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Fonterra units hold up in early trading, despite DCD scare

Fonterra Shareholders Fund units took a small, immediate knock as trading opened on the NZX this morning after a weekend in which international media latched on to the news that small traces of a nitrate inhibitor had been found in some Fonterra milk powder.

FSF units dropped 0.4%, or 3c, to $7.20 at the open of NZX trading, and bid and ask prices were displayed briefly as low as $7.14 and $7.18 before recovering to a range of $7.20 and $7.23 in the first 10 minutes of trading and appeared to be holding those levels.

Global investor reaction may yet occur in other markets, although the Australian Stock Exchange is closed today for a national holiday long weekend.

Despite assurances the levels of the chemical, known as DCD, are far below European Union food safety thresholds, the incident has produced scare-mongering reports which Fonterra will now have to work hard to counter.

Prime Minister John Key used his weekly morning radio slot on Newstalk ZB to label some international media reports as "misinformation" after highly reputable sources such as the Wall Street Journal website headlined reports with the question" "Is New Zealand milk safe to drink?"

''The situation here is that there is no health risk, at all," he said. "Key told Newstalk ZB he would be concerned if international consumers reacted to 'misinformation.'

''The situation here is that there is no health risk, at all," he said, echoing comments by Fonterra chief executive Theo Spierings, who issued media statements over the weekend to try to reassure export markets.

''Once you get these sort of stories written, even if they're incorrect, it's a big job to close them down," Mr Key said.

Theo Spierings said reactions were ''way out of proportion."

Nitrous oxide is a greenhouse gas produced by grazing stock and accounts for around 16% of the country's annual emissions contributing to climate change.

DCD has been used by some farmers to limit such emissions, with nitrogen inhibitors being one of the few technologies currently available to farmers to cut emissions, which in total account for around half New Zealand's total annual GHG emissions.

BusinessDesk

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Comments and questions

Unexpected consequences.
Have to laugh what with John Key and his boy wonder Nick Smith both failing to put the ETS and related matters into the rubbish bin where they belong. So now we have the poor farmers fiddling with some additive to lower the bovine flatulence for a mythical problem created by the climate religion nutbars and now NZ's milk marketing reputation is in damage control. Plonkers!

It's called bovine eructation (belching), an normal part of ruminant digestion.

Yes, thanks Greens and all the other enviromentalists!

So much for clean, green NZ milk ... the global warmists are a sick joke, surely?

Chemical solutions to cow farts heating the planet, really?

Milk - for goodness sake just get on drink the stuff. There is nothing wrong with it. Never has been and never will be.
Doesn't this demonstrate how stupid the media really are and the true nature of the whole GHG "debate".

There is an alternative to DCD for farmers.
Donaghys sympathises with farmers and the rural community who will feel the impact of the suspended use of nitrification inhibitors (DCD) as a pasture management tool, but says the good news is that there is another option that is DCD free.
Jeremy Silva, managing director of Donaghys Ltd, says the ruling on January 24 to suspend the use of DCD*, provides farmers with the ideal opportunity to consider alternatives and reassess their pasture management tools.
“Our LessN product contains no DCD. It is a nitrogen utilisation enhancer in liquid form which is mixed with dissolved urea and sprayed onto pasture. It has been internationally trialled in 284 pasture and crop trials including 43 independent universities and organisations”.
The development of LessN involved the largest nitrogen fertiliser response research on pasture in the country since 1981.
Containing no chemical components of DCD, LessN instead contains extracts from several groups of common microbes in the soil. These are naturally occurring microbes and are found everywhere in the soil regardless of whether LessN is used or not.
“On a conservative basis, more than quarter of a million tonnes less nitrogen fertiliser could be used per annum with no compromise to production if every dairy farmer in New Zealand adopted the LessN system.
“This is a well proven product and we are pleased to be able to offer farmers a viable option. The trials show LessN doubles the pasture response of a 40kg per hectare application of urea whilst also providing considerable cost savings.
“It costs a farmer 12 cents per kg of dry matter grown self-applying the LessN system instead of costing 18 cents per kg using contractor-applied spread urea. That’s a saving of $30,000 based on 10 applications on a 130ha farm.” concludes Silva.
*(DCD was added to an international list of substances that must be tested by organisations such as the United States Food and Drug Administration).
For more information on Donaghys LessN, contact Jeremy Silva on 027 437 0040 or visit www.donaghys.com
ENDS
Established in 1876 with agriculture as its core business, Donaghys is a leading New Zealand owned manufacturer of innovative and reliable products that provide effective solutions for rural, aquaculture, marine and industrial markets internationally.

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