Pāmu Farms takes hit from dairy slump, Cyclone Gabrielle

Pāmu Farms of New Zealand chief executive Mark Leslie.

State-owned Pāmu Farms of New Zealand, also known as Landcorp Farming, has taken a financial hit from a slump in global dairy prices last year and adverse weather in its latest half-year result.

Pāmu produced a net operating profit (NOP) of $3 million for the six months to December 31, 2023, compared to $15m in the comparable half-year.

“Challenges posed by a sharp reversal in global dairy prices, plummeting lamb prices and adverse weather events have impacted our profitability,” said Pāmu chief executive Mark Leslie.

“Sustained damage from last summer’s cyclone continues to impact our bottom line as we reinstate infrastructure and work to re-grass lost pasture, repair or replace damaged fences, clear slips and maintain farm tracks.”

In August, the Global Dairy Trade Auction (GDT) price index dropped 4.3 per cent in a “shocker” result which also saw whole milk powder prices decline to figures not seen since June 2020.

Pāmu had previously warned of the impact of Cyclone Gabrielle on 24 of its farms.

However, a rebound in dairy prices - a trend that started last October and resulted in fierce bidding at February’s GDT auction - is expected to aid Pāmu in the second half of its financial year.

Pāmu is forecasting an improved full-year NOP of between $9m and $19m, compared to its original forecast of between $1m and $10m.

“The change to the forecast is largely a result of the positive uplift in the global dairy trade index and gains from our wider forestry business. It assumes that there will be no further deterioration in the exchange rate and that livestock prices hold through the season,” Leslie said.

Leslie said the company also achieved an “important milestone” in December, with the last of its company quadbikes leaving farms as it strives for enhanced health and safety.

“This was achieved in the same month as media reports of several fatalities involving quads, highlighting the risk of using these vehicles for farm tasks and corroborating our decision to exit them from the business,” he said. “While not without some costs, removing quads from a peak of 440 nationwide is a major milestone in our health and safety journey.”

“Over the past six months, we have continued to progress on our organisational strategy. We continue to adjust our practices to increase profitability and efficiency while seeking to ensure our farming activities contribute positively to ecosystems and communities.”