KEY POINTS:
Forget those calls for a transtasman currency - as the "golden age of agriculture" dawns, dairy products could become the new, internationally accepted legal tender.
But while we're caught in Fonterra payout-induced fantasies involving blinged-up farmers riding speedboats, we would do well to remember that global dairy domination
has its dark domestic flipside - with implications far beyond mere inflation.
Indeed, Environment Minister David Benson-Pope last week saw fit to wade into the rural reverie, urging the dairy sector to spend some of its record returns doing more to shake off the persistent tag of "dirty dairying".
Given the rising interest among the less stellar pastoral sectors in converting to dairy, Benson-Pope is rightly concerned about the environmental consequences of milk's increasing status as liquid gold.
The minister's call for dairy farmers to do more to better the quality of the nation's waterways comes in the wake of a recent report that showed a national compliance average of 67 per cent among Fonterra's 11,600 dairy farmers when it came to effluent management.
What's more, 10 per cent of farmers were guilty of "significant non-compliance" with the potential of having "environmental impact".
In light of such transgressions, Benson-Pope urged dairy farmers to use some of their payout - which looks as if it could rise still further - to meet the accord's targets, especially through riverside planting, bridging, stock separation and cutting nitrogen run-off.
But while Fonterra acknowledged the payout boost might encourage that hardcore group of offenders to improve their behaviour, it said the issue was more complex.
"For some of them, it will be the money aspect of it, but that won't be the only reason," said Fonterra sustainable milk growth general manager Mark Leslie.
However, Fonterra seems to think the bottom line is clearly the best incentive, given it has begun targeting transgressors through its "effluent indicator system" with the threat of reduced payouts and, ultimately, non-collection of milk, should they continue to offend.
"For a small group of suppliers that have been persistently non-complying around their effluent performance ... if they don't address that they will end up with a financial penalty through the milk price," said Leslie.
Outside of that group, however, Leslie said there had already been "strong uptake" in terms of fencing off streams and minimising the use of nutrients "regardless of the payout environment".
However, he acknowledged the extra cash would "just make it easier".
Open Country Interest
It was only a matter of time before foreign interests would come calling at the dairy door. Not long after Mitsui, one of Japan's biggest companies, said it would buy a 14 per cent share in Canterbury milk powder company Synlait for $13.5 million, another Asian foods group seems to have developed a hankering for our milk products.
On Friday, the Singapore agricultural commodities supply chain group Olam International gatecrashed Affco-offshoot Dairy Trust's takeover party, snaffling a 19.9 per cent stake in Open Country Cheese for $3.20, far higher than Dairy Trust's valuation of $2.25.
Whether this augurs another takeover play for Open Country is uncertain but it certainly gives credence to independent adviser Ferrier Hodgson's faith in Open Country and its financial forecasts.
What's more, Olam, a leading international supply chain manager of agricultural products and food ingredients, seems to have taken a page out of Fonterra's book too. During the past three years, Olam has completed what it describes as the first leg of a strategy to source dairy products from Argentina and Ukraine for supply into growth markets such as Africa, Russia and China, eerily echoing Fonterra's recent growth strategy involving securing South American and Eastern Europe supply.
The Open Country buy appears to be part of Olam's next move, which involves "establishing a meaningful presence" in Oceania and the United States.
Besides being impressed by Open Country's vital statistics, Olam praises New Zealand for its low cost of production "due to pasture-based grazing", expected growth in milk production of 3 per cent a year, significant export orientation and proximity to Asia.
Farming Research
How intertwined is our rural lot with that of Australia. Just as its meteorological misfortune has helped to push up the global price of dairy commodities, its ivory towers too might have a role to play in future-proofing the success of our own farming sector.
The ever-industrious AgResearch has said it is to spend some of its closely guarded pennies across the ditch, jointly funding with the University of Queensland an academic post tasked with nutting out the thorny issues vital to ensuring continued economic success for agricultural communities.
AgResearch chairman Rick Christie says the chair in systems thinking practice at the University of Queensland's School of Natural and Rural Systems Management will tackle the complex issues confronting agriculture on both sides of the Tasman.
The successful candidate will spearhead research that weaves together the "environmental, social and economic realities of farming and the rural community as a single, complete system".
"They are all intertwined. In the past decades, New Zealand has dealt with each separately to the detriment of farming," Christie says.
The chair will work closely with the CRI on R&D aimed at honing more profitable production systems as well as protecting local pastoral systems from diseases, pests and weeds.