1 00:00:00,040 --> 00:00:01,840 Speaker 1: Having dealt with the Alliance, dooring meet boat this week 2 00:00:02,240 --> 00:00:04,880 Speaker 1: next cab off. The old agricultural rankers, of course, are 3 00:00:04,920 --> 00:00:06,880 Speaker 1: the brand sale for Fontira. I got a new report 4 00:00:06,920 --> 00:00:09,399 Speaker 1: from ASB estimates the deal could unlock four and a 5 00:00:09,440 --> 00:00:12,240 Speaker 1: half billion in additional spending. The flow and effects everywhere 6 00:00:12,240 --> 00:00:15,360 Speaker 1: from manufacturing to retail to real estate, average farmer return 7 00:00:15,360 --> 00:00:17,560 Speaker 1: could hit three hundred and ninety two thousand. Nick Toughley, 8 00:00:17,920 --> 00:00:20,439 Speaker 1: asb's chief economist is back. Well this Nick morning to you. 9 00:00:21,160 --> 00:00:23,319 Speaker 1: Come on, is this an economy mover? 10 00:00:24,920 --> 00:00:26,720 Speaker 2: We look, it's certainly going to help when you edit 11 00:00:26,760 --> 00:00:29,000 Speaker 2: up and look at the how that spending could flow 12 00:00:29,080 --> 00:00:32,320 Speaker 2: through and stimulate spending and income another sectors and so on. 13 00:00:32,680 --> 00:00:35,720 Speaker 2: You're talking about one percent of GDP over a period 14 00:00:35,760 --> 00:00:38,680 Speaker 2: of time. I think the caveat is that the impact 15 00:00:38,800 --> 00:00:41,800 Speaker 2: gets a lot more focus and sectors that are a 16 00:00:41,840 --> 00:00:45,560 Speaker 2: bit more adjacent to where farmers normally spend their money. 17 00:00:45,640 --> 00:00:48,400 Speaker 2: So we still think the Reserve Bank will need to 18 00:00:48,400 --> 00:00:50,120 Speaker 2: cap rates a little bit further just to help with 19 00:00:50,159 --> 00:00:53,440 Speaker 2: that sort of broader economical capuary. But hey, this certainly 20 00:00:53,440 --> 00:00:53,960 Speaker 2: is going to help. 21 00:00:54,280 --> 00:00:56,840 Speaker 1: What's your vibe around the debt V spend in other words, 22 00:00:56,840 --> 00:00:59,160 Speaker 1: how many paying down debt versus will go out there 23 00:00:59,200 --> 00:00:59,840 Speaker 1: and have a party. 24 00:01:00,760 --> 00:01:05,800 Speaker 2: But we're roughly estimating it will be somewhere around like 25 00:01:05,920 --> 00:01:08,280 Speaker 2: fifty to fifty in the sense that you will see 26 00:01:08,480 --> 00:01:11,600 Speaker 2: a reasonable amount of debt retirement and savings built up. 27 00:01:11,880 --> 00:01:14,640 Speaker 2: But you'll then also see on farm investments. You'll see 28 00:01:14,680 --> 00:01:16,840 Speaker 2: that a personal spending by farmers, and you may see 29 00:01:16,840 --> 00:01:19,440 Speaker 2: some farmers, you know, particularly ones that have been looking 30 00:01:19,480 --> 00:01:23,880 Speaker 2: at retirement, moving off off farm and taking those windfalls 31 00:01:23,920 --> 00:01:25,960 Speaker 2: elsewhere as well, so raffle effects through. 32 00:01:26,600 --> 00:01:29,000 Speaker 1: I can't I mean, I don't know whether you can 33 00:01:29,080 --> 00:01:31,200 Speaker 1: draw comparisons. I mean I always saw the Alliance deal 34 00:01:31,240 --> 00:01:32,920 Speaker 1: going ahead because they were they were in a corner 35 00:01:32,959 --> 00:01:34,760 Speaker 1: and they were stuck. It's not the same with Fonterra. 36 00:01:34,800 --> 00:01:36,600 Speaker 1: But I equally see the deal going ahead. You don't 37 00:01:36,640 --> 00:01:39,080 Speaker 1: turn down four hundred thousand dollars, do well. 38 00:01:39,120 --> 00:01:41,960 Speaker 2: We'll certainly be up to the farmers to decide what 39 00:01:42,080 --> 00:01:44,440 Speaker 2: they're going to support, support it or not. We've got 40 00:01:44,480 --> 00:01:47,160 Speaker 2: the folks coming through next week, and of course it 41 00:01:47,200 --> 00:01:50,240 Speaker 2: does need regulatory permission to go ahead as well. 42 00:01:50,280 --> 00:01:51,440 Speaker 1: That wouldn't be a problem, would it. 43 00:01:52,240 --> 00:01:56,880 Speaker 2: Or I don't really see any particular reasons not to, 44 00:01:56,960 --> 00:01:58,680 Speaker 2: but I'm just not in the area that I'm really 45 00:01:58,720 --> 00:02:01,440 Speaker 2: that much of an expert. When you're looking, when you've 46 00:02:01,480 --> 00:02:05,760 Speaker 2: seen independent reports of the offer price, you know that 47 00:02:06,200 --> 00:02:08,440 Speaker 2: have been done for the sort of farmer's shareholders, that 48 00:02:08,520 --> 00:02:10,880 Speaker 2: sort of suggests it's a pretty generous offer. 49 00:02:11,120 --> 00:02:15,480 Speaker 1: In reading the spread, so three ninety two is the average, 50 00:02:15,520 --> 00:02:18,000 Speaker 1: but there's sixty percent? Is it two or three hundred 51 00:02:18,040 --> 00:02:20,400 Speaker 1: thousand dollars? I think I've written that downe wrong, But anyway, 52 00:02:20,440 --> 00:02:22,520 Speaker 1: the point is, is the spread of the payout of 53 00:02:22,560 --> 00:02:26,720 Speaker 1: itsels broad enough to make a genuine economic impact or 54 00:02:26,760 --> 00:02:28,360 Speaker 1: a handful of people getting a shedloaded. 55 00:02:28,400 --> 00:02:32,520 Speaker 2: Though, we did some calculations that suggest that you've probably 56 00:02:32,600 --> 00:02:35,440 Speaker 2: got sort of upwards of sixty percent of farmers will 57 00:02:35,480 --> 00:02:38,040 Speaker 2: get sort of at least two hundred thousand dollar catch 58 00:02:38,080 --> 00:02:41,680 Speaker 2: wind full. So that's a fair chunk and that's pretty significantly. 59 00:02:41,720 --> 00:02:44,600 Speaker 2: You're starting to talk about a decent LOTO win amount 60 00:02:45,320 --> 00:02:49,760 Speaker 2: coming through there. So in terms of you know, fairly 61 00:02:49,840 --> 00:02:51,960 Speaker 2: big decisions, Okay, this is a good time to put 62 00:02:52,000 --> 00:02:55,400 Speaker 2: some money onto the farm and invest in productivity or 63 00:02:55,520 --> 00:02:59,079 Speaker 2: placing the milkshead. It's potential to have that sort of 64 00:02:59,120 --> 00:03:01,280 Speaker 2: profound decision making impact. 65 00:03:01,720 --> 00:03:03,760 Speaker 1: Just going back to the export numbers that we got 66 00:03:03,840 --> 00:03:05,560 Speaker 1: a week, all this week, whenever it was, I can't 67 00:03:05,600 --> 00:03:10,359 Speaker 1: remember how much actual lifting of the economy is dairy doing. 68 00:03:11,800 --> 00:03:16,760 Speaker 2: Look, it's basically the number one still, so it's our 69 00:03:16,960 --> 00:03:20,200 Speaker 2: very important export industry. We're still seeing the value of 70 00:03:20,280 --> 00:03:24,240 Speaker 2: our dairy exports go up. And also we're still relatively 71 00:03:24,320 --> 00:03:26,720 Speaker 2: resilient with our exports to the US as well, which 72 00:03:26,800 --> 00:03:29,760 Speaker 2: is one reasonable market for us too. So look, this 73 00:03:29,960 --> 00:03:32,400 Speaker 2: is where a fair chunk of money, not just dairy, 74 00:03:32,480 --> 00:03:36,800 Speaker 2: but meat as well, and our fruit we get a 75 00:03:36,840 --> 00:03:39,640 Speaker 2: lot of revenue that filtered through into the economy. 76 00:03:39,800 --> 00:03:42,040 Speaker 1: Yeah, a good long weekend. Appreciate your expertise as always, 77 00:03:42,080 --> 00:03:44,880 Speaker 1: Nick Tuffley out of the aspre this morning. For more 78 00:03:44,960 --> 00:03:48,040 Speaker 1: from the Mic Asking Breakfast, listen live to news talks 79 00:03:48,080 --> 00:03:51,200 Speaker 1: it'd be from six am weekdays, or follow the podcast 80 00:03:51,320 --> 00:03:52,160 Speaker 1: on iHeartRadio.