Chief executive Steve Carden said the State Owned Enterprise has a strategy of reducing exposure to commodity cycles by supplying value-added processors that differentiate its products.
“Landcorp has looked at its future direction and we want to reduce our exposure to commodity markets especially in dairy, and invest in niche products and markets such as sheep milking,” Carden said.
“On that basis we decided to reallocate our current investment tied up in the partnership with Shanghai Pengxin,” he said in an interview.
Landcorp announced this week it would not renew its sharemilking contract on the Chinese-owned central North Island dairy farms when it expires at the end of May 2017.
This brings to an end an arrangement that started in November 2012 when Shanghai Pengxin bought 16 central North Island dairy farms from the receivers of the Crafar family and employed Landcorp as sharemilkers, developers and managers.
Carden said an announcement was imminent on a “reconfigured land use” of its 25,600ha Wairakei Estate development near Taupo that has already resulted in the establishment of 13 dairy farms and 61 homes.
Previously it has said it planned 39 dairy farms milking 42,000 dairy cows but while not releasing any detail, it appears the announcement will reveal those plans have been reviewed.
“You can see from where we are investing money and reallocating funding where Landcorp is heading in the future.”
The move to sheep milking, supplying wool to Danish footwear manufacturer Gleryps and another pending announcement on supplying venison to North America, were further examples of this new strategy.
Carden and Pengxin NZ Farm Group chief executive Andy Macleod said the relationship remained amicable and the two companies were on excellent terms and could work together in the future.
Macleod said Landcorp had done a “first class job” transforming the farms bought in a state he described as “distressed,” and while he would have liked them to continue with the contract, he respected their decision.
In the last three years $20 million has been invested in a dairy training academy involving Landcorp and the Taratahi Agricultural Training Centre, the construction of two new dairy sheds, six new houses and the renovation of 60 others, the construction of six effluent ponds, the erection of 300km of stock and riparian fencing, 800ha of regrassing and installation 900 water troughs.
What management structure would replace Landcorp would be decided in the coming months but Macleod said they were open to employing sharemilkers.
Landcorp said they have an undertaking from Shanghai Pengxin that the 62 staff employed on the farms will keep their jobs and transfer to Shanghai Pengxin once the contract ends.
