Landcorp profit falls amid tough times for agriculture

Thursday 15th October 2009

Landcorp Farming, the state owned national farming company reported a net operating profit of $6.9 million for the end of June year, well down on 2007/08’s $11 million.

Though total operating income rose to $174 million, “the decline reflected a sharp fall in the annual payout to dairy producers New Zealand-wide, high costs on some production inputs, the continuing impact of severe drought in the previous year and a slowdown in the section sales of property development subsidiary Landcorp Estates,” its annual report said.

The SOE said its vision is “to become, quite simply, the world’s best agribusiness.”

“These are tough times for agriculture, with profitability undermined by global recession, financial market instability and unrelenting cost pressures. However, New Zealand farmers remain in a fundamentally strong position as efficient producers of food in a hungry world.”

The company notes that its diversification of farm types and livestock since 2002 – particularly into more dairy and deer – has now been implemented, and no significant change in the mix is intended in the next few years.

Dairying is now the principal activity on 38 of Landcorp’s 105 farms, contributing 34% of total farm operation revenues in 2008/09.

A further 25 properties are now predominantly deer breeding and finishing operations, with venison and velvet contributing 15% of farm revenues.

The report places particular emphasis on sustainability, measuring its triple bottom line across environmental, social and economic terms, devoting five pages for indicators of progress in each area.Landcorp made comprehensive submissions to Parliament’s review of the Emissions Trading Scheme (ETS), telling the select committee agriculture needs more time to develop emissions reduction and mitigation technologies.

“We would have grave concerns about economic sustainability if the ETS puts a high cost burden on agriculture, and ultimately, on all New Zealand.”Landcorp identified a further 81 areas on its farms to be set aside for protection, and 742 hectares were fenced under 30 registered covenants and one riparian agreement.

These covered 16 separate separate areas of vegetation, 55 wetlands and 10 areas of riparian land.Electricity use and creation rates a special mention in the reportIts Waimakariri dairy unit in Canterbury is part of a pilot operation to increase renewable energy production.

A bio-digester produces on-farm electricity, and the success of the project will see a second prototype unit built at its Wairarapa Wing Point dairy unit.An audit of Landcorp’s dairy farm energy use has resulted in energy-saving actions and some upgrading of plant.

These have contributed to an overall 8.2% saving in energy costs on the properties concerned.The farmer has also canvassed potential wind farm sites throughout NZ, signing a joint venture agreement with an electricity generation company for the future installation of turbines on a selected property.

Businesswire.co.nz

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