Value-add paying off for Landcorp

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 Pãmu, stopped converting farms and forestry lots to dairy in 2016 and ceased using the controversial feed supplement, palm kernel, on its dairy farms the following year.

At the time, Landcorp said it 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 and was focusing on different ways of 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, grassfed, 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 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.

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.

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.