What is Landcorp's role in NZ agriculture?

Rural News

Landcorp adds weight to Beef and Lamb SIL data base

20th Oct 10, 11:28am by Tony Chaston

Crown owned Landcorp's decision to combine its animal performance recording system with the industry run SIL is a good one.

As taxpayers we all own a small share of this company, so an industry good approach should be the norm. In striving for genetic progress, size does matter and the bigger the database the better opportunity there is to find animals with high quality genes.

With Landcorp also heavily involved in the PGP project with Silver Fern Frms and PGGW, are we seeing a change in approach from the Landcorp board?

What do you see the role for Landcorp in NZ agriculture in the future? Is it just a landbank for future Maori land claims, should it compete against genuine NZ farmers, or does it have a role as it now seems to be expressing?

NZ's largest farming company, Landcorp is moving its performance recording system for its sheep flocks to the Beef + Lamb New Zealand SIL (Sheep Improvement Ltd) sheep database, making it the most extensive genetic dataset for sheep in the country. Landcorp’s deer system will also move over to the Beef + Lamb New Zealand DeerSelect system. B&LNZ's General Manager – Farm, Richard Wakelin says Landcorp has some of the largest datasets for performance recorded sheep flocks in New Zealand and there is huge value associated in combining those with SIL.

“SIL works with ram breeders and flocks throughout the country, gathering performance records in a secure, online database and providing a genetic evaluation service for sheep farmers for most major production and health traits. “Rates of genetic gain have tripled since SIL went live in 1999 and including the extensive back data from Landcorp flocks with its already existing SIL datasets will give SIL greater critical mass.

Head of Landcorp’s Genetics Unit, Dr Geoff Nicoll says that Landcorp has routinely provided its animal data since SIL was established, and the move to more actively use the recording system makes sense for the future as new and old genetic technologies merge. Recent developments the two entities have worked on include revising the evaluation systems and selection indexes for growth and carcass meat yield. SIL has used information collected by Landcorp to refocus it’s evaluation of carcass merit on tissue yield rather than tissue weight.

Landcorp also participates in SIL-ACE, the large-scale across-flock genetic evaluation that SIL conducts regularly, and it is now selling genetically improved rams on the commercial market.

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7 Comments

by Brent | 20th Oct 10, 1:14pm 1287533683

Land corp should be split up into econnomic units and belloted out for young farmers to get a start

It is every farmers competition it gets every thing cheaper than the average farmer even our co ops give them a better price for there lambs cattle and deer and if it runs at a loss the government check book comes out to make it all right now they and sff and pggw and land corp are forming a unholy alliance where they will be the main ones to benefit from it

by Sheep Shagger | 20th Oct 10, 1:44pm 1287535481

Good points Brent. Landcorp are notorious for playing the 2 meat co ops off against each other and getting premiums at the expense of us small shareholders who take what we're given. Shareing their genetic information is the very least they can do for industry good.

When I was looking at land down here I was constantly being out bidded by Landcorp(the govt) for what reason? The govt has no business in running a farming operation and the sooner its split up as Brent suggested the better or alternatively the NZ super fund could look to take it over . Either way it would be good riddance!

by PhilBest | 21st Oct 10, 10:47am 1287611240

Almost all the wealth creation in the world economy in the last 50 years has occurred in CITIES and their growth. Terms of trade have steadily gone against commodity exporting nations, by a factor of 4.

It is utter economic lunacy for NZ to now be forcing urban users of land to pay dozens or hundreds of times as much for land compared to the price at which hundreds of times as much land is readily available, but strictly reserved for yet more low value farming uses. Talk about the way to the third world.

by Casual Observer | 21st Oct 10, 12:00pm 1287615648

Philbest: I am curious, does your statement re wealth creation:

does that statement refer to ALL cities or just the major cities of the world?
does that statement also apply to NZ or are we different?
Is the city wealth creation largely as a result of financial services?
downstream agriculture employs many people in the cities e.g.Auckland- think of Fonterra not just in their HQ but also in their Takanini milk plant, Tip Top Factory, etc. These are resultant from ag. I am not saying that ag is responsible for city wealth creation, but in NZ it does have a significant overall impact on our economy.
often the most productive land is on the fringes of urban areas. The lower value farming land is often further out.

by Kate | 22nd Oct 10, 7:33pm 1287729211

The last 50 years of wealth creation.... or did you mean wealth destruction and redistribution?

by Sheep Shagger | 21st Oct 10, 12:11pm 1287616269

Phil, Terms of trade for food commodities are in the process of reverseing as the world needs to produce 70% more food to feed 9 billion people by 2050. You seem to be advocating urban sprawl which is already robbing NZ of hundreds of thousands of hectares of in some cases our most productive land for unproductive urban houseing or lifestyle blocks. Surely we would be better off intensifying land use within existing city limits.

by Colin Riden | 25th Oct 10, 3:02pm 1287972126

As taxpayers we own ALL of this company. What Landcorp is expected to do is set out clearly in its Statement of Corporate Intent 2010-2013:

http://www.landcorp.co.nz/statement-of-corporate-intent-sci/

That would not appear to give Landcorp any option but to join Sheep Improvement Limited. I suspect Landcorps's corporate intent may have recently been changed - perhaps in an attempt to justify its continued crown ownership - because since SIL was being formed in 1997 they have not been willing to join.

Landcorp's statement of corporate intent is worth looking at. Included are: A business purpose to maximse economic production of animal products; A vision to be the world's best agribusiness and; A list of intentions that are claimed as strategies. The dominance of production over profit being of concern.

They wish to champion success and excellence, but no mention is made of improving leadership. Rural land price stability gets a mention as an industry wide factor impacting on Landcorp's performance and implementation of strategy.

The commercial value of Landcorp has reduced by $180 million from $1.45 billion at 30th June 2009. Mainly due to a fall in land values. Landcorp also had a valuation done in 2009 based on 10 year discounted cash flows (just under $1 billion) but based on in my opinion unrealistic compounding productivity gains.

In answer to Tony's questions, to me Landcorp is useful in providing:

a) An insight into the profitability of corporate farming in NZ. If Landcorp's spin is to be believed they are the the country's best at it, and other corporate farms should perform below them.

b) Insights into interpreting accounts and balance sheets of NZ agricultural based corporates. E.g. While we hear much about Landcorp's $10 million net operating profit we hear little about the group's net losses before tax and after tax, $112 loss in total comprehensive income or the parent's $126 million loss for the same. And the latter based on only a 12.5% loss in land value over the 12 months.