The pre-tax trading loss for the year ended June 30 was $9.4 million, compared with a profit of $4.9m a year earlier.
This was on total revenues of $209m, from $224.3m previously.
Milk revenues were down nearly $13m on a year earlier, but an increase in production as new farms were brought on offset a portion of the actual price fall.
Landcorp was back in production in a number of other areas, notably beef, as it reduced stock numbers due to forecasts of an El Nino weather pattern last summer.
For the same reason, it largely stayed out of the store market for cattle so could not take full advantage of strong beef prices.
Lower lamb returns were also a factor, chief executive Stephen Carden said. Deer returns were a bright spot.
In the June year, a $7.4m gain on land sales plus higher livestock valuations offset the trading loss and led to a bottom-line profit of $11.5m, compared to a loss earlier of $20m.
There was another turnaround under the accounting rules for total comprehensive income, so the net return for the Crown as shareholder was a negative $2.9m, though better than the previous year’s negative $8.4m.
The land sales involved some dairy farms in the Bay of Plenty. Some properties were better-suited to private ownership, and another six to nine farms round the country could be sold in the next year to 18 months, Carden said.
Landcorp was continuing to focus its farming on clusters and properties which best suited the customer supply contracts it has.
This meant it was not wedded to all sites inherited from the old Lands and Survey Department and also reflected the move towards managing land for other owners, now involving about 400,000ha of farms.
The trading result was solid given the tough conditions in the dairy sector, he said. Dairy prices had picked up since balance date and he was now “quietly confident” of a break-even result this year, rather than the initial budgeted loss.
“We’ve made a deliberate decision to move away from a high-input system, to be a lower-cost producer and to forego production. That will hurt us in high income years, but be good in other years.”
Steve Carden
Landcorp
“We want to get back to making profits and paying dividends.”
The state-owned farmer was continuing to bring more dairy farms into production, with another four or so still to come in on the Central Plateau in the North Island.
However, over the dairy estate, the focus was now on lower-intensity farming and cost reduction.
There was a concern the industry might have run its farms too hard, putting pressure on the environment and animals.
“We’ve made a deliberate decision to move away from a high-input system, to be a lower-cost producer and to forego production. That will hurt us in high income years, but be good in other years.”
Despite new farms being brought on, a strong culling programme on existing farms last year pre-El Nino and to improve herd quality meant total cow numbers remained about the 60,000 level.
In the years ahead, Landcorp would focus on a high-quality farm system, including looking to benefit from price premiums on GMO-free and organic production.
It had made good progress in its new sheep milking programme on the Central Plateau, with the first full-year of production, and selling pro-biotic powders into Taiwan.
The programme has about 4000 ewes, but a PGP project with government funding would lead to genetic gains and expansion.
A second farm was likely to be brought into production in the next couple of years, and further out potentially involved third-party partners.
“It’s a small part of the business, but exciting,” Carden said.
