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With 119 farms Landcorp is the largest corporate farmer in the country and is publicly owned. It has had a 'solid' year. Allan Barber assesses its results

With 119 farms Landcorp is the largest corporate farmer in the country and is publicly owned. It has had a 'solid' year. Allan Barber assesses its results
Landcorp's Rangitaiki Station - Taupo

By Allan Barber

Landcorp’s net operating profit of $27 million for 2011/12 was down on the previous year, but was still seen as a solid performance.

The SOE will pay a $20 million dividend to its shareholder, the NZ Government, in spite of a softening in global commodity prices compared with 2010/11.

A good growing season meant higher production and productivity, but the impact of lower dairy, beef and wool prices saw a 7% reduction in annual revenue.

Calving, lambing and fawning percentages were well up on last year, although slightly behind target for calves and fawns.

Lambing percentage at 139.2% was very good.

Profit was down for the period because of a $12.7 million increase in expenses, mainly pasture maintenance, supplementary feed and farm working expenses, and overall revenue reduction of $8.9 million.

Softer demand affected dairy, beef and dairy prices, partly offset by lamb returns, up 5%, and venison and deer velvet, as well as higher production.

The budget for the current 2012/13 year is for profit at $12.7 million to be less than half last year’s and less than a third of the 2010/11 year because of falling prices due to global financial concerns and the obstinately high NZ dollar.

Landcorp is New Zealand’s biggest and most diversified corporate farmer with a total farmed area of 173,000 hectares and nearly 1.5 million stock units throughout both North and South Islands.

In 2011/12 it produced 13,357 tonnes of milk solids, 10,176 tonnes of sheep meat, 9,715 tonnes of beef, and 2,258 tonnes of venison as well as large volumes of wool and timber. Landcorp has a target of selling 80% of its lambs on fixed price contracts to Silver Fern Farms, Alliance and other meat companies and last year achieved in excess of 70% by this method, proving to its satisfaction that this provides less volatile and overall better market returns than spot trading.

Lamb production is geared to meet specific weights and specification to fulfill meat companies’ contracts with northern hemisphere retailers.

As a founder partner with Silver Fern Farms and the Ministry for Primary Industries in FarmIQ Systems, Landcorp is committed to the development of integrated value chains from pasture to plate, designed to align New Zealand production and supply with consumer demand preferences.

Twelve of Landcorp’s farms are now on FarmIQ’s farm management system.

The development during the year which attracted most publicity was the joint venture with Shanghai Pengxin to manage the 16 Crafar farms bought from the receivers and expected to get underway shortly. One of Landcorp’s goals is to increase its involvement in the dairy industry and, in addition to the JV with Shanghai Pengxin, an extension to Maronan Dairies in Mid Canterbury and further development of Wairakei Estates near Taupo will contribute to this. Shanghai Pengxin will invest $15.5 million over three years in upgrading the farms which will lift annual production to around 5,000 tonnes of milk solids, increasing Landcorp’s total production by more than a third Sheep and beef finishing has been boosted by the development of Cheltenham Downs in Manawatu and this has helped recovery from the drought years of 2007 and 2008.

In an industry such as agriculture which necessitates large land holdings and variable returns from year to year, there will always be questions about the validity of state ownership. But the SOE model achieves two key objectives: first, the enterprise is able to function at arms length from the government and second, there is no risk of these large swathes of farm land being sold to overseas investors.

Landcorp is a well managed farm business which could no doubt produce better profits, at least in some years, with different farming practices or mix of activities.

But the SOE seems to tick most of the relevant boxes. It is profitable most years, occasionally extremely so; it has very extensive genetic records which are very valuable for tracing bloodline and breed performance; it invests in innovation and technology; its farms are well maintained and it appears to have sufficient capital for reinvestment; and over the past 22 years it has paid dividends to the government, therefore New Zealand as a whole, of nearly half a billion dollars.

There’s no evidence that Landcorp is constrained by public ownership or that it would benefit from part privatisation.

This doesn't seem to be an argument the country needs to have, at least in the short term, so we are all likely to enjoy the pleasure of farm ownership for some time.

Long may Landcorp continue to prosper.


Allan Barber is a commentator on agribusiness, especially the meat industry, and lives in the Matakana Wine Country where he runs a boutique B&B with his wife. You can contact him by email at or read his blog here »

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But is it the governments job to be farming? One employee on over 620k.
Assets  1.662 billion  1.6% return on investment!  
 Great company great profits, they should have bought houses in Auckland.


No Andrew. Landcorp made a loss so their return on investment was negative.

A solid performance? I think not!
Total equity ($000):
Balance beginning of year 1,351,627
Balance end of year           1,331,969
Over the year Landcorp's equity decreased by approximately $20 million. Despite including a Total Income Tax Credit of 8,312.

Their profit was $18/su? Good god. So if a ewe is classed as 1.5 SU, they made $27 from her. Her lambs were worth $150 ea last year, and she had 1.39 of them each. So out of $208.5, what did they spend $181.5 on? I would suggest their costs are out of control, or they are not doing the production they should be. Cos last year was one out of the bag, if you werent making big spondalees farming last year, you are a big cock up. I would like to see the per stock unit thing related to dairying, in my book a cow is 15su, so a 1000 cow farm would make 270,000 profit. Hell, they will be in shit street with dry weather, a falling lamb schedule, and lower milk payout this year. Ridiculous 

And now I have just read Colins comment. For petes sake, lease the farms to young NZ farmers, so someone can make export dollars for this sick country.

Does Allan Barber have a relationship with Landcorp?  Why else would he write this propogandal.

Landcorp has all the benefits of the best market advice, good genetics, bulk selling power, some awesome farms, good infrastructure ....what is their excuse for this result? 

Landcorp are making thier money selling sections and lifestyle blocks.......
 from  (page30)
…in the Eyrewell district, Landcorp Estates is bringing onto the market 47 blocks, each with sealed road access, reticulated water and electricity supply…….
Further south, Landcorp Estates is offering unique lifestyle opportunities on the shores of Lake Manapouri. The development has a total of 16 sections, ranging in size from 1.35 to 3.4 hectares.
The company has been busy in the North Island as well, with a resumption of section sales on the Wharewaka development near Taupo township. Most of the 212 sections .....bla bla bla....have now been sold.  At Lakeside, ....... near Taupo, 44 of the total 66 sections have now been sold. .....bla bla bla .....The Wakelins Riverfront Estate, near Pahia, began selling again during 2011/12. This development has 28 sections,

Have have to sell them to pay the bloated salaries.

sorry the indignation makes me stutter.

sorry the indignation makes me stutter.

..I did hear some time back that Landcorp continues due ot the land bank it has which could be utlilised in treaty claims. 
That aside, anyone who has any hands on with farming knows that keeping on top of the tricks that paid staff get up to when the owner is absentee is nigh imposisble (personal hers/flocks , multiple shearing tally books, wink wink nudge nudge stock agents, meat for cash..and on it goes)...

I have considered that I have looked at these results with one eye firmly shut. Perhaps the profits are there, but disguised, by piling them back into the properties. However, the government coffers are in a sore state. Times like these, flash yards, new weighing systems, and water reticulation, could be put on the back burner, while the tax payer is given a hand.
If indeed this is happening, who has oversight? Who calls the tune, as to how much they return to government and the taxpayer?  

Landcorp or Lands & Survey as it was then known was set up in my belief to survey government land mainly bush and develop it into blocks. These blocks would be set up as farms and ballotted to returned soldiers initially then young farmers as first farms. The farmers farmed the land and contributed to increased production from NZ land and improved the economy. This worked well but what is the purpose of Landcorp now???? What??