Landcorp plunges into the red

State farmer Landcorp has suffered a half year loss of $10.5 million on the back of dwindling milk prices and higher farming costs reports The Rural News. The company has signalled it will not achieve previously-budgeted full year operating profit of $15m. For six months ending December last year, Landcorp suffered a $10.5m net operating loss before tax, compared to $9m profit for the corresponding period in 2007-08. The company also blames negative effects from the previous year's drought for the slump in earnings. Landcorp chairman Jim Sutton says it is working steadily through 2008-09, with a focus on protecting and maximising its capabilities for growth in production and profitability in future years, with an emphasis on cost control. Sutton, a former Labour Agriculture Minister, is likely to come under attack from the new National Government which has been pushing state owned enterprises to lift their game. Despite the reduced earnings from dairy, Sutton says Landcorp will strengthen its dariy operations. He says priorities for 2008-09 include emphasis on grass-based systems and productivity growth per cow and making further progress on best-practice effluent management on dairy units. "˜The company has 35,000 cows and expects to produce 12m kgMS this season.  It will also spend capital to support company performance long term and increasing the commitment to employee training and development. Landcorp chief executive Chris Kelly says key input prices to NZ agriculture are unsustainably high given the current contraction in farm revenues and international demand for products. In the half year, Landcorp continued to face high fertiliser, feed, fuel and energy costs "“ and these were reflected in a 29.5% increase in operating expenditure compared with the corresponding period in 2007-08.