The Year that Was and the Year to Come

2007 was a year of adjustment.

We saw Fonterra offering us their capital restructuring programme hoping for a 75% vote in 2008. They need to stop farmers cashing up their shares and going to unshared supply. I am personally concerned at the mass exodus as farmers I know cash up their shares.

We saw the flight to quality in New Zealand as the subprime market in the US unfolded.

We also watched as a number of finance companies in New Zealand collapse and I think, sadly, there may be more to come in 2008. These companies have taken about $2 Billion out of our second tier market, so those borrowers who need funding outside of the banks will find it very difficult in 2008.

We saw the world food shortage suddenly unfold with strong demand and increased prices. New Zealand will be a winner here because we are a food producing nation. Dairy farmers have already been recompensed with an increase in pay-out, hopefully sheep and beef will follow.

We saw farm costs rising at an alarming rate with fertiliser being one of the main areas. 2008 will see continued rises across all inputs.

We saw Bollard trying to slow the ship with a blunt instrument which was raising internal interest rates. It has finally slowed the housing market but at what cost to the productive sector? 2008 will see.

We saw oil prices rise to nearly $100 per barrel as the world supply came under pressure. Talk of 'peak oil' is a reality as oil prospectors start to look to find more expensive sources of black gold. A cold winter in the US could see further rises in the short term.

We saw dairy farm prices rise rapidly with some areas nearly doubling in value. In 2007 punters everywhere were all trying to climb aboard for the free ride up and tax free gains. Will 2008 be the same?

We saw the government taking an ever increasing role in telling us what we can and can't do and bringing in more restrictions. We suddenly realised that the government is a big business trying to maximise their income off everything we do. They are legislating so fast we can't keep up with it. We realised that we are working for the government first and ourselves second and I don't think 2008 will be any different.

We saw the National Party, with John Key, rising in popularity and now having the support to govern on their own should an election occur right now. 2008 is election year; it will be interesting to watch as the political malaise unfolds culminating in a new government, but who knows.

Will we see the share market go from bull to bear?

We have seen 42,000 Kiwis jump the ditch to our wealthier brother across the Tasman. This exodus is alarming, to say the least, with a number of farmers joining the migration. Their perception is that Australia is a better place to live. Is it?

As a consumer, we saw the price of butter and milk rise rapidly leaving us with emptier pockets. We are seeing people reverting to growing vegetable gardens and going to farmers markets to find locally grown produce. We will see people avoiding imported food in 2008 as they want to know what is actually in the can and what is the country of origin.

And finally, we will see that dairying is holding up our economy. Dairy farmers will be busy juggling a lot of issues but can be proud of their endeavours. This government is finally acknowledging the role that agriculture has in our economy. If it were not for the high commodity prices, particularly for dairy products, this country would probably be in the doldrums. We will see rural communities thriving whilst cities and urbanites struggle. The only thing for certain is, it will be less certain.


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