Agricultural companies will continue to be at the centre of aggressive takeover battles in 2005.
Fonterra's hostile bid for Australian dairy company National Foods and Wrightson's more friendly bid for rural services rival Williams & Kettle will come to a head in the first few months of the year.
If
Fonterra is successful, we can expect big changes at its consumer business, New Zealand Milk. With control of National Foods, it would become the biggest consumer dairy business in Australasia.
Fonterra has also been working for almost a year on a joint venture with the Sanlu dairy company which would give it access to the lucrative Chinese consumer dairy market.
The deal should be finalised in the next few months and will provide another boost for NZ Milk.
Growing international demand for dairy, beef and lamb - driven in part by the Chinese economic boom - has left the rural economy in great shape and Government seers view the prospects as good for the next few years at least.
There are plenty in the corporate sector who see profits to be made from the sector's golden run.
Kicked off by Craig Norgate and Baird McConnon's successful takeover of Wrightson, the rural services sector is in the midst of its biggest shake-up in decades.
There is plenty of speculation that Pyne Gould Guinness and Fonterra's RD1 may be making consolidation moves in the new year.
How long the good times last will depend on two key factors - commodity prices and the dollar, which are at historical highs. Statistically, they are overdue for a fall.
If the dollar falls quicker than commodity prices then agricultural export returns will rise. If they fall in tandem, an equilibrium of sorts will be maintained.
The nightmare scenario would be for commodity prices to fall while the dollar remains at present levels or goes higher. If that happens, there will be tough times down on the farm.
That would be bad news for the economy and the corporate players hoping to cash in on the sector.
