Value-add starts to pay off for state-owned Landcorp

Landcorp chief executive Steven Carden. Photo / Supplied

Landcorp's chief executive Steve Carden says the state-owned farming company's value-add policy is paying off.

The company, which has 125 farms throughout the country, has paid its first dividend in four years as earnings rose on increased livestock sales.

Landcorp, which uses the brand name Pāmu, Landcorp stopped converting farms and forestry lots to dairy in 2016 and ceased using the controversial feed supplement, palm kernel, on its dairy farms in following year.

At the time, Landcorp said wanted its partners and customers to know that it could farm sustainably and care for the environment.

Carden said in an interview Landcorp had been paying off debt amassed when it was converting in dairy's heyday years and was focusing on different ways extracting value from its huge portfolio.

"The value-added elements of the strategy are starting to pay off with a million dollars worth of premiums coming through from our dairy business around organics, grass-fed, and winter milk as we looked to produce that differentiated milk that the market is increasingly after," he said.

While the focus over the last few years was to get Landcorp's debt levels down, the attention was turning to thinking differently about achieving profitability on the farm.

In Canterbury, there has been a rethink of getting the right stocking rates on Landcorp's farms and a focus on alternative land uses on those farms.

Landcorp is involved in organic farming, which involves a drop in productivity and an increase in the premium paid.

"That's where we need to get with our milk - to attract premiums and to not put quite as many cows on the land to achieve that," he said.

Carden said Landcorp was learning more about the different types of farming as distinct from previous models, which relied on palm kernel and fertiliser to get more value from the property.

Looking ahead, Carden said the farming sector faced challenges in the form of Mycoplasma bovis, water quality and what has been referred to agriculture's "licence to operate".

"These are all challenges," he said. "At the same time there is a huge amount of innovation happening across the sector and we are a small part of that," he said.

"A lot of that is around new farming systems and on new ways of producing traditional milk and meat products," he said.

In its latest result, Landcorp's revenue rose 7 per cent to $247.1 million and earnings before interest, tax, depreciation, amortisation and revaluations came to $48.5m, up from $35.6m in the prior year.