AN IRISH-OWNED agricultural company with interests in Argentina has been sold to Saudi Arabia’s largest food company for $83 million (€65 million).

Fondomonte was founded in 2006 by London-based investment manager Mark McLornan and Irish farm manager Jim McCarthy, with the aim of capitalising on the rise in global demand for food.

The investment company owns and operates three farms in Argentina, totalling more than 12,000 hectares, which focus on the production of crops such as maize, wheat and soya. Barley, sorghum and sunflower are also grown.

The shareholder base comprises Irish investors, primarily from the southeast of the country, as well as some private investors from the UK and corporate investors. The largest shareholder is Wexford-based agribusiness Cooney Furlong Grain Company.

The initial venture in 2006 to invest in Argentine agriculture involved the consortium of Irish shareholders raising €26 million towards the €41 million acquisition cost of the land. The balance came from the US and British investors.

Aspiring shareholders required a minimum investment of €187,500, The Irish Times reported at the time.

At the outset, they anticipated an annual dividend of 8 per cent per annum on the investment. In 2010, it emerged that the enterprise had reported net returns of 53 per cent in its first four years of operation.

The directors of the company, which was based in Luxembourg, included Walter Furlong, Michael Hannan and Oran McGrath.

Fondomonte has been sold to Almarai, the biggest dairy company in the Gulf region by market value. Founded in 1976 as a dairy processing company, it diversified into bakery in 2007 and poultry production in 2009.

The sale was sealed just days ahead of a vote by the Argentine parliament limiting the purchase of prime farmland by foreigners.

The Saudi company has a historical link with Ireland, having been founded as a partnership between Saudi Arabia and Irish agri-food expert Alastair McGuckian and his brother Paddy.

It listed on the Saudi bourse in 2005 and is the largest food company in Saudi Arabia and one of the largest dairy companies in the world.

The company said the acquisition was part of the company’s drive to expand its supply chain and increase its access to feed for its dairy herd and poultry business.

The transaction was “in line with the direction of the Saudi government towards securing supplies and conserving local resources”, the company said.

The company financed the transaction from its cashflow and Islamic banking facilities.

Saudi Arabia is encouraging food companies to invest in emerging markets in an effort to reduce the level of local grain production, which is extremely water-intensive. However, Saudi Arabia depends significantly on imports to meet its food requirements, and companies such as Almarai have seen their margins come under pressure from rising food prices.

New statistics from the Health and Safety Authority show a 15 per cent increase in deaths from workplace injuries, with 55 people killed in 2011 against 48 the previous year.

More than one-third of those were fatally injured while working on farms. Twenty-two of the deaths happened among people working in crop and animal production.

The HSA has recently launched a high-profile advertising campaign, urging farmers not to take risks while working and to be careful around high-powered machinery.

Martin O’Halloran, CEO of the safety body, said: “This is the second year in a row that the total number of workplace  fatalities has increased. The fact is that behind these statistics there  are human tragedies, lives lost and families ruined.”

The trucking and warehousing industries accounted for the next largest number of deaths, with eight people killed in Irish workplaces.

Six people were fatally injured on construction sites, and five in the fishing industry.

Among the safest sectors were financial, administration, education and IT services, in which there were no deaths.

Despite this increase, the rate of deaths in the workplace has fallen gradually since 2002, when it was roughly three in every 100,000 workers.

IFA National Potato Committee Chairman Thomas Carpenter said potato growers are facing wipeout if a viable price is not achieved for their product. At meetings in recent days, retailers and merchants were challenged by potato growers to return a viable farmgate price.

He said, “Prices to producers are at historical lows and running well below the cost of production on all potatoes sold. Retailers and merchants must return a viable price that delivers a margin if growers are to remain in business.”

“We have noticed a worrying and increasing trend of sheep being stolen out of fields
in recent times. The Department of Agriculture needs to be especially vigilant with
unusually high requests for sheep tags from someone not previously known to be an
active sheep farmer.

“It’s not unusual for an active farmer to go from 400 ewes to 600 ewes with
investment but it’s highly unlikely that someone with 12 or 13 ewes would increase
the flock to 200 or 300 in a season. Sheep cannot be sold or slaughtered without
tags so a request for a major increase in tags may have been made by an unscrupulous
farmer.

“Roadside butchers also need to be punished hard for their actions. There have been
a number of notable reports recently of sheep been butchered out and with the head
and offal left in the field. Lamb is valuable commodity and these people need to be
met with the full letter of the law where found guilty.

“Vigilance is the key to this issue both with the farmer and, more importantly, the
Department. The ICSA doesn’t want to hinder the growth of active and progressive
sheep farmers but unusually high requests for tags need to be doubled checked by
Department officials to ensure no foul play,” Mr. Gilmartin concluded.

Fertiliser costs on farms rose by 26pc, while feeding stuff went up by 22pc
in the same period. Energy costs rose by 13.3pc.

While output prices also climbed during the same period, the increase was
significantly less than the cost of inputs. Cattle, milk and sheep prices
increased by 15.3pc, 13.1pc and 9.1pc respectively. However, potato prices
suffered a drop of 36.3pc.

Kiwis to host farm events

New Zealand farmers are organising a series of showcase events to impress
their Irish counterparts visiting the country for the Rugby World Cup.

The free events will be hosted by New Zealand’s top dairy farms, sheep and
beef units, an irrigated cropping farm, university and government research
organisations, meat works, vineyards and horticultural operations.

The main events will be in Otago, Marlborough, Taranaki, the Manawatu, Hawkes
Bay, and the Waikato.

Details of each event are on www.nz2011.govt.nz.

Incomes to go up in US

US net farm income is set to rise by 31pc to $103.6bn (€72.5bn) this year,
according to USDA estimates.

The increase equates to an additional $24.5bn (€17.1bn) in US farmers’
pockets.

The forecast is the second highest inflation-adjusted value recorded since
1973.

The three measures of farm sector earnings — net farm income, net cash
income, and net value added — are forecast to rise more than 20pc this
year.

Net farm income and net cash income are both projected to exceed $100bn
(€70bn) for the first time, while crop receipts are set to rise by $33.6bn
(€23.5bn).

Storms halt Russian corn

Russia’s return to global wheat markets suffered a hiccup last week when
Russian Railways halted grain deliveries to the Black Sea port of
Novorossiysk.

The railway said a “massive” backlog of grain wagons was clogging lines
linking farmland to the port. Storms had slowed vessels leaving Novorossiysk,
which added to the back-up.

Grain exports reached a near record 3m tonnes last month and are expected to
continue at this level this month as farmers race to move grain after the
country’s self-imposed export ban was lifted in July.

Met Eireann was
last night considering issuing a severe weather warning today after putting out
an advisory yesterday.

“This is on the way and it is a significant storm,” Met Eireann forecaster
Gerry Murphy said last night.

“It is moving close to us and will generate very strong winds and high waves
off the west coast.” 

Met Eireann has predicted winds of up to 160kmh, with the north seeing the
worst winds and sea flooding in Donegal Bay — as well as Galway Bay and the
Shannon estuary and other harbours — caused by 15-metre waves out in the
Atlantic strengthening storm tides.

Britain‘s Met Office issued
a rare extreme weather alert covering all of Ireland, warning of
130kmh winds on Monday causing sea flooding and “phenomenal” ocean conditions
expected to cause danger to ships.

Experts said winds were expected to hit 130kmh in Dublin and 105kmh in Cork
and warned of damage to house and building roofs and trees, adding that driving
could be “very dangerous”, especially in the west. Tornados are also a
possibility.

Katia, a Category One hurricane with 145kmh winds, is causing seven-metre
waves on the US coast before spinning across the Atlantic through the weekend.

iWeather Online Senior Forecaster Peter O’Donnell said: “If you live in
Clare, Galway, Mayo, Sligo, Donegal, Derry, north Antrim or nearby parts of
other counties, and not in some deep valley with hills off to your southwest,
you should expect storm or hurricane force wind gusts between six am and 3pm on
Monday.

If you live in a region including most of Ulster, Leinster
north and west of Dublin, or west Munster, you
should be on alert for gusts between gale and storm force in a slightly later
time frame. If you live in the southeast, you may be off the hook for now.

The giant storm is carrying 145kmh winds across a 160km-wide centre and
tropical storm force winds across a 800km-wide area, with experts expecting only
a slight easing before it crashes into the north of Ireland tomorrow night.

Hurricanes can cause huge damage after crossing the Atlantic, as was seen in
August 1986, when Hurricane Charley battered Ireland, causing the worst flooding
in a century and smashing rainfall records.

Katia’s wind gusts are well above the 117kmh speed required for a ranking of
hurricane force, meaning it is expected to cause “excessive damage”, with sea
conditions considered “phenomenal”.

The Met Office’s alert for Ireland warned of widespread damage to buildings,
uprooted trees and transport disruption, saying: “The remains of Hurricane Katia
are expected to arrive on Monday, bringing very windy weather.

“The public should be aware of the risk of disruption to transport and of the
possibility of damage to trees and structures.

“There remains uncertainty about its track, and warning areas may be extended
or upgraded to amber, but the best estimate is that northern and western parts
are most at risk from very strong winds.”

Met Eireann forecaster David Rogers said: “Hurricane Katia will make the
transition into the northern half of the country which will be the windiest –
and weather warnings are a possibility and under review.”

Dermot Kelleher: “The weanling trade is doing very well at present but there are
certain ways a farmer can take full advantage of high prices at the ringside. Unless
a weanling is tipping the scales at 350 kg then they simply shouldn’t be sold. We
have a tendency of selling our weanlings in bunches but maybe that isn’t always the
best option as  some of the younger, weaker animals bring down the overall price.
Price per kilo is important but the overall price of a weanling is more important
and this is more likely to be achieved by selling the weanlings on a more gradual
timescale.”

“If the farmer has the opportunity to sell some of the stronger weanlings he has,
then there’ll be more room at the creep feeder and more grass for the smaller
animals so they then have the opportunity to thrive.  Earlier selling of the best
weanlings often coincides with higher prices and the more backward ones get a chance
to put on more weight.  However, selective selling may not suit every farmer
especially where lorry transport is used.

 
Kevin has now won the top prize of a specially commissioned piece by Clare-based artist Erich Fichtner and a travel bursary worth €3,000. Substantial prizes were also awarded to second place winner Denis Finnegan from Cork and third place winner Colm Ryan from Clare.
 
Aoife Ladd, from Cork, received the Special Prize for Community Involvement from Pat Smith, IFA Chief Executive while Caroline O’Neill, also from Cork, was presented the Award for Innovation in Farming by Edmond Connolly, Macra na Feirme CEO.
 
Twenty five contestants from all over Ireland took part in the 13th FBD Young Farmer of the Year final. The competition, run by Macra na Feirme in conjunction with the IFA, aims to recognise excellence in the agricultural industry and promote farming as a career with a bright future.
 
Six overall finalists were interviewed by a judging panel chaired by Tom Arnold, Concern Worldwide CEO; with Professor Gerry Boyle, Director of Teagasc; Willie Fahy, IFAC CEO; Joe Burke, Bord Bia; Joe Healy, Former Macra President; Seamus Phelan, Former Macra President and Pat O’Toole, Irish Farmers Journal.
Macra na Feirme National President, Alan Jagoe, praised the enthusiasm of the farmers who had made it through to the national final, “Macra’s ‘FBD Young Farmer of the Year Awards’ promotes excellence among young, progressive farmers and recognises their commitment to both the agricultural industry and their local communities. Last week we witnessed the increased demand for Agricultural Science courses in our colleges, the farmers entering this competition are a perfect example of the types of young people making a career out of agriculture. Farming is a challenging profession but it is important to highlight the fact that there are many highly educated and skilled young people choosing agriculture as a career and making a success of it. To capitalise on the potential of the agri sector as a driver of economic growth it is critical that the Minister for Agriculture directs supports at facilitating and assisting young farmers who wish to make a career out of farming”, he said.
 
Speaking at the event, Conor Gouldson, Group Secretary of sponsors, FBD said:  “For 13 years now FBD has sponsored this important showcase event for Ireland’s young farmers.  Their enthusiasm, energy and innovation is quite extraordinary and as ever they are a credit to themselves, to their educators and of course to their families.  Many of the previous winners and finalists of the FBD Young Farmer of the Year awards have gone on to leadership positions in Ireland’s farming and agricultural industry and we see them regularly consulted and quoted in the print media.  FBD was founded by people with vision and we are delighted at our continued association with this competition which celebrates and recognises excellence.  We congratulate all finalists on reaching this stage and we wish them all every success in their careers.”
 
IFA President, John Bryan, said, “The calibre of those who participated in this year’s competition underlines the exceptional talent that exists within farming. This cohort of farmers will be at the forefront of the expansion plans for the sector over the next ten years. It is critical that the Government facilitate their role in driving the agri-food sector forward by maintaining tax reliefs for the necessary restructuring, transfer and growth at farm level.  Teagasc must meet the challenge of providing education for young people planning to go into the agri sector, and use all available opportunities to disseminate technical and financial information to improve efficiency and competitiveness at farm level.”

What is your exposure to super levy?
Each farmer has to look at their own situation and make the relevant decisions to avoid a super levy fine. For each farmer the first action to be taken is to quantify your super levy exposure. To do this, work out your herd milk yield at peak. This usually occurs in May so take your highest milk collection docket and divide by the number of cows in the tank and the number of days in the collection. Take the following example of a May collection of 7,500L for 100 cows and three days. Peak yield is 7,500 divided by three days which equals 2,500L per day. Peak yield of 2,500 per day divided by 100 cows equals a peak yield of 25L per cow per day.
So now you have established your peak yield for your herd. To get an accurate reflection of how this yield translates to a yearly milk yield multiply your peak yield by 220. So our example gives a yearly milk yield per cow of 25L X 220 which is 5,500L per cow. This means that the potential milk in this example herd is 550,000L. This potential can then be compared versus your milk quota.

How serious is your super levy exposure?
Having worked out the milk potential of your dairy herd and comparing this figure to your milk quota, how much over your milk quota will you be? I would categories quota exposure as shown in the table. The category you fall into will determine how many actions you will need to undertake to alleviate your quota exposure.

Over Quota Position    Category
< 10 per cent over    Manageable
10 to 20 per cent over    Serious
>20 per cent over    Critical
Where do you start and what options do you have?
The later you start to rectify your situation the lesser the effect, as you are now four months into the current milk quota year. Your four months supply to date have been the biggest supply months so time is slipping away. By the end of July, 50 per cent of your annual supply from April 1, 2011, to March 31, 2012, will have taken place. So let’s look at where to start to reduce your super levy exposure and also to upgrade your herd at the same time.

Step 1  Reduce cow numbers – Somatic Cell Count
It looks like super levy is not going away until April 1, 2015, so keeping too many cows to fill milk quota is not a profitable proposition until then. Reducing cow numbers can have a beneficial impact on milk quality and animal health in your herd. The first cows to exit the herd are the repeat Somatic Cell Count (SCC) offenders. In an over quota situation there is no reason that these cows remain in the herd. Most herds have up to 5 per cent of the herd as SCC problem cows. Getting rid out these cows now could reduce your super levy exposure by 2–3 per cent.

Step 2  Reduce cow numbers – Lame Cows
Every herd has lame cows and these cows need constant care and attention. These cows can slow up walking time, are in paddocks near the parlour, need more veterinary attention, are slower to go back in calf, give less milk etc. In a super levy situation it is hard to justify holding on to these animals. It is best to dry off lame cows and fatten them for the factory. Again, most herds could have up to 5 per cent of the herd lame and to stop milking these cows now could reduce your super levy exposure by 2–3 per cent.

Step 3  Reduce cow numbers – Poor Yielders
All herds have cows that are well below the herd average. These cows cost the same to keep as the higher yielding cows in the herd but leave only a fraction of the profit of the better yielding cows. Look through your milk recording to identify the poorest yielder’s in your herd. This could reduce your super levy exposure by up to 2 per cent.

Step 4  Reduce cow numbers – Late Calvers
If you are in a super levy situation and have too many cows and heifers for the next few years then you have to ask yourself if you should really be keeping cows that calved from mid May onwards. These cows always tend to calf late every year. Culling these cows out of the herd at this stage of the year could reduce your super levy exposure by around 2 per cent.
So, by undertaking the steps at this stage of the year by the time you get to March 31, 2012, you could have reduced your super levy exposure by 8 to 10 per cent, with the added bonus of having a fitter herd for 2012. These steps would sort out most farmers in the manageable category above. Once the herd have been tidied up where to next?

Step 5  Meal feeding
Cow need to be fed adequately but in some cases cutting meal feeding levels somewhat in a super levy situation needs to be done. Assuming a milk response of 0.75kg of milk for every kg of meal, then reducing meal feeding by even 130kg per cow will reduce milk yield by 100kg per cow. This 100kg of milk equates to 2 per cent of annual milk supply. So reducing meal feeding by 130kg per cow can reduce your super levy exposure by 2 per cent.

Step 6  Milk to calves
Feeding milk to calves will not make you rich but it could save a hefty super levy fine. The reared calves could be sold on after April 1, 2012. For farmers that keep only 30 per cent of their calves as replacement heifers this option could reduce their super levy exposure significantly. This option of rearing all calves will mean a greater labour requirement and greater pressure on animal housing. Rearing all calves on the farm and getting calves to drink 400L of milk per head could reduce super levy exposure by 5–6 per cent.

Step 7  Lactation Length –November 1 Dry Off
When all the relevant options in step 1 to 6 have been exhausted, then your are going to have to look at lactation length to reduce super levy exposure. Milking cow to their potential means milking until early December but in a super levy situation an earlier dry off will be necessary. Cows normally give 4 to 5  per cent of their annual milk in November so drying on 1st November could reduce your super levy exposure by 4–5 per cent.

Step 8  Lactation Length – October 1 Dry Off
In critical situations, an October dry off may be more appropriate. This will mean a very long dry period for cows and the appropriate dry cow tube/sealers should be used. Cows normally give 7-8  per cent of their annual milk in November so drying on October 1 could reduce your super levy exposure by another 7–8 per cent.

Step 9  Once A Day Milking
This is an option only to be used in critical situations. Using this option is not a long-term solution as quota looks likely to be an issue until 2015. Typically, once a day milking will give 20 per cent lower total milk solid deliveries over the entire lactation (Shalloo, 2011). Given that 50 per cent of your annual milk volume has been delivered to the end of July, even milking once a day from August to April 1, 2012, will reduce milk supplies for the rest of this quota year by 10 per cent. So this option will reduce your super levy exposure by 10 per cent.

Steps 1-8 above can reduce super levy exposure by up to 25 per cent. The two most important things to do are first quantify your super levy exposure and secondly start to work on the problem now. Long term, reducing cow numbers and purchasing milk quota are the two best options to avoid super levy.

Based on projected global population growth as well as increased affluence and urbanisation, it is anticipated that global demand for food will increase by 70 per cent.  Ireland is already a major meat and dairy producing country with a huge exporting capability. Our production significantly exceeds our home consumption in key products - our self sufficiency is 617 per cent for beef, 344 per cent for sheepmeat, 573 per cent for cheese and 915 per cent for butter.

Agriculture and the agri-food sector is Ireland’s most important indigenous industry and has a key role to play in terms of direct economic activity and is one of the growth sectors designated to advance the country’s national export-led economic recovery.  The Irish agri food industry is embedded in the economy and contributes to national prosperity. Due to its low import content and low profit repatriation levels, the net foreign earnings of this sector amount to 32 per cent of the total foreign earnings from primary and manufacturing industries.

The Minister said: “Although these figures are still to be confirmed, and a definitive final position will not be available for some time, it appears at this juncture that the country has, fortunately, avoided a super levy. However, given generally favourable market forecasts and the increased rates of heifer retention in recent years, I am concerned about the real danger of going over quota in the 2011/2012 milk quota year, and in subsequent years.”

The Minister pointed to the market recovery in 2010 and the favourable weather conditions which gave rise to a dramatic increase in milk production, resulting in a remarkable turnaround from a position where the country was 10 per cent under quota at the end of the 2009/2010 milk quota year to one in which a super levy appears to have been only narrowly avoided. He also alluded to anecdotal evidence which suggests that milk supplies are already running ahead of expectations in the first two weeks of the new milk quota year.

The Minister concluded: “In such circumstances it is appropriate to again remind all dairy farmers of the need to carefully plan their production activities and to pay close attention to the limitations imposed by the quota regime if they are to avoid potentially very damaging super levy fines. Even allowing for a further increase of one per cent in the national quota since 1 April 2011, recent delivery trends, if repeated, will put the country in serious danger of going over quota. It is therefore incumbent upon every milk producer to exercise the necessary caution and to seek advice from, for example, Teagasc on the most sensible approach to be taken in managing their enterprises as they enter a crucial phase of the preparations for the abolition of quota.”