Saturday, March 30, 2024

Landcorp will stick to its guns

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There are few roles in agriculture that have eluded Warren Parker’s career – except full-time farming, though he does live on a lifestyle block near Rotorua. Neal Wallace spoke to the new Landcorp chairman.
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Now, more than ever, New Zealand agriculture needs a trailblazer, an entity with size and scope to test new systems and ventures,  new Landcorp chairman Warren Parker says.

He is happy for the state-owned enterprise, also known as Pamu, to be that entity given the breadth of challenges, from integrated farming systems to water and nutrient management and reducing its environmental footprint, farming faces.

But it isn’t a case of Pamu providing a blueprint for others to follow.

Rather, it is working alongside other farmers to find ways to integrate innovative management methods and techniques.

“It is not ‘here’s Pamu and this is the way we should move’. It is more around how we can work with the best minds and the best farmers as we move to where we need to be in 2030, 2040 and 2050,” he says.

Sheep and deer milking and regenerative farming are examples where Parker says Pamu has been leading and the next challenge is how to scale up those industries.

Pamu’s business is 70% core farming, 20% added-value and 10% transformation to new farming systems and ventures.

Parker’s appointment earlier this year nearly completes a career that has all-but gone a full circle.

As a schoolboy he milked cows and built fences and after leaving school worked in a shearing gang and for an agricultural contractor.

What followed was a long and distinguished academic career where he became professor of agricultural and horticultural systems at Massey University and later its head of agribusiness and resource management.

A career change in 1998 after 18 years saw Parker appointed manager of AgResearch’s beef and dairy division with responsibility for 220 scientific and technical staff.

After two years he was appointed chief operating officer, looking after AgResearch’s science capability, including a $100 million budget and 670 staff.

A period working overseas followed, running the Institute of Molecular Biosciences, a spin-off from the University of Queensland, before returning home to run Landcare Research for six years.

Then he moved to running Scion, the forest research organisation.

Parker is also a former chairman of the NZ Conservation Authority, on the board of Predator Free NZ and sits of the boards of Farmlands Co-operative and Quayside Holdings.

“In a sense I have been fortunate to work across agriculture, land management, environment, conservation, biodiversity as well as forestry.

“I’ve had some engagement with horticulture as well so I have been pretty much across all land use in agriculture.”

Parker says throughout his career he has tried to stay connected to farmers and ensure science and technology stayed relevant, helping them make decisions today that will shape tomorrow.

Farming for tomorrow is at the heart of Pamu’s strategy and a major focus is addressing the biological side of the business, specifically greenhouse gas emissions and farming within resource limits.

That means addressing issues is the bigger picture facing agriculture – its social licence to farm.

Public perception of agriculture is being shaped by the growing influence of social media.

As much as farmers might not like it, those perceptions influence decisions being made today, which will direct where the industry wants to be in five or 10 years.

Farmers do a good job of caring for ecosystems with riparian planting and setting aside wetlands but carbon farming by planting trees could be a source of income while also offsetting emissions and further enhancing water quality and biodiversity.

It is an area of focus at Pamu.

In addition to finding new products, Pamu is also striving to add value to its products by working with processors to meet their supply specifications and earn premiums.

“I’m very confident in the strategy and the direction we are taking with our core farming, appetency to extract more value by providing product to specification and verifiable authenticity.”

Pamu has been criticised for including some of farming’s most vocal critics on advisory boards, a move Parker supports saying it is a deliberate tactic to hear differing opinions.

“We don’t have to respond but we create an opportunity for them to voice their views. 

“But how we adapt to that on farm, we only do so profitably and at the same time environmentally responsibly.”

However, Parker is not satisfied with Pamu’s financial performance saying last year’s 3% return on assets must improve and he wants to see returns meet the weighted cost of capital.

Mid-year results were ahead of budget and indicate earnings before interest, tax, depreciation and amortisation (EBITA) of between $38m and $52m.

To improve that financial result will be challenging, he warned, given asset valuation is underpinned by high land prices and the sector’s traditional low cash returns.

“Those days for dairying are coming to an end.

“You can’t keep pumping asset values when milk returns are stable or rising slowly.”

Pamu has also been criticised for making a submission to the Tax Working Group advocating a capital gains tax.

Parker says it advocates the principles of a sound tax system and has broad community support.

“People tried to use it for points-scoring but it was thoughtful given the challenges in front of agriculture and taxation, to incentivise and encourage the right behaviour and allocation of capital.”

A measure of Pamu’s success will be having the wider industry adopt some of its transformational farming systems – sheep milking scaled up to be a reasonable size business, returns from core business meeting the weighted average cost of capital and staff growing in capability and contributing to the wider community.

A further sign of success will be Pamu being admired and respected by the wider community who view it as an iconic NZ company.

“NZ is going through an exciting period which Pamu is embracing and using the opportunity to do better and continuing to back farming while also exploring technology and systems which other farmers are not able to do.”

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