Why is the Govt in the business of farming?

Rural News

Landcorp buys farmland from failed Tawera

6th May 11, 11:59am by Tony Chaston

Why is the government in the business of farming through it's state owned enterprise Landcorp? I'm sure the 30 odd underbidders will be asking just that question after missing out on a significant piece of farmland near Fielding.

The Lands and Survey Dept was set up originally to be a large scale developer of marginal farming land, which was sold on to new farmers. They had a clear and defined role, but do they have a place in todays economic climate? Could this investment be cashed up, sold to new, passionate young farmers, and the money used to reduce the country's debt? I would venture to claim the country would lose little in productivity from the many new owners, compared to the state owned enterprise if that happened.

They are having a role with their huge genetic livestock base being used to identify key productive genes which will drive our livestock to better production in the future. The are having a role in The Primary Growth Partnership with Silver Fern Farms and PGGW and others looking to improve the supply chain efficency for our meat products. And they are at least some competition for overseas buyers looking to purchase our farm land and maybe a land bank for Maori Treaty claims.

But are these roles enough, and appropriate in today's economic climate for the government to compete with the market in agriculture? Do you think the government should retain Landcorp, or should it be sold to help repay NZ's debt?

State-owned Landcorp has bought nearly 1300 hectares of farmland near Feilding after the $45 million receivership of the company that owned the land. Landcorp bought 1270 hectares of high-quality land located near Feilding, owned by Tawera Land, which is in receivership reports Stuff. The sale attracted bids from about 30 groups, in what was the biggest land-holding sale by one owner in the district.

Meanwhile, Landcorp chief executive Chris Kelly said the corporation planned to invest "significant capital" in the Feilding properties bought from Tawera's receivers. The land was earlier reported to lack fencing and water systems.In total, secured creditors are owed more than $45m by Tawera. The receivers were acting for ANZ National Bank, owed $29.5m. Another secured creditor, South Canterbury Finance, is chasing almost $14.5m across several Thurston companies, including Tawera.

Receivers have already sold two large blocks from Tawera, near Taumarunui, for about $8.4m. Tawera was put into liquidation by the Inland Revenue Department late last year because of a $530,000 GST bill.

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47 Comments

by Colin Riden | 6th May 11, 1:39pm 1304645963

"Could this investment be cashed up, sold to new, passionate young farmers, and the money used to reduce the countrys debt?"

Landcorp is a state asset that Treasury said should be sold before others, National said before the election they would sell (another broken promise from John Key) and which would benefit the economy if sold.

"They had a clear and defined role, but do they have a place in todays economic climate?"

Yes, but only a stupid one in keeping a floor under inflated farm asset prices.

by Julienz | 6th May 11, 7:29pm 1304666958

It seems to me that Landcorp would be a far better candidate for partial privatisation than the electricity companies. At present apart from actually buying a farm there is very little opportunity for urban New Zealanders to invest the rural industries which create our wealth in the world. This lack ot opportunity exacerbates the urban rural divide and encourages urban savers to invest either overseas or in non-producive assets in New Zealand. A partial privatisation of Landcorp ticks the boxes in terms of maintaining New Zealand ownership, attracting new investors to an export industry and it doesn't result in higher costs to poor New Zealanders in the way electricity privatisations will.

by NeilD | 6th May 11, 7:46pm 1304667994

Doubt it bro!..you list Landcrop on the NZX a watch the life get sucked out of it by directors fees and inefficient management..you stakeholding will languish like most other stocks...best you go buy a section in a nice suburb and build if your looking for a good investment!!

by Andrewj | 6th May 11, 8:11pm 1304669499

NeilD

Have yoiu checked what the management of landcorp earn> The problems with floating landcorp is its capital value would have to at least half for it to be able to pay a worthwhile return

by NeilD | 6th May 11, 8:52pm 1304671964

Exactly what i'm trying to illustrate to Julienz...don't waste your time..but what is the future for Landcorp??..there must be a 'vision' established by the goverance..a directional brief from someone!!..Jimmy Sutton? JimBo Anderson? Carter? nobody has frontfooted with even the slightest hint of where its going ( maybe the MSM covering rural NZ just aren't there anymore)...I have an issue with Landcorps involvment with Wairakei Pastures, their only leaseholders (45yr lease admittedly) therefore are not going to profit from the improvement and therefore future capital gain of that ex-forestry land...if you can't see any benefit to the tax payer, why should landcorp be there???...(that aside they are doing a great job of the conversions)

by VC | 6th May 11, 9:01pm 1304672468

I'd disagree with you on the one point Julienz, there are plenty of opportunities for non farming folk to invest in agriculture without buying a full farm. What about MyFarm? What about AgInvest? What about equity sharemilking?

by Wolly | 6th May 11, 7:43pm 1304667790

It is a state directed white knight that can ride to the rescue using taxpayer dosh to bailout any agricultural gamble that goes pear shaped and at the same time put backbone into the rural land price bubble. By chance the National Party rump happens to be mostly in rural nz...and into making capital gains on property ponzi deals where buying each others farmland is par for the course but dependent on rising prices of course.

by Julienz | 6th May 11, 9:25pm 1304673938

@vc All too difficult for the average "Mum and Dad" (much as I despise that term) investor - equity sharemilking requires that I go out and vet an operator, unless I already know someone I want to back then not really an option and where is my exit option in terms of liquidity, ditto syndicated investments. I appreciate the NZX has failings but we need to address them to give New Zealanders a chance to invest in New Zealand

@NeilD - with wider input is theer not a better chance of direction and vision? Maybe I am being idealistic .. an admitted failing. Right now Fonterra is a closed shop, Ballance is a closed shop, the meat industry is a closed shop, the wool industry is invitation only... How do you invest in New Zealand?

by VC | 6th May 11, 9:42pm 1304674929

It's in the pipeline for "mum and dad investors" to be able to buy into Fonterra's dividend pool. AFCO is publicly listed, as is PGGW and many other Ag services businesses.

In terms of liquidity and ease of exit, the wealth that has been created by those who have invested in farming over the years hasn't been achieved by people with short term (sub 3 year) plans. It would be unrealistic for someone with short term plans to invest in farming, and i would argue that this form of capital being introduced would be to the detriment of farming in this country as it would introduce further volatility.

Many of the banks introduced schemes where mum and dads could invest in farming growth, however while a very good system in theory, the timing (late 08) of this caught many investors out and has left a sour taste.

In short there are options, but its a cake/eat it thing as well. Can't / shouldn't compare ag with stock market.

by Andrewj | 7th May 11, 9:32am 1304717553

Looks like we are all going to have a sizeable stake in farming, c/o the government. I just dont know how we ended up in a situation where the government was the biggest farmer in the country. I dont recall there being any debate just a socialist agenda. Im Ideologically opposed to the idea as Im a fan of free markets and believe that individuals can out perform the Government, who should not be invoved in commercial activities.

I dont like going to an auction to find im up against an organisation using my tax to bid against me. Its why Im not investing in agriculture in NZ. Its why Im going to the USA this week and then South America. Im looking for opportunities but not here and I dont think Im alone. Ive farmed here as long as I remember my family started farming in the South Island in 1860 my wifes somewhat earlier, they came out from Devon at 19 only to return in their 30's. Ive farmed it all Ive worked in Canada the UK and the USA. I studied farming it was my life I lived in my business, now im cashed up but sidelined. Im looking at options and Im not going to hang around for much longer, unless I can see some opportunity. Im trying to help a young man in his 20,s get started but its a struggle as all the ' marginal land' is now off shore. Im thinking about taking him offshore with me, as I think in parts of Australia and Chile he would have a more interesting and challenging life. Look at the growth of Dairy in Chile and Argentina %16 a year compunding, costs of production a 1/4 of ours, this little dream world is about to blow apart and then with high costs and low returns let see what our creditors do. Its the 80's all over again, Selling assets when they are worthless.

Solution would have been to let the cards fall and collapse land values letting my young keen friend get a start but oh no, its keep the indebted on the farms look after the banks use landcorp to make SCF look better than it is and keep values high. All its going to do is force peole like me with capital offshore, and I have people come to me with capital asking what they should do in farming here, I say keep your hands in your pockets, its a waste of time. Go elsewhere, the future is not here.

I dont get why we dont face our problems. I dont think Im racist but I regocnise a problem in our society. I have a friend who does budget work at WINZ. %80 of his clients are Maroi, they have a benefit mentality and he said critise anyone in the family with a work ethic. They call it 'living off the Honki" and expect it as a right. He is horrified at the behaviour of the State towards these people, taking the easy option giving a cheque because it takes less effort, not facing the problem. He said they cannot put these people into Orchards for work as they have no work ethic, no values they steal and destroy, so just keep collecting the dole and having kids.

by kane02 | 7th May 11, 9:53am 1304718780

Andrewj your last paragraph makes interesting reading. I am involved in the credit industry and can verify 100% your statement...if only we could put a box on our application that specified "race or ethnicity?" ...Our losses I suspect would fall dramatically...but that would breach all manner of Codes wouldn't it. So the same old same old continues. Borrow, pay a bit, drag them to Court, and pay back 3 times the original amount (costs and fees added)

The only way I can see things improving is for the State to slowly but surely reduce benefits - across the board. Say increase them for the next decade at half inflation. My personal view is that over time NZ Inc. will become more productive, and the majority of our problems will vanish

Oh, there is one problem, we will have Helen Clark and the UN on our back complaining of poverty, and all manner of things.

Very simply we need her and the UN to f&*&^ off

by Kate | 7th May 11, 10:10am 1304719829

The reason I'm so supportive of Gareth Morgan's suggestion of a Guaranteed Minimum Income is that it removes all the perverse incentives which presently keep people locked into the welfare system. If there is a single fixed sum associated with all welfare initiatives - and all adults regardless of circumstance receive that same benefit, then all the incentives to avoid means tests, increase the number of dependents you have as a way to increase your benefit and otherwise manipulate and play the "system" are gone. The only way under such a system to improve your lot is to work - and no amount of work or income alters the amount of benefit received.

And it would see an end to the super debate, an end to the WFF debate, an end to the invalid vs sickness vs unemployment debate. AND an end to WINZ.

As well, secondary school leavers could use their GMI to pay for tertiary education and thereby avoid student loans.

Aside from the fact that we'd need to introduce capital and/or Tobin or transaction taxes to fund it ... I just can't understand why no political party has picked up on the general idea as a platform for reform. It seems to me the only idea that has any chance of breaking the cycle of intergenerational welfarism.

by Sheep Shagger | 7th May 11, 11:30am 1304724617

AJ,I 100% agree re your views on landcorp and the benificary issue.

Where I think you are way out of line is your constant bagging of NZ ag. It is you, that seems to be in your own little world. Obviously you havent read a current lamb schedule or seen the dairy payout forecasts for awhile. NZ ag is having probably collectively its best year in decades which was graphically reflected in the recent trade surplus.

Sure, go overseas and seek the opportunities that are undoubtably there. From your postings I think id be right in saying NZ has been good to you and your family to the point of you building substantial wealth. Perhaps you should also acknowledge that periodically.

What we need here are positive and motivated farmers to fully capture the opportunities that are currently being presented. NZ needs that now more than ever.

by NeilD | 7th May 11, 12:03pm 1304726592

It's a time and place thing shagga..Farming in the Hawkes bay ain't what it use to be..Times up on a culture thats done well as you say, i think Aj's saying he's off to look for a new place to 'colonial-ise'...its heads down/ ass up hard yakka for the rest of us from now on!

by Colin Riden | 7th May 11, 12:27pm 1304728068

Whose views would you choose to believe?

A man who has demonstrated he understands agriculture, politics and markets and with a record showing he could pick his time to exit NZ farming, or one who appears more than a little dependent on NZ agriculture entering a golden age?

One who has made astute comments on a wide range of topics and supports those comments with interesting links, or one who limits his comments to positive spin from a narrow perspective of NZ agriculture and provides virtually little beyond anecdote or myth in support?

I could continue and cover age, experience, connections, etc. but I think the picture emerging from those comparisons will remain consistent the points already made.

by Sheep Shagger | 7th May 11, 1:10pm 1304730608

Colin. That you and AJ have consistently been proved wrong in this forum as witnessed the afore mentioned Dairy payout and meat schedules which have soared dispite your protestations of doom and gloom. Im sure this is very annoying to you and may go some way to explaining your high and mighty attitude.

Im not sure how you are qualified to judge that im" more than a little bit dependant on NZ agriculture entering a golden age". Your knowledge of my personal circumstances is Zero!

That AJ is an interesting and well researched contributor to this site is without question. He spends a huge amount of time devoted to it. Whether he is proved to be astute is open to interpretation, which is what forums like this one are designed to do.

by Colin Riden | 8th May 11, 2:57pm 1304823478

SS,

You are right in that I don't know your personal circumstances – you use a pseudonym, but there are only a limited number of reasons why a farmer would advocate the concept of a golden age of agriculture. Your response was helpful in that respect.

Your reply and some of your previous comments are consistent in making misleading claims, and coming to broad conclusions from selective use of data. I don't for instance believe I have ever made any comment regards meat schedules in this forum or any other. If you think I have please provide a reference to them.

What does interest me is data on agricultural debt and dairy prices. Most of this data is public but usually reveals more with either some analysis or a look through the press releases that are often spun with their release. Doing so can of course upset the spin masters.

You made the statement:"NZ ag is having probably collectively its best year in decades which was graphically reflected in the recent trade surplus". I don't have any problem with that but I do with you extrapolating one exceptional year into a golden age of agriculture.

Given this year is the best in decades lets see whether collective farm debt is decreasing. The RBNZ provides this data:

http://www.rbnz.govt.nz/statistics/monfin/c7/hc7.xls

What do we find? Agricultural debt as at March 2011 is $46,252 million. An increase of $48 million from March 2010. Sure, debt is still dropping in a seasonal pattern as it always does after peaking in the Spring, but year on year to March, the best season in decades has not seen sector debt go down. Debt for the food processing and forestry sectors is also up on 12 months ago.

Statistics NZ provide detailed export data but if you want export prices you need to divide receipts by quantity. While you will find export receipts are up (your trade surplus) much of that is being driven by increased export volumes especially from forestry. Some of our main agricultural export prices are actually down in NZD terms from where they were in the middle of last year:

http://www.stats.govt.nz/infoshare/default.aspx

If you want to understand how well prices are holding up at Fonterra's auctions you should first look at how the value of the USD has moved against the world's currencies (down about 10% over the last 12 months). The St Louis Fed provides that information:

http://research.stlouisfed.org/fred2/categories/105

Now look at the more detailed Fonterra auction data rather than the summaries. Check the volumes especially of SMP in the last auction to see why the price was up a little. Only between 500 and 600 tonnes was offerred with delivery spread over 7 months from June to December. Then look at how WMP prices have slipped (in lower valued USD dollars) since the beginning of March and how the longer dated contracts have lower winning prices than the shorter dated ones. Prices are trending down:

http://www.globaldairytrade.info/public/english/Trading%20Events%20Hist…

I am not questioning that the dairy payout is going be a record this season but it is important to understand that it will be as high as it is because of windfall gains that aren't likely to be there next season or the season after.

If you believe you can make a coherent case for NZ entering a golden age of agriculture I would be very interested and know I can find a journal that will publish your article. I suspect I would be given a right of reply.

by Andrewj | 7th May 11, 1:50pm 1304733044

SS, You are right NZ has been good to my family but we have been good back.( I stand on the shoulders of real men) some history, I come from a line of very progressive farmers. My Grandfather gave up farming and let his sons take over at a very young age( my father was 20) so he could continue to write and follow his interest in history. He wrote about going to Napier, to see relations off to fight in the Boer war, lost brothers in the first world war and watched his own family leave for the second world war. His father spent two winters at the top of lake Wanaka, living in a tent while he worked on a saw mill in the 1870's depression. He lost the farm and started again on the banks of the Clutha but lost his stock in the huge 1 in a 100 year flood of 1878. http://en.wikipedia.org/wiki/Clutha_River  his wife had relations in Glascow in the ship building industry (I think) who lent them money to settle in Hawkes bay. My Wifes family were also very early settlers in the south Island but returned to Devon and then India in the British army. My wifes father was an amazing man who was nominated for the Victoria cross at Nineteen but was reduced to a military cross as he was on National service at the time. Her great Grandfather was the man who gave us Hopkinson's law .

I know I get a bit negative but I stuggling to see a way forward maybe Im going to a loser and accepting 10k an acre for my land was the wrong thing to do, but honestly as I left farming and replaced my friends and aquaintances with friends from a more varied back grounds, I found myself looking at farming differently and so the cynicism. My costs went crazy during the 1990's up to when I sold in 2008. Those costs are still climbing and I believe that the present stock prices are but a blip in a decreasing real return to farmers that has been happening for years. My grandfather on my mothers side always said that the high prices of the 50's gave Kiwi farmers an unrealistic expectation of their place in the world. ( he was in the oil industry)

The oil industry way back in the times of Standard oil and Rockefeller realised the importance of owning the distribution chanel and were happy to buy the oil off the well owners and learnt to pay them off against each other very successfully. They concentrated on pipe and rail networks along with refinery. We gave away our distribution and will always be in submission to the supermarkets.

As soon as we stop farming for capital gains then we will all be better off, in the long run Im a firm believer that land and capital gains taxes are coming once the huge cost of the misallocation of resouces as the propery bubble formed and the huge cost this will have on our future, as we are forced to de-leverage.

by Sheep Shagger | 7th May 11, 2:28pm 1304735328

Interesting insights AJ. Maybe you should follow in your grandfathers footsteps and pursue a writing career? Hopefully not The history of the demise of NZ agriculture!

As for being in submission to the supermarkets, do you not get a sense that the tide has turned back towards the producer of the raw material? I understand for example that the retail price of lamb in the UK has only moved up slightly dispite large lifts in returns to the farmer. That increase is being worn mostly from the huge margins retailers were collecting. They have screwed us over so hard that they are now paying the price as supply has substantially reduced. If we are smart enough we will take the opportunity to keep the whip hand.Time will tell of course.

I personally dont have a problem with a land tax provided it is set at a reasonable level and offset by reductions in other taxes. Capital gains tax im not so certain of as I think there are pros and cons.

by Andrewj | 7th May 11, 2:41pm 1304736100

SS, i honestly hope you are right and this is the beginning of a trend in ag prices. But and a big but, is that farmers are inclined to capitalise very rapidly any increase in returns and then we start the whole chasing of capital gain again ( aka landcorps books) and the falling of the return on assets and farms get harder for young to buy. and that self reinforcing bubble with resultant crash and deleveraging.

Just on a side line. In year 2000 dollars my grandfathers 1950 wool clip was worth over 3 million dollars, but anti land agregation laws stopped him being able to buy land so he followed other interests.

I think that the supermarkets will keep scouring the world for cheap food but as the reality of our energy future unravels, they will start to look closer to home. Anyway what ever we have learnt in past dealing with the west will probably need to be thrown out the window and a new book written on how to deal with the Chinese and come out on top.

by scarfie | 7th May 11, 12:50pm 1304729422

Andrew I would be very interested in the results of the overseas recce, let me know how it goes.

I do see farms, like all real estate, taking a bit hit in this country soon. I would contemplate getting involved if the yields became realistic.

So very interested in how you get on.

by musterer | 8th May 11, 9:55am 1304805350

andrew give us a call when you are in chile , based in osorno phone 66078775

willing to provide any assistance regarding this part of the world

by Andrewj | 8th May 11, 1:42pm 1304818973

Im in the States till the end of May. Then I will head over to Chile and be based with family Santiago. I will then drive to the coastal Andes to stay with a friend on a Vineyard. Im then due in Ancud to catch up with a Kiwi friend. Will then head back north to Valdivia and Pucon, will try and phone to give you some warning. You can get my email of Bernard if you want to keep in touch.

Andrew

by Sheep Shagger | 8th May 11, 1:40pm 1304818827

Musterer, assuming you are involved in farming in some way in Chile, can you give us an overview of the scene over there?

by Kunst | 7th May 11, 12:12am 1304683920

New Zealand– the next defaulting nation ?

NZagriculture vs “Climate change” – a few major weather events in 2011…2012…..and ??

Next to NZtourism, which obviously is in trouble, since the worldwide recession and high oil prices, it seems to me in general NZagriculture is very volatile of the same, but other reasons also. Because important other segments of our economy are missing, the two strongest pillars of our economy do not provide sufficient security for our already fragile economy.

What will balancing our economy in case “Climate change” and it’s results will have devastating affects on tourism, but especially agriculture ?

http://unfccc.int/essential_background/background_publications_htmlpdf/climate_change_information_kit/items/288.php

by steven | 7th May 11, 8:09am 1304712540

Defaulting? I think thats a bit of a stretch, maybe by 2015 if we have not got our budget back in balance or at least heading there then Qs will be being asked Im sure....but I dont think we can take NZ state/condition in isolation, many other countries are far worse...........

The effects of AGW on NZ are fairly small so far....oil im not so sure, I noticed or have the impression anyway that some crops such as avacados, apples and fejoias seem smaller per item this year....just wondered if less fertilizer was being used.

Interesting that for the UK they say the growing season is already extended, I wonder if a similar thing is happening to say otago? cantebury might get too hot and dry but further south better...

Globalisation is dying....so our economy will re-balance as it "naturally" becomes more economic to make stuff here than in say china (wage increases) and pay the cost to ship (fuel)....I wonder if we will have some hvy plant (again?) eg a steel works/mill.....there are signs that this is happening in the US....so the "let the market decide brigade" will have their day I dont think ppl will be happy with that though....as I suspect no one will sponsor / encourage before hand local manufacturing except local manufacturing/investors (with a lot of risk)...and then there will be the credit needed to do so which might be very scarce......I think the thing that gets to me is just how complex and inter-linked everything is....its almost impossible to take a single aspect / sector of an economy and say with confidence what will happen from say peak oil (high proces or scarcity) as each sector has so many interlinks and feeds in and out from other sectors.....its really an unknown....for 200 years and certianly the last 65 all we have had is expansion....now its 30 odd of contraction....

regards

by Kunst | 7th May 11, 8:40am 1304714432

How much longer can food production be maintainted to the current level and can we expect a price explosion with massive consequences for the poorer, when no money is available to feed them ?

There is another threat : http://www.stuff.co.nz/business/farming/4973857/Fears-bee-colony-collap…

by steven | 8th May 11, 5:28pm 1304832536

I have a plant in my garden the bees just love, its about 10 years old and every year up until last summer the honey bees outnumbered the bumble 10 or more to 1it was simply crawling with them....this year I was lucky to count 5 honey bees and 2 or so times bumble....thats a huge change in 1 year....this year I will watch closely again...if this is a trend then we are in doo doo.....

regards

by Anon good nurse | 7th May 11, 10:30am 1304721051

"Could this investment be cashed up, sold to new, passionate young farmers, and the money used to reduce the countrys debt?"

No. It will be shared out among the government's buddies: the corporate cronies and the campaign contributors. The farms and farmland will be used as rewards and bribes.

by Julienz | 7th May 11, 1:26pm 1304731612

From the print edition of the Economist May 5th 2011

When others are grabbing their land

Evidence is piling up against acquisitions of farmland in poor countries

http://www.economist.com/node/18648855

The article relates to Africa but the conclusions apply equally well to New Zealand. A couple of quotes:

"Still, some conclusions seem warranted. When land deals were first proposed, they were said to offer the host countries four main benefits: more jobs, new technology, better infrastructure and extra tax revenues. None of these promises has been fulfilled."
"So why are land deals popular? That is surprisingly easy to answer: strong demand and willing suppliers. The big investors tend to be capital-exporting countries with large worries about feeding their own people. Their confidence in world markets has been shaken by two food-price spikes in four years. So they have sought to guarantee food supplies by buying farmland abroad. China is by far the largest investor, buying or leasing twice as much as anyone else."
"Ruth Meinzen-Dick, one of the authors of the IFPRI study, says that in 2009 the balance of costs and benefits was genuinely unclear. Now, she argues, the burden of evidence has shifted and it is up to the proponents of land deals to show that they work. At the moment, they have precious few examples to point to. "

These conclusions reinforce my belief that we need to diversify the opportunities for, and remove barriers to, local investment in New Zealand's primary industries.

by ploughboy | 7th May 11, 10:35am 1304721357

its wrong that landcorp is out bidding nz farmers for farm .have yet to see why they should own land.

as for investing there were lots of coops named above where you have to be a farmer to own shares.invest in a young farmer at ground level.

by Casual Observer | 7th May 11, 10:04pm 1304762655

Spoke recently to a farmer who has been on 'friendly' bank watch for the last two years. He said 'I can't understand the wankers. For the last two years they have been keeping a close eye on me an now they come to me asking if I would like some funds to expand or buy another larger property!' The banks are awash with $ they want to lend out -and are getting desperate to do so. Farmers like the chap I spoke to have long memories and won't be taking up that particular banks offer any time soon.

The Landcorp farms that I know quite well are 10,000+ stock unit farms. Hardly the size that a young farmer could afford to buy.

Ploughboy is right - if you genuinely want to invest in ag without doing the hard yards yourself, invest in a young farmer. Some folks have rather romantic ideas about farming - it is hard work and holds some risk.

Aj - for the last decade we have been investing in young, but motivated farmers who have a dream and more importantly a plan to get where they want. It's been a win-win situation and seeing them achieve their goals is fantastic. Good luck with your 20yr old. Rather than take them offshore, (I believe they are too young to emigrate without their family) you may be better to give him a ticket to go and experience farming and life in general, offshore. ;-)

by Andrewj | 8th May 11, 9:28am 1304803685

CO, there is a world of difference between the dairy industry and the sheep and beef one. He loves dogs etc and is very good with stock. Ive employed him since he was 12 so we go back a long way. I will keep an eye on him and see how business orientated he becomes. I suggested a few years as a stock agent.

The banks are flush, a mate with Westpac just got an offer to go for any dairy unit under 10 mill and we will be there to support you (Id spend a week on the fine print:-) ). I think I know why. Reading Stephen Hulmes blog it appears the Government are borrowing huge amounts at %5.36 and then funneling it back to the banks at the OCR. omo.co.nz

by Casual Observer | 8th May 11, 12:01pm 1304812872

Have a family member who got his first job as a sheep/beef cadet for Landcorp a few years ago. I was most impressed with the training he got - both the practical and encouragement to study while learning. He sees his near future working for them as he says the opportunities to progress there are huge. The farm he is on makes a $2mil profit. They don't pay that well, but training and diversity of work opportunities, he says makes up for the lack of $. I know a young farmer who started with them and now has his own farm.

When I hear people say that Landcorp should go, I think of these young guys who got their start with them, the training (practical and academic) that was available to them, and I wonder if in fact the sheep/beef industry can afford to lose such a training ground. That's an outsiders view, those in the industry may see things differently. ;-)

by Kunst | 7th May 11, 10:34pm 1304764483

Downscaling and more diversity.

Reading articles about NZagriculture, I’m worried in the assessment and future planning of our economy, “Climate Change” and other worldwide accumulating/ accelerating factors aren’t taken enough into consideration.

http://www.youtube.com/watch?v=-HQ0WTSiXHM

by SimonP | 8th May 11, 8:49am 1304801347

If LandCorp is not earning an adequate rate of return then their assets are over-valued.
I also find it ironic that they have the lease for Waiareki Pastoral when it is the tax payer who will have to pick up the Kyoto liabilities as most of the land conversion occurred prior to the ETS
coming into effect.

SELL. They are working in areas the Govt has no business in being in and potentially distorting the market.

by steven | 8th May 11, 10:18am 1304806682

Places like Molesworth station are un-economic so the Govn took them over (I think tahst what happened?)....it seems private farming couldnt make ends meet, maybe indeed it should be left to go fallow...

regards

by NeilD | 8th May 11, 10:55am 1304808942

Molesworth and St James stations are crown owned but administered by DoC not Landcorp. Their value is ecological not economic. Molesworth was taken over in 1949 so yes at that time it may not have been profitable (and probably over run by rabbits), St James in 2008 by Heer Clark at a cost to the tax payer of $40m as we all know, but was most likely quite profitable and probably still is....but their are both wonderful public assets, which we all can visit/travel through and enjoy

by Andrewj | 8th May 11, 4:47pm 1304830046

NeilD

isnt it odd that we purchased a farm (st James) That we already owned (it was crown lease) and then leased it back to the original owners.

by NeilD | 8th May 11, 5:17pm 1304831836

Yes, but if the high country lease/tenure review had played out like other stations the Stevenson family would still had been left with one hell of an asset (in fee simple title) . If my memory serves me rite, there was an offer on the table for st James of $40m from an foreign interest, that prompted stevenson to offer it, as a whole, to the crown...

by Andrewj | 8th May 11, 6:20pm 1304835650

But what a nonsense the whole process was. Some farmers made a fortune others much worse off. We could have decided, that St James station heritage was to important and left it as pastoral lease. They never should have touched the high country leases.

by NeilD | 8th May 11, 7:57pm 1304841429

Aj..thats the word thats the centre of the issue, Clark couldn't give a rats arse about HERITAGE, the crown was not interested in buying heritage, dig a whacking great hole and bury it as far as she was concerned.The public perception of the High country, perfectly illustrated if not somewhat innocently, by steve's comment above, is not that of yours mine or any one else who can claim a direct link back to the earliest settlers...'best left fallow'....

by J Martin | 8th May 11, 4:19pm 1304828348

Oh ye of little faith, Bernard has all the answer's!

by Grant A | 8th May 11, 7:27pm 1304839645

Andrewj - the banks don't borrow at OCR, and certainly not off the Govt. I think it just a case of the banks being well funded at the moment and comfortable with the risks in certain business segments. I'll worry more when both of those factors aren't the case

by Andrewj | 8th May 11, 9:39pm 1304847585

Hi Grant, Can you tell me where the Government is stashing all the money its borrowed over the past month or two? My understanding was it was going to the RB and then lent to the banks.

by Pete Prophet | 8th May 11, 10:29pm 1304850557

I pray that your plant, like me is just not as attractive in it's older years. Wild declines in our honey bee population here seem to have reversed recently in the Waikato. Maybe like other beewildered ones they are enroute to Auckland.

by GG | 9th May 11, 10:32am 1304893963

Bernard - thanks for raising an issue. It is something I have been very uncomfortable about for a while.

LandCorp should not be using taxpapers money to bail out banks and farmers. It is a moral hazard. More importantly, the LandCorp purchases are funded by foreign debt and unsustainable burdens on our children.

What really concerns me is people who argue that instead of selling land to the "slantly eyed people", we should nationalise all the farms, funded via foreign debt issued to the above mentioned "slanty-eyed people".

Rubbish!!! Farmers over-extended themselves in a debt fuelled spend up, financed by very poor lending decisions by the banks. I do think we should restict sale of land to non-residents / non-citizens, including all residenial property.The banks should therefore take a haircut on their loans. Farmers should face a decline in capital gains. This will allow younger farmers to enter the market.

What also concerns me is that once the farms are nationised, they become objects for political games. I remember a discussion with a leading Maori figure within Tainui who their plans was to own all farming landing within Waikato. I asked how he thought this was possible. His response, was that they would get the government to buy the land (via LandCorp), then get the land vested in Maori authorities as a political buy-off.

As AndrewJ states, the dumb-arse honki can pay for it via their taxes.