KEY POINTS:
As the Government prepares to lift the lid on the fiscal feast - or famine - that may be Budget 2007, Agriculture Minister Jim Anderton has begun whipping up the rural sector's appetite with rousing toasts and select tidbits, but the nature of the main course remains a mystery.
A pre-Budget pledge of $1 million a year for four years to promote and support international collaborative research on the agricultural and forestry sectors' response to climate change is a step in the right direction, says AgResearch boss Andy West, but needs to be in the order of tens of millions if it's to have any impact.
But there's no doubt about where he wants the money spent. With livestock grazing some 26 per cent of the planet's land mass, and Australia and New Zealand together employing around 75 per cent of the world's experts on greenhouse emissions caused by animal digestive systems, the focus should be on "a major transtasman research programme".
"It should be our contribution to humanity's total effort. It is starting to be talked about but there hasn't been any action yet," West said.
He said the $1 million would help kick off such an effort, but would not go far. "As far I'm concerned that's just the disbursement cost to travel the Tasman to set up seminars and get people talking. It just pays the airfare and hotel accommodation."
While he expected a Government response along the lines of scientists always wanting more money, the enormity of the problem raises such a plea beyond some other requests. "The scale of the problem we're talking about here is the loss of civilisation."
Anderton, who with Climate Change Minister David Parker announced the funds, admitted it was a small sum but said it was really about promoting New Zealand research into climate change and that a "significant package" across all sectors would be unveiled in September.
Dairy debut
While Open Country Cheese shareholders examine the independent adviser's report on the value of Affco offshoot Dairy Trust's takeover bid, a related cheese concern is about to enter the rough and tumble world of tradeable securities.
Waharoa-based Kaimai Cheese is poised for quotation on the unregulated share trading register Unlisted tomorrow, a milestone for both entities, according to Unlisted manager, Bruce Cossill. "It's our first IPO straight to the market."
Kaimai Cheese - which plans to start producing premium-quality cheese such as camembert and brie at the end of August - aimed to raise $5.5 million but its float was "heavily oversubscribed", in the end accepting $6.5 million out of $11.7 million, Cossill says.
The addition of Kaimai brings the number of companies trading on Unlisted - which debuted in December 2003 - to 24, a promising sign after a Ministry for Economic Development review into the platform's unregistered status in 2005 took some of the wind out of its sails.
"We're taking a little while to get that momentum again," says Cossill.
But he hopes Kaimai will lead the way for other smaller companies that have ambition but also an eye on the pennies. "It's an example of how smaller companies in New Zealand can have a relatively do-it-yourself approach to preparing a prospectus and raising capital and coming into a trading environment that keeps their costs down."
While it's hard to spot a trend among the kind of companies trading on the platform, Cossill highlights a strong interest among vineyards. Although two of the three that had joined have since departed for reasons such as capital restructure, Cossill says he knows of three actively looking to list on the platform.
Cossill believes Unlisted offers a chance to unlock some of the dairy sector investment not generally accessible to the wider investment public - stressing co-operatives as an obvious example.
"Co-operatives often have restrictive ownership and may have difficulty adjusting their constitutions to meet NZX requirements, so if they're looking for a vehicle for liquidity or transparency then Unlisted might suit them better."
Ironically, growth in that sector could also deplete Unlisted's ranks. Commenting on Open Country Cheese (which just happens to share a number of the same directors as Kaimai, including former National Party deputy prime minister Wyatt Creech and fellow MP John Luxton), Cossill said: "If it was completely taken over by a listed company it potentially may not require a quotation on Unlisted."
But Cossill says the offer that began on Monday might also bring another company on board, with Dairy Trust not currently quoted anywhere and not planning to list on the NZX until some time in 2008. "If they [Dairy Trust] wished to provide a trading platform for their shareholders between now and their NZX listing there's no reason why they couldn't come through Unlisted on the way."
Fonterra's surplus
Although Fonterra's latest payout boost of 20 cents per kilogram of milk solids will curl many a farmer's frown up at the edges, such largesse is not necessarily in their best interests long-term, says accounting professor and Fonterra critic Alan Robb.
Fonterra recently slammed the expert in co-operatives for daring to warn of the dangers of surrendering control to non-farmer shareholders, ahead of what could be a radical rejig of the diary giant's capital structure.
Undeterred, Robb is raining on more of Fonterra's parade, attacking it for a payout policy that leaves the cupboards bare.
"I'm very surprised when I see Fonterra adopting a policy of paying everything out - because it's not best practice in co-operatives."
Although not a requirement, it is common for co-operatives to retain some part of the year's surplus as a non-distributable amount, says the former Canterbury University professor who now teaches cooperative accounting and finance at Saint Mary's University in Halifax, Canada.
"It weakens the co-operative because it means then that they are more dependent on borrowing to provide the necessary capital for expansion or calling on shareholders to contribute more by way of shares or other finance."
While Robb acknowledges Fonterra retained non-trading profits to plough back into the co-operative after selling shares in Australia's National Foods, the surplus from milk supplied by members did not have to be distributed in full.
