his years working and living on the land.

He said there were many farmers in the region who were reaching retirement age and would have to sell the family farm because their children did not want to take over.

“The mines have pulled a lot of people away,” he said.

“It’s high money for less work whereas farming is a lot of work and late nights and you are not guaranteed a profit at the end of the year,” he said.

However, Mr Nichols also has friends in their early 30s who are running their parents’ farm or are starting to buy.

He hopes agriculture will be sustainable into the future but says there has to be a guaranteed profit at the end of the day.

“It will be interesting to see how the water scheme in the Midlands will kick off,” he said.

“Maybe if they’ve got that security it will boost farmers’ confidence.

“There are also people who have grown up on a farm and done ag science at uni.

“They aren’t interested in taking over the farm, but we do need people who are farm-minded to work as agronomists.”

Mr Nichols believes the government can do a lot to assist farmers, such as stopping cheap vegetable imports and offering subsidies like they do in Europe.

He doesn’t think he will be able to buy the land but his feet are firmly planted in the rich, red dirt on the property and he hopes to continue in his current role.

The farming lifestyle has its pros and cons.

The hours are long, the work is hard and the rewards are not guaranteed but Mr Nichols loves the challenge.

He has a wife, Lauren, and three-year old son, Jack, and said he could choose when he started work so he could spend time with his family.

“I can have part of the day off, but I have to make it up that night,” he said.

“It can be flexible, which is good while my son is young.”

He said the nature of farming had changed and farmers now needed to be multi-skilled as they would be moving irrigators one day and in the office the next working out a budget or talking to the accountant.

“People used to think you could always fall back on the family farm. But now you need a whole range of skills to be a farmer,” he said.

Mr Nichols said his father had stepped back and allowed him to make changes on the farm.

“When I finished school I worked on a farm in the UK for two years, which is the best way to learn. You can’t be stuck in a rut and do things the same way year after year,” he said.

“It’s not hard to make things better, you’ve just got to be willing to change.”

One of the farm’s strengths is its diversity which means it is not dependent on just cropping.

“You’ve got to be diverse,” Mr Nichols said.

“If you are just a crop farmer and there is a bad year, it will be a really bad year.”

Cropping is the main focus of the farm, but it also has chickens, beef cattle, plantation trees, Hill Farm preserves and Mr Nichols has a combine harvester for contract work.

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QUEENSLAND FLOODS A YEAR LATER-HOW IT IS

A year after the floods that devastated much of Queensland, many businesses are struggling to understand why little has been done to help those in flood-prone areas.

It’s not just last year’s floods that have hurt businesses across the state. Some are fed up with chronic, ongoing mismanagement around issues such as delays in settling insurance claims.

Steve “Burnsie” Burns, proprietor of the remote Nindigully Pub on the banks of the Moonie River, central Queensland, is one such operator wondering when compensation and assistance will arrive.

A far cry from when the floods hit … Steve Burns and Debbie Lee outside the Nindigully Pub. Photo: Supplied

At the dawn of 2010, as floodwaters threatened, Burns was told to cancel his pub’s iconic New Year’s Eve celebrations. The pub, which harks back to 1864, is the oldest continually licensed pub in Queensland.

New Year’s Eve is central to the survival of Nindigully – permanent population five – and traditionally the biggest night of the year, with celebrations attracting more than 3000 people.

He estimates he lost $100,000 as a result of the New Year’s closure.

Hit a second time

Then, last March, the pub was hit a second time, when Nindigully experienced its largest recorded flood, with waters reaching 4.65 metres and lapping at the pub’s floorboards.

“We lost all our plumbing from under the pub and all our tank water. We were surrounded by water, yet had none on tap. We were isolated for over a month,” Burns says.

“The flood that cut us off last year wasn’t as bad as the flood of 2010. But the issues we faced back then have still not been addressed. I can’t believe we’ve waited two years for anything to happen; nothing’s being done,” Burns says.

He submitted a compensation claim immediately after the first floods, but says he has “been mucked around for two years”.

“I keep supplying invoices and they keep dragging things out. I’m hoping they might make me a reasonable offer at some point,” he says.

Rivers rising

He believes the decision to shut down the pub on that New Year’s Eve was the result of a mistake by police who he says claimed the river was more than a metre higher than its actual reading.

“The inspector claimed the river was at 3.6 metres when it was 2.45 metres. I’m the river reader and I put the information on to the Bureau of Meteorology site. The inspector read the information the wrong way, but he shut the pub down anyway,” Burns says.

“We were the only business in Queensland officially shut down even when other businesses and pubs up and down our river were allowed to continue to trade”.

Early this week he was due to meet local council staff to discuss ongoing flood-related issues, including the need to fast-track insurance claims, a lack of available flood insurance for businesses such as his and the need for better communication between those who measure and report the river’s height.

Burns is now pushing for better communication between local authorities to reduce the risk of a similar situation in the future.

Closing its doors

Another business severely impacted by the floods last January was the Champions Brock Experience near Rockhampton (pictured below), the largest collection of Peter Brock cars in Australia. It was eventually forced to shut.

“We lost three-and-a-half weeks of peak holiday trading, and the business just wasn’t sustainable after that,” says former manager Heather Smith.

“We have been approached to move the collection and we’re investigating our options, but at the moment we’re closed permanently.”

“The floods had a major impact on the region, but there’s been a lot of people around this summer because many have decided to stay home as they are worried about leaving the region after what happened last year.”

A region hit hard

Bunjurgen Estate Vineyard, near Brisbane, has also spent the past year recovering.

Chief executive David McMaugh says the water-sodden vineyard and fairly serious mildew problems led to a smaller crop in 2011.

“That said, the good news this year so far is that although the crop is only 20 to 25 per cent of what it would normally be, quality is high and we look like making some fantastic rosé style wines,” says McMaugh.

McMaugh says the floods hit the region hard.

“A local winery closed due to lack of business, one local vineyard bit the dust and three more are for sale – so not a pretty sight in that department. But in a way having less opposition has worked well for us at least – the harsh reality of life I suppose,” he says.

Yesterday, McMaugh was facing the prospect of bushfires destroying his property. What a difference a year makes

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A publication reveals the power and struggle behind Australia’s wool industry.

THE wool industry is such a critical part of Australia’s history that until the late 1980s its economic impact was arguably greater than that of mining.

The industry has featured in epic aspects of Australian history – the 1890s shearers’ dispute that led to the formation of the ALP, the power of the big pastoral dynasties and droughts.

At its heart is the merino sheep. John Macarthur is credited with bringing the merino to Australia in early colonial times, but the breed that came to characterise the industry evolved later.

It was bred in the middle of the 19th century on a property in southern New South Wales – at Wanganella, outside Deniliquin in the Riverina – by a Somerset sheep man, George Peppin. The Peppin merino came to be featured on the old one shilling coin, symbolising the prosperity that sheep had brought the country.

That little-known story has now been laid out in a new history – Wanganella and the Merino Aristocrats by Timothy Lee – that was launched just before Christmas. The book was financed by the property’s owners – Colin, Lewis and Andrew Bell, of Bell Potter Securities – and their two partners, Alastair Provan and Ray Dalio, with the help of local publisher, the late Di Gribble.

”The sheer magnitude of what the Australian Peppin merino did has not been told. There was huge secrecy, there was this huge rivalry of sheep studs. Still today, there is secrecy around sheep breeding, the fierce competitiveness of it – breeders did not want to acknowledge that others’ sheep were better,” Lee, a reporter with the ABC’s rural affairs television program, Landline, told BusinessDay. ”By the 1950s, the Peppin bloodline derived from Wanganella was in about 90 per cent of Australian merino sheep. They derived from this one stud.”

Wanganella was the cradle of the sheep breed that revolutionised the world of agriculture. It’s a story of risk-taking, innovation, sheer hard work, and luck. Lee had access to 80 volumes of stud books that detailed the day-to-day happenings on the estate.

The Peppins owned Wanganella from 1858 for 20 years. In 1861, they were in dire financial straits, but embarked on an experiment to develop a dual-purpose animal: a good meat sheep that also produced large volumes of quality wool.

Until 1860, the wool-growing areas were confined to the ”safe” coastal regions. The Riverina was renowned for its ability to finish and fatten stock for the Melbourne markets, but was mainly unexploited inland plains.

The Australian merino in 1861 was a pretty small animal that weighed about 18 kilograms and produced only a kilogram or so of wool. It wilted in the inland heat and the dust ruined the wool.

The Peppins aimed to breed an animal that would survive in the harsh conditions. ”If you did not have a creek or billabong frontage, if you were 15 kilometres from water, you could not run sheep. It was tough enough for cattle,” Lee said. ”They needed to breed an animal that was hardy and tall so it could walk a distance up to 15 kilometres. It needed long, stapled wool that was three inches or better and needed to be dense to keep the dust and heat out, and provide good insulation.” The animal also needed good mutton meat in case the wool price fell and to provide income at the end of the sheep’s productive life.

The process was essentially trial and error. The Peppins obtained the best genetics they could from overseas. The French allowed the export of merinos they had been breeding at Rambouillet outside Paris. Louis XVI had obtained the sheep from his cousin, the King of Spain, in 1786. The Rambouillet was big and strong with long fleece.

Also imported was a German sheep, the Negretti, which had a dense fleece. ”The Peppins kept experimenting between the two, and when they got a good animal, they would breed it further to fix the traits. Within 20 years, they had a great big, large animal used for mutton that also had this great wool,” Lee said. ”It wasn’t a stroke of genius to get the idea – others did too – but within 20 years, the Peppin breed was becoming the breed. The Peppins had good luck, others didn’t.”

The Peppin merino was large and robust, could walk long distances to feed and water, and the dense wool kept out harmful dust and provided insulation from the heat.

However, George Peppin junior died, aged 50, in 1876, and his brother Fred was not as keen on sheep breeding. He had enough of the harsh conditions of the Riverina.

In 1878, other families took on the stud. Albert Austin and his brother-in-law Thomas Millear – like the Peppins, great sheep men from Somerset – bought one half of the property, Wanganella, while Franc Falkiner bought the other half, the Boonoke portion.

”The Austins reckon they got the best of the deal, the pick of the stud sheep. There was then this fierce rivalry for 70 years,” Lee said.

F. S. Falkiner & Sons, which became the traditional name for the properties, started in 1899. It became the largest merino stud in the world, at its height selling up to 10,000 stud rams a year.

The Peppin merino’s long, bulky fleece found its way to the world’s textile mills. By the 1870s, woollen clothes in the form of tweed had changed global fashion.

Meanwhile, by the 1890s, the capital of the biggest 40 pastoral properties was estimated at £30 million, equal to the rateable area of Melbourne at that time. Wanganella and Boonoke were integrally involved in the great shearers’ dispute that led to the formation of the Australian Workers Union and the ALP.

By 1910, the Peppin merino was being exported to 12 countries, including South Africa and even central Africa, which had never had sheep before. ”It was such a hardy sheep, but could adapt to anywhere, with fantastic wool, the wool for most of the wool trade,” Lee said.

In 1924, a Wanganella ram sold for 500 guineas, equivalent to $1 million for a yearling racehorse now – such was the prosperity and prestige of the wool industry.

In the ensuing decades, Wanganella went through the peaks and troughs of the wool trade. Then in 1978, still intact but struggling at the height of drought, the corporate sector lent a hand. Rupert Murdoch bought the property for $3.5 million in cash.

He invested in irrigation and other infrastructure, keeping the stud and structure preserved throughout drought and the collapse of the wool price in 1991. The Bell brothers and partners bought the property from News Corp in 2000 for $29 million.

”The property is still in the same make-up as in the Peppins’ [time] because of corporate ownership. Few family-wool enterprises from then are still in the same formation. If not for the corporate money, the stud may have been broken up and the properties dispersed,” Lee said.

News Corp included a clause in the sale contract to the Bells that Wanganella’s heritage had to be preserved, that the property could not be split up.

Wanganella remains a property of 120,000 hectares, with sheep, cattle, and summer and winter crops. On the 150th anniversary of its founding, with wool prices rising, a Wanganella hornless poll merino ram sold for a record price of $50,000 at the annual sale in September. ”It’s not a hobby farm and has not been turned into a nature reserve,” Colin Bell told BusinessDay.

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