REX March 9 - Mark Butterworth, David Reesby and Chris Houston

0:00This is a podcast from Rover. Rover! Rover will exchange. With NetSpeed. Internet till the cows come on. Good day everyone, welcome into the Rex Daily Podcast. For Monday the 9th of March, I'm Dom George, the show brought to you by the team at NetSpeed, oh 800 NetSpeed, NetSpeed.net.nz gets the web to the shed now coming up for you on the program today. And just a moment, Mark Butterworth is going to join us from Craig's investment partners. He is an investment advisor, and has been having conversations on the ground with farming families in Taranaki about payout options. What's coming through most strongly is a sense of pause rather than urgency. So we're going to have a bit of a look into what the options are, given, of course, the big win for that Fonterra shareholders have got since the mainland sales. So, Mark Butterworth to talk through that stuff with us. We've also got David Reesby on the program with us today. Winner of the Taranaki Manawa 2 young farmer of the year contest and days competed back in 2022.

1:03So a few years ago, and he took out the title there. So he's got grand final experience. He's also a New Zealand dairy industry award winner as well. Also actually represented New Zealand in small bore rifle shooting. So he's got a bit of a story to tell. David Reesby taking out the latest in the regional contests for the FMG young farmer of the year. And also we're going to be chatting as well with Chris Houston from Beef and Lamb New Zealand. He is on the policy team. He's head of technical policy. And consultation has opened this month on plans to change the traceability regulations around sheep and farmed pigs in New Zealand. So we're going to find out the nuts and bolts of that. Submissions are currently open as well. So we'll find out all the details around that particular proposed change in legislation. That's all coming up here for you on the Rex daily podcast. Enjoy. Rural exchange with Netflix keeping the country connected. Right. Of course, Fonterra farmers, as we spoke about on the program,

2:05are in line for a win fall in the region of about $4.2 billion. Bumper dairy season, but of course the mainland sale. It's one of the biggest cash payouts to sector scene in years. Farmers are approaching. A significant financial decision on the back of this. Do they reinvest in the farm? Do they pay down debt? Do they look beyond the farm gate? So talk about this. We've got Mark Butterworth with us from Craigs. Investment partners. Here's an investment advisor. So who better? Good to have you on. Mark, how are you? Good, Dom. Thanks. You know, fantastic to be here. So you look forward to where this conversation sort of takes us. It's a very topical at the moment. As you say, that win fall as we sort of talk about is due to be sort of paid. In the next little while, win exactly not quite sure, but it'll be, yeah, everyone sort of I guess started to talk about and just think about what their options might be. So yeah, now it'll be a great conversation. Well, I'm going to start with a weird one because my producer has told me that apparently Sparkle sold out at one of their field days, right? To ask Sparkle's design of a successful farming year.

3:05Maybe they are. I mean, I think I was thinking about this. The last time sort of Sparkle sold out was during COVID. Obviously we're in different times than when we were in COVID. But look, I think like if you're going to spend 15 or 20 grand on a Sparkle, given the amount of cash, you're going to likely receive from the power. Treat yourself. You've spent 20, 30, 40 years in a cashier. Hey, why not be able to sort of sit in the spa or relax at the end of a day and sort of and rest those weary legs. So good on them. I think there's always if you've got a portion of cash that you want to spend on a bit of a luxury item. So to speak, by all means, fill your boots. It might not be a Sparkle. It might be something else. It might be so obviously travel might be something like that. But I think a little reward for all the hard work you put in over those number of years is certainly not to be not to be not done at all. Yeah, exactly. Yeah, you can't dismiss it because after all the end of the day, what are you working for? Correct. So what's the size here? Are we talking about across the average of a potential payout for shareholder? Yeah, it's an interesting question. So average obviously is there's averages these ups and they're down to.

4:08And it's relative to most for people. It's relative to production. OK, so the number of shares you have historically has been backed by the number of milk solids you're producing here in Taranaki, which I guess for me is the local sort of province, which tends to be smaller. So sort of slightly smaller production. The average payout here is just over the $200,000 mark. I think if you look across the industry, that might be in the mid three, $380,000. Some of the bigger farmers through Canterbury, Southland, your upwards of $600,000, $700,000. Obviously a little bit dependent on production, a little bit dependent on how many solids you were shared up to. Yeah, that's where it sort of sits. So those are the ball parks. So there is a bit of a range to be fair. Yeah, big range definitely. Tax and GST. No, no tax. So I guess the reason that's been sort of set at $2 effectively in terms of that distribution is to mitigate any tax obligation that might be payable. So the $2 is tax free. And there's no goods and services associated with either. So there's no GST component at all. So it's effectively a $2 per year cash distribution

5:09that will arrive in the bank account in the next little while. So how are farmers looking at this, the ones you've spoken to and from what you've managed to glean from your colleagues. Obviously you say you're in Taranaki, obviously. So you will have had conversations. I'm sure what are you hearing? Look very much like as your interest suggested. There's the option of paying down debt. There's the option of investing on farm. And then there's the option of looking off farm. I think certainly it creates an opportunity to have a discussion. There's been obviously the debt repayment thing as a big one. I don't think necessarily the banks want all of that repaid. They're in the business of lending money, not necessarily taking it all back again. The beyond farm thing, whether that be compliance, I've heard a lot of mention of solar. That's been a sort of an interesting topic to talk about, particularly with electricity prices where they are. So the installation of solar on cheds, etc. To sort of help power that sort of part of the business. And then there's the off farm stuff. And that not necessarily doesn't necessarily mean what I do. But it can also mean buying a house in town that allows mum and dad

6:09to retire from the farm. The whole succession thing opens up a real, I guess, avenue for people to really explore what their goals and aspirations might be. And how this went for, so to speak, can be used or utilized best to help them achieve those goals longer term. So it's obviously horses for courses. People are at different stages of their careers. Massively, massively, massively. And even at this point in time now, where we have clients, we have some clients buying more shares because they want to click the $2. We have other clients actually unloading shares because they think it's a good time to sell a few. And there's a reasonable amount of liquidity in the market to do so. And again, the people that are buying and selling know real, real, real, real, real reason. Different stages of their lives, parts of their careers, whether they're exiting, whether they're just starting their, I guess, their farming journey. Everyone is so, so different. There's no right or wrong answer. People come down to individual businesses, individual personalities, where people are at in terms of their lifestyle, at life stages, really. Yeah, exactly. But let's hypothesize here a little bit and go, okay, look at those three options.

7:10Reinvesting on the farm, pros and cons. Look for investing on the farm. I mean, the end of the day, you want to be looking at anything that is obviously going to make your farm more sustainable, I guess, more robust from a compliance perspective. And at the end of the day, anything you wanted to spend money on, you're wanting it to make sure it's giving you a robust return on that investment. So another one that's been banded about is the holder system. So for example, people using the holder as a means of, I guess, adding technology to their farming business, and hopefully generating additional returns through the use of that technology. So anything they're going to do on farm, you'd want to work out and go, okay, if I'm going to spend X amount of dollars, what am I going to get out of the bottom line? Is it going to save me labor units? Is it going to save me cost? Is it going to save me power, etc? So those are the sorts of conversations and things people sort of need to have and those are the calculations people really need to sort of sit down and work out through whether that's through their accountant or their bank manager, however, just to make sure that they're not just spending cash willy nilly. It needs to, I guess, have a financial benefit to the overall business. Yeah, which is like the examples you mentioned,

8:10as you say, like wearables, solar, infrastructure investment, things like that, do they have a net benefit once you've invested? Exactly right, exactly right. Yeah, okay. So there's that one. There's also the most boring one, the most one, the one that you go, oh God, really? But it's the paying down of debt, but sometimes, you know, you just got to bite the bullet, don't you? And this could be what some people are after, you know? You do. And I guess a few, it's an interesting question. So I was thinking about that the other day. So if you came to me and a man off the street on a P.A.Y.E. so salary didn't come. And you asked me as an investment advisor, what should I do? Should I pay down debt? Or should I invest in the markets? Our advice would generally be pay down debt. Okay. If you're a business or you're operating a significant sort of dairy business, whether that be dairy commercial property, whatever, a portion of that borrowing or that interest payment is tax deductible. Okay. So if you're in a position where your debt servicing or your debt position is at a relative modest level and you're comfortable,

9:10it actually makes sense to have a little bit of debt from a tax deductibility sort of perspective. So when people walk in and they've still got a reasonable chunk of debt, I guess I want to talk to us about investing. Then it sort of complicates things because you know there's a section of deductibility associated with it. And then you sort of look at it and go, okay, if you're borrowing rates are at X, Y, Z, whatever they are, and they're like, you've come off the highs that they work, even what the OCR has done, if we did put a portion of that money rather than repainting debt, are we better off investing off farm and generating a return with those funds outside of repainting debt? So that's a balancing situation, clearly. It is. And again, as we talk, every situation and every circumstance and every farm is very different. And there are some people that getting rid of debt is their key goal. You know, all of the started, they started with a chunk of debt. Their sole purpose of farming is to reduce that debt and get that as long as possible. That's cool. If you want to do that, other people are comfortable with having relatively high debt levels and can cope with it. So they're more happy to say, okay, what if we put a

10:10what a doe off of farm and see what that can do, sort of to help sort of, I guess the longer term, I guess family succession, all those sorts of things that come into play. Yeah. Well, that's beyond the farm gate, isn't it? Really? Yes. That is that category, which as you mentioned, maybe it is a retirement house somewhere in town or something like that. There are a lot of people as well at the moment, or you can talk to that, but also people also investing in the land, but with diversification in mind, i.e. Agritarism. One example of me. Yep. Yes, certainly. I guess all those options are open. At the end of the day, I guess the land thing is what people know. I mean land. Typically, we sort of look at those farming businesses as having three prongs, you own, you've got a land business, you've got a milk business, and you've got a meat business. And the land business, historically, with capital growth and capital gain has treated people very, very well.

11:11And it's a bit like the rental property thing we also see in town here, where people like to own bricks and mortar. And they'd like to be able to see something tangible and be able to feel it and walk over it and open a door and whatever. But I guess people, the thing I guess I'd like to see people sort of get from the conversation we're having now, there are things beyond just property, beyond farmland, et cetera, that maybe they, if they have got an hour or whatever an opportunity to talk to someone, that there is things outside of land and property that they could be investing in. You're talking about portfolio, it's really, aren't you? Yeah, I am. Yeah, I think that's where we come in. And that's where we specialize. And that's our sort of effectively bread and butter essentially. So anyone that's, and the vast majority of our clients, are those sort of people that have sold a farm or sold a commercial property and got a reasonable amount of money that they don't want to necessarily leave in the bank. So they're wanting to create three things. They're wanting to protect what they've got. They're wanting to grow it.

12:11And in most cases, but not always, they're wanting to generate and then come stream. And those are the three prongs that we look to create portfolios that hope to deliver those sort of three avenues for those people. Yeah, it's an interesting one. You know, we've sort of looked at it personally. And, you know, I know a lot of people that do it. And there is a, well, how should I phrase this? I don't want to say a skepticism. But there's a, I mean, you know, you're handing your money over to be played with by somebody else. You really hope they know what the hell they're doing. Yeah. And that's an interesting one. Because farmers, particularly, I guess, when you think about they've been in control of their own businesses forever, you know? And they, to hand a water money over to someone that you've only just met and expect it to do X, Y and Z is a massive thing for them. It's interesting because we, you sort of see what happens is they might have sold the farm. And I guess we're moving a little away a little bit from the foundation of the frontier thing. But they might have sold the farm for $3 million of whatever. You might get $2,300 to start with. I can almost guarantee you within two years you've got the whole lot.

13:14Okay. As they grow confident with what you do, as they see what you do, as they understand what you do, and that rapport starts to build and the confidence starts to build and they understand it. But that takes time. It's exactly right. You're not going to necessarily give someone your life savings without sort of saying, okay, you need to show me improved to me and you need to earn your keep effectively before I'm prepared to give you everything I've got. And it's a massive deal. And it's a massive responsibility for us too. And in some cases, it's like savings. You know, we're not the sort of thing you take for granted. So certainly a big decision for a lot of farmers to be able to step away and hand the reins to someone else when they've been in control for 20, 30, 40, 50 years in some cases. Yeah. And then, of course, the conundrum becomes, well, yeah, I want high yield, but that comes with higher risk. Exactly right. It does. And you can't have your cake. I need it too, unfortunately. So that's 31. That's the perfect, yeah, I know. So we certainly have, I guess, a very region.

14:16We're not so rigid, but we work through a series of questions that really determine where that risk profile lies. And they range. They range. I guess we talk about risk capacity and risk willingness. And sort of that sort of produces a matrix. And we then sort of, I guess, effectively funnel those people into what we consider to be the appropriate acid allocation in terms of how much risk they are prepared to take on. The only caveats that normally age and stage of life is the key driver to that, but another caveats is how much you're investing relative to your overall wealth. So if it's a couple of grand or 10 grand and you're worth whatever, it's going to probably take a bit more risk than you are if it's everything you've got. So that's all taken into consideration as well when we put any sort of portfolio together from the outset, really. One of the things that always freaks me out about it a little bit as well is, OK, all things being equal, you guys do what you do, and most people come out with the desired result at the end of the day.

15:16I'm sure otherwise this wouldn't be a thing. Now, the problem is you get events outside your control. Geopolitics, for example, very timely at the moment. And you get it, you get an event like that. It's like farming, you get an active God thing, right? And you just go, oh, I can't have done anything about that. There'll be things that you guys just don't see coming and they can affect markets drastically. Exactly right. And I guess some of our farmers understand that, which is to be fair, when they do come to us, it's one of the things we talk about is that volatility. So volatility is a thing and it is a real thing. And as you say, right at the minute with what's happening in Iran, it's certainly creating some jitters through the markets. Long-term, if you look at long-term averages, even you go back 100 years, the markets will always recover out the other end. And farmers typically understand that they know they are in there for the long haul. There are going to be market movements on a daily basis that can see portfolios go up and down. But they understand that, as you said, there's always stuff that comes out of left field

16:17with in farming business. You get a weather bomb or whatever. And they have to cope with that. And it's exactly the same with financial markets. So it gets its our job really as the advisor to hold people's hands and just give them the confidence that their companies that were invested in aren't going anywhere. Yep, there's going to be ups and downs and value, et cetera. But over the long run, those companies that were invested in strong balance sheets, sound modes, not going anywhere. Yep, there may be some volatility at the moment. You could argue that some of those companies are actually on sale. For example, Microsoft, all those sorts of ones. Some people don't look at it like that. Some people look at it like I've lost this money. You've only lost or you only actually realized the loss if you sell. And it's our job as the advisor to hold people's hands through that sort of periods of volatility. Yeah, because I've seen people just like become obsessive with what and tracking, tracking the number. Yeah, that's interesting too. Because we sort of tell we obviously once you've got a portfolio set up, you've got live data in terms of where the portfolio sits and the value isn't. We tend to tell people not to look at it every day. Like, don't look at it every day.

17:17You're either having a good day or a bad day based on the number that you see in front of you in the morning. And it can have an emotional toll on some people. So we say, look, we're reporting reasonably regularly to you. And we'll be giving you some color as to what's happening and why it's happening. If you're just looking at a number without sort of understanding the context around that number in terms of why the ups and the downs have happened, it can be a bit disturbing to some people. So bear advices, don't look at it every day. Look at it once a month or once a week or whatever, but the daily fluctuations can be significant. And it can influence people. As people are starting to, as it's interesting, it's sort of happened through that sort of, I guess, the COVID period. If someone was ringing you more than once a week, even though they said they're okay, they probably weren't okay in terms of their ability to withstand that up and down. And we have some of the questions that we have in our risk tolerance questionnaire. Actually, talk about that. And one we used to have in there was a sleep test. And sort of, okay, if you'll portfolio fell by $X, how would you be sort of fine, not fine, really not good?

18:17People, it's easy to tick, not fine, but if you actually see it, if you see your whatever figure go from thing and it goes down 10%, where the rubber hits the road, people's sort of, I guess, emotional decisions become a little bit different to what they can tick on a box on a piece of paper. So that's our jobs. I mean, and that's why you pay, I guess, a bit of professional advice to make sure it's being looked after it, and well, well-resourced. And a wider farming context. Things are pretty good at the moment. So I mentioned the start there. Obviously, dairy markets are going pretty well for how long? Who knows? Red meats going really, really well. Most harts going well. So most facets of ag are going pretty good at the moment. So I imagine you're seeing, I don't know, you tell me, what's the landscape out there in terms of what you're seeing from the general ag population? Oh, positive. I guess I'll turn on Akiyama, probably a little bit more blinded towards the dairy sector. But very, very happy. And the happier too, we've had a really unbelievable summer in terms of, not a great summer if you're a townie, because it's kept on raining.

19:17So we had a bit of a slow start through the spring, but the summer, all this up until now, it's starting to dry a little bit, has been unbelievable. Land market has been, I guess, very active. So up here in Taranaki, prices probably haven't moved that much, but there's been a significant number of transactions. So every now and then, you'll get a sort of a couple of years where there'll be a bit of a backlog of farms that haven't moved, and you'll have every sort of third or fourth year that seems to be a sort of a bit of a clean out effectively. And that's been one of those years. Now whether that's been driven by the $2, I tend to think it's probably more driven partly by, I guess, people are pretty, pretty, pretty bullish about where sort of things are headed, and the dairy sector payouts are looking solid for the next little while. So by the buy, everyone's pretty happy, you know. It's been a good season, payouts are good. Everything seems to be taken along nicely. Yeah, no, I'm glad you mentioned Land value there. So yeah, can you talk more on that, like what are sort of other effects is it having on Land values?

20:18It's more just transaction, although I was talking to a colleague in Christchurch, who were down in Canterbury, and he was sort of intimating that down there, and I guess you're talking bigger dollars than you are here in Taranaki just in terms of quantum, that the values and the number of transactions has increased. So again, I don't know whether you can pin that all on the fact that there's this distribution. I'd imagine, again, if I was a banker back in the day, if I was putting my banking cap back on, if you were working on a transaction and you knew you were writing a check out for a $5 million on the first of June, then you'd be probably accounting for some of that money that was going to be distributed in the next little while going into that transaction. So from a banker's perspective, maybe that is being put into those calculations, but I think the wider context, I think it's just a really positive outlook for the industry across the board, really pay out the whole thing just seems to be ticking along nicely. Yeah, and it just shows as well, you know, agriculture again, doing the economic heavy lifting, I suppose.

21:20Oh, absolutely. And I just, it does annoy me that that does sort of get missed, and I guess the wider media. I mean, you've got all this, everything else that's going on in Auckland and goodness and Wellington, for example, but the little old regional New Zealand just keeps ticking away, you know, it just keeps delivering the goods. We sort of fly under the radar a lot, I think, and probably don't get the credit that we're credits Jew in some cases. I think in a lot of cases. Yeah, in a lot of cases. Yeah. Very good. Well, keep buying those sparkles, people. Thank you. At the moment, Mark, good stuff, man. Thanks for talking to us. Appreciate your expertise on all of this and having a more general chat about the state of the economy as it pertains to particular to dairy farming and the wider ag sector. If people want to get, how do you? What's the best way? I look to websites, probably the best way. I mean, Craig's, Craig's IP.com, a few sort of go to that website. We have branches throughout the country, about 20, odd branches, curie curie and vocago,

22:21and any of our advisors be more than happy to have a chat, even if you've got an hour, just to call in. Understand, I guess, what we're doing, how we do it. I think people don't know what they don't know. And if there's an opportunity to look at a portfolio and something of farm, I think it's certainly something that they should have at least on their list of things to consider. So that's where I'd say it. Good, man. Have a good one. Cheers. Appreciate it. All right. Well, after a couple of weeks, hiatus. We've got the young farmer of the year regional finals. They resumed over the weekend. We're Tadanaki Manawa 2, taken out by David Reesby from the Martin Club. Lovely to have you back on. David, and congratulations on the win. Thank you very much, Thomas. Good to be here. Your name rang a bell. And I thought I've spoken to this bloke before. When did you, you've won this before, haven't you? A few years ago. Yeah, back in 2022. So it's been a while since I've been back out on the paddock. Yeah, and the intervening years you haven't competed? Or you have?

23:21No, I helped out with convening a regional final and reading the district's last year or so. Yeah, just trying to get on the other side of the competition and see how it all works and give it back to from what I've got from last time. Yeah, it's good to be back. So what made you give it another go three, four years later? It was a special feeling when you get up there on that when you're at the cause. And yeah, we're even out on the paddock. You know, it's a pretty special feeling to be out there competing against your fellow people on the region. And obviously my partner there says too, and yeah, she did very well on the day as well. So you've then obviously had grand final experience back in 2022. So you feel like, you know, but at times past the fact that you've got that under your belt that, you know, the time is kind of right to go again.

24:22Yeah, yeah, I've definitely learned a lot. I've probably had to do before. But yeah, I think age does that a little bit. Yeah, obviously, yeah. You work out. We didn't do so well last time. Yeah, try to counteract that and learn from it. Do you feel like you are in a bit of spot this time round? Yeah, yeah, I'll be giving it my all. I'll think I'll leave everything out on the paddock. Yeah, I won't leave anything out there. Tell me about the weekend. How'd it go for you? Yeah, it was good to be back out on the paddock and skating. I really enjoy it. The adrenaline of it all. Yeah, it's this pretty special feeling. Yeah, I really enjoyed doing the farmer and getting in there and getting the sponsors and working on their models.

25:23It's always a good time getting to buy some more of the tools and constructive things. Tell me in terms of what the competitors were like this time round. Was it a strong field? Yeah, absolutely. I didn't know what to really expect with being out of the competition for a few years. How well I'd go or what would happen. I was pretty overwhelmed to see my name at the top of the leaderboard going into the quiz. So yeah. Fantastic. And the quiz obviously won, OK? The end there? Yeah, yeah. I really enjoy the quiz. And yeah, managed to take out the quiz. Yeah, I was pretty stoked. I was having a look at your profile from 2022, just pulled it up, actually. And yeah, if you've competed for New Zealand in small bore rifle shooting in the past, haven't you? Yes. Yeah, I did a fair bit of that through high school.

26:26And yeah, I sort of have been busy with young farmers. And yeah, I sort of haven't been back to in the last years. But I think I will probably at some stage. You know, go make me, uh, yeah, compete. It's a great precision sport where you learn a lot about yourself, especially being at any one team sport. Yeah, exactly. Also, they mentioned the fact as well that you have a dairy industry award. That was from back in 2020, I think, as well. So you're obviously, for those who are unfamiliar with you, tell us about what you do. You're obviously in the dairy industry. You're still working in that industry? Yeah, so I'm on the family farm at home. Yeah, working alongside my parents. Yeah, we've got a couple of properties. So we're managing them in the day-to-day running over them. So yeah, I really enjoy the wide variety of what I can do in a day.

27:28And no two days is the same. So tell me in terms of, since we would have spoken a few years ago, obviously you're winning the award. You've been in the grand final. You've done a lot of bits and pieces. I think you were doing primary ITO papers at the time as well. So what's happened in those intervening years? Yeah, I've tried to hone my skills in a bit. Yeah, just trying to get as much practical experience and theoretical experience. I've finished my primary ITO level fours last year. So yeah, I've entered the dairy industry awards for their managers category last year. And yeah, I'd like to compete in the competitions that are put out there because you can learn a lot. And there's a lot of people in sponsors that put a lot of time and effort into you to try help you go. Exactly. What's the ultimate farming aim for you?

28:31Yeah, I love my dairy farming. Yeah, I love my cows. Going as much grass as possible. Yeah, fully fading them. And probably alongside that, growing some beef. Very good, excellent. So, yeah, dairy's in a pretty good spot at the moment too. You won't be an unhappy chap in 2026. Yeah, and the dairy farming is very stable at the moment, which that's the best thing that anyone could have. No, not too many fluctuations. They could stay the same for the next couple of years. It'd be great. But obviously, there's a few things happening in the world at the moment, which could turn that table a bit. Yeah, well, it's a very, very good point. So, in terms of looking ahead to July and the grand final, of course, what do you do in terms of prep this time? What have you learned from last time that you can improve on or things that worked? Have you got mentors or anyone like that?

29:32How are you approaching the lead in July? Yeah, I think I'll be starting from scratch this time. Oh, yeah, start again. But yeah, I'll definitely be reaching out to past regional winners. And people I've met over the years to try to get their own sight on things and how they would approach things. And yeah, I'll be, obviously, need to brush up on a bit of study still. Yeah, definitely getting those, getting myself organised for July. Well, hey, listen, thanks for joining us. Really appreciate your time. Congratulations for the weekend. All the best for July as well. Go well. Thank you, Don. Good talking to you. Well, consultation opened this month on plans to change the traceability regulations around sheep and farmed pigs in New Zealand.

30:32So, question then arises. Will every sheep need a Nate-style tag? Chris Houston is with us now head of technical policy. A B for their New Zealand. Lovely to have you on. Thanks for your time today. Good morning, Don. It's a pleasure to be here. Thank you. So, tell me, let's start right at the beginning. What are the current requirements for sheep traceability in New Zealand? So, currently, movements of groups of sheep are the movement recording for those. It's most frequently done by farmers filling out paper-based ASD forms, ASD stands for animal status declaration. Those can also be completed electronically using the MyOSPRI system and just growing uptake of that for particularly movements to processors, but most movements are recorded using the paper-based form. Okay. So, what are the proposed changes then to the system? So, MPI is consulting on three options,

31:34well, one being remaining the status quo, and then two further options for essentially making the current paper-based declarations electronic. So, that's either using making electronic use the ASD's mandatory, so essentially phasing out paper and moving to electronic ASDs or EASDs. And then the third option is effectively achieving the same level of traceability but bringing that requirement under the Nate Act. So, if it did come under the Nate Act, what would that mean for sheep farmers in particular? Are we talking mob-level? Are we talking individual sheep here with tags? So, there's no proposal to introduce an ear-tagging regime under any of the proposals. The difference between the two options is essentially the legislative underpinning. Oh, okay. What do you think of Beef and Lamb New Zealand?

32:36What's the recommendation that you guys are putting forward? So, we're talking to farmers at present and receiving feedback. We're very keen to hear what farmers think of the proposals. But I guess at present we favor option two, which is making ASDs phasing out paper and moving to mandatory use of EASDs. Right, but not bringing it under the Nate requirement so to speak with the Nate legislation. That's correct. What sort of feedback have you had so far from farmers? So, I guess the reason we favor EASDs is because the feedback from farmers have been using them is that it builds on existing requirements and they find them practical and easy to use. So, EASDs have been available for a number of years now, and the feedback's been really very positive, and so we're keen to progress with that.

33:39Why now in terms of these proposed changes to your understanding, Chris? So, it's been talked about for some years now, and essentially it boils down to reluctance to continue relying on paper-based movement recording. The current system works, but there's questions about how quickly and a biosecurity emergency responders could do the necessary tracing when they're relying on a paper chain between movements. Right, and obviously, you know, foot and mouth is one of those things that has been on the radar for a long time. Thankfully, I haven't had it. Some say inevitable. Some say, you know, no, we've, you know, had a good track record up until this point, no reason to think that that can't continue. The problem, I guess, with sheep and it comes to foot. Now, it does take time to show up as clinical symptoms. Is that right? That's right. So, the parent, you know,

34:40essentially the visibility of clinical signs of disease and sheep can vary according to the strain of the virus, but compared with cattle and pigs, it is much harder to see the disease in sheep. To some extent, that issue is mitigated in New Zealand by the fact that sheep are very frequently co-run with cattle. So, and sheep can be farms in particular, and the disease is easier to see in cattle. Right, and, you know, I guess, you know, it's always been a priming biosecurity such a massive issue for a country like this. But when, you know, we rely on our exports so much. That's right. It's FMD would have a very serious impact on all of our livestock production sectors. Yeah. The Australians have gone down this road, I think, to a degree. What, do you know much about the Australian example? Yes, the Australians are in the early stages of implementing EID, which is electronic individual identification, so in sheep.

35:47So, a system very similar to what we have in cattle and deer in New Zealand with deer tagging and movement recording of every single individual when they move. The Australians have very recently made that mandatory for sheep and goats as well, I believe. And that, so it's a bit early to tell how it's going because they kind of just started it. But, yeah, that's the case. But that's not on the cards here, though. That's not an option on the table, as you alluded to earlier. No, no, it's not. We're very pleased that the government's sort of taking steps to make some progress and sheep traceability. But it's not on the agenda to include EID or electronic deer tagging and sheep. It's fascinating to see what the Australian feedback is on it, considering some of the size of the mobs as well. They have over there given their landmass, it'd be quite fascinating to see how they're coping with it all in six months time or something. Yes, we're going to be watching that closely.

36:48There's been concerns among producers about the practicality and cost over there. Yeah, I can totally imagine that would be the case. The quality and cost for what we're proposing here, time and cost for farmers, time as precious as we know. So I guess we want the best system that takes biosecurity obviously into account and has a tight and lid on that as possible. But also mitigating, as I say, the time and the cost. That's right. So we feel that electronic mob-level traceability strikes the perfect balance between improving biosecurity readiness. But also keeping things simple and practical for farmers. So, tell me, in terms of the legislation behind this, what is it come under at the moment? Is it the biosecurity act or obviously there's the Nate legislation as well, but I guess that's one option. But under the legislation, what has to be changed here?

37:50So currently, animal status declarations, ASDs are at sit under the Animal Product Act. So their primary purpose is to provide assurances to overseas markets about the safety and market eligibility of livestock products. So if option two was the one that the government selects, then that would require a small change under the Animal Product Act framework, which is essentially a notice. So it doesn't require a full change to the Animal Product Act to bring that about. Whereas if option three was selected, are you using the Nate Act, they would actually be necessary to amend that Act, which would take a lot more time, and you know, you need to get that one to the legislative agenda, etc. Interesting. Right. Okay. So this, again, is another reason why, I guess, beef and lamb, considering this to be the most viable option.

38:51So what would the time frame, what are the time frames around this? So that's still being worked through. So MPI is consulting on the three options right now, that consultation closes on the 5th of April. And then it'll receive feedback and then do the usual policy process of analyzing feedback and then working out how to take that forward. So we're not, you know, that's not determined yet, but we're confident that option two, making ASDs mandatory, would be a faster way to make improvements to sheep traceability. In terms of your other sort of ag colleagues here, the likes of the dairy and seeds, and is that the sort of the consensus across the ad board, if you like, at the moment, that option two, is the preferred one? So we're having conversations with those groups. We work very closely with dairy and sand, in particular, across traceability and biosecurity issues.

39:58I understand the organisations are still arriving at positions, so seeking feedback from their constituents and farmers. So I think the one thing we can say across the board is that there's support everywhere for improving the traceability of sheep ampics, because, as we talked about earlier, biosecurity and readiness for FMD in particular is really important. Yes, certainly. So in terms of info, then, for people out there listening. So I think there's some webinars coming up on this right. So can you give us some details on that? So that's correct on MPI is running some webinars. My understanding is those are on the 11th and the 19th of March, and more details on how to register can be obtained on the MPI website. Beef and lamb is also making information available to our farmers via e-diaries, and we're planning a webinar, but we haven't landed the date yet.

41:00So there'll be a beef and lamb webinar as well, where farmers can jump on and learn a bit more about it and let us know what they think. So often when it comes to these submissions and the consultation phase, a group like beef and lamb will almost provide something of a template for people to go on and submit in that fashion. Are you doing that this time, or is it just the farmers just go on to the MPI website and do it that way? But we haven't landed exactly how we're going to do that yet. We're keen to hear what farmers think. If the feedback is, as we believe it, it's likely to favor e-a-c's and early signs, or that's where people are headed. Then we may not issue a pro-former or a template for people to use that depends on what people think. Yeah, okay, very good. So we've got webinars coming up and the consultation closes. I think you said April the 5th, right?

42:03That's right. Yeah, excellent. Good stuff. All right, well, we'll watch this space then and see how farmers respond in kind. But thanks for giving us the outline of everything. Chris, really appreciate it. Cheers. Thanks, Tom. Our general focus today lets wrap the Golden Shares from over the weekend. New Zealand winning five of the six titles. If you haven't caught up with the news at the Golden Shares, World Sharing and a wall handling champs in Masterson, Roll and Smith and Joel Hanare among the stars. So New Zealand claimed an unprecedented five wins from six events at the event. And they swept the team's machine-sharing, blade-sharing and wall handling titles on the Friday. Then they added two more world titles on the final night on Saturday, Roll and Smith claiming as second individual world machine-sharing title. Joel Hanare, completing a third team's an individual titles double. The only event not won by New Zealand was the blade-sharing title. And that's a great turnaround given the fact that they failed to claim any titles at the 2023 champs in Scotland.

43:09In the Golden Shares open final to a Henderson from Northland successfully defended his title despite finishing second off the board to Gavin Much from Scotland based in New Zealand, of course. But it was Henderson's superior quality that gave him victory by about half a point. So congratulations to all the winners, a great weekend for New Zealand at the Golden Shares World Sharing and a wall handling champs in Masterson. That is the program for today, everybody. Thanks for listening. Thanks to the contributors, big thanks to Net Speed as well. Fast, reliable, locally supported phone and broadband packages available right throughout New Zealand in rural and city areas. Mobile Homes Caravans batches, pretty much anywhere you can think of, 800 Net Speed Net Speed.net.nz. That's the show. Have a great day. We'll catch you all back tomorrow. We'll exchange with Net Speed. Outstanding in that field.