Disruption is never comfortable – it presents a new set of challenges for the producers, processors and marketers of pastoral livestock products but it also generates opportunities
The strategy being pursued by Pamu (Landcorp Farming) is a response to these emergent disruptive forces.
It embodies the need for new thinking while also running the traditional farming business as efficiently as possible.
The strategy is designed to ensure the company stays in control of our future rather than have it shaped by others.
It requires us to do two things really well.
First, investing in exploring future farming systems that have a materially smaller environmental footprint while producing higher value and margin products than today.
Second, lifting the productivity of our dairy and livestock farms through the smart use of technology and best practice management and by fully exploiting our geographic diversity, scale and ability to meet product quality standards to maximise product premiums.
Doing both things at once of course creates a tension between allocating capital to evaluate new ideas, applying capital to replace and upgrade assets in operations and paying a dividend.
Our mission is to enrich our people, our land and the future for farming.
The emphasis on farming and its future success is deliberate because the disruption of food and fibre markets by non-animal products means we must find viable methods of food and fibre production that are genuinely environmentally sustainable and socially acceptable.
We are not alone in facing this, of course – all farmers know future prosperity lies partly in regenerating rather than depleting the stocks of natural capital on which farming depends and producing much lower levels of greenhouse gas emissions than we do now.
As a state-owned enterprise we must achieve this transition to a sustainable farming business while generating returns comparable to our private sector peers. Our shareholders rightly demand this.
The evaluation of new farming systems and development of new supply chains is funded via the working capital we generate, contributions from our partners and, if required, debt. We don’t have an open cheque book or a shareholder that willingly parts with cash – quite the opposite in fact.
We partner with others to spread the risk but also ensure that best expertise is brought to bear on the challenges before us.
The sheep milk and deer milk ventures are great examples of working with other farmers and investors to provide new farming options for the future and to access expertise and share the rewards and risk.
We work closely with the Crown research institutes and universities, industry organisations, notably Beef + Lamb NZ, DairyNZ and DeerNZ, Maori entities and technology providers. Our expertise and resources are complementary and we can achieve more together, faster than by working independently.
For the same reason, our environmental advisory group is deliberately diverse including the voices of non-government organisations concerned about the sustainability of farming methods. We appreciate this has been controversial for some but we intentionally want to hear all viewpoints and build their understanding of the commercial realities we face.
Where land development was once a core function of Landcorp, our focus now is on ensuring land is put to its best use, whether that be animals, forestry (right tree, right place) or increasingly horticulture – we are trialling avocados in Northland.
How to optimally integrate these enterprises spatially to improve water quality, restore biodiversity and habitat for endangered species and generate a carbon portfolio is a challenge we are embracing. Carbon provides a new source of liquidity and reduces Pamu’s carbon liability.
Land is also leased to vegetable and arable crop growers and to evaluate novel plant corps where it sensibly fits into a pasture renewal programme and can generate returns above livestock farming.
Livestock genetic improvement is a core capability of Pamu. Through Focus Genetics, our wholly owned genetics subsidiary, the sires supplied to Pamu and commercial farmers are continually improving the feed conversion efficiency, reproductive efficiency, longevity and animal health resilience of our livestock.
Our role in running progeny test trials to assess the performance of Pamu and industry beef cattle and sheep sires under the same environmental conditions is hugely valuable to the farming industry and we see scope to further collaborate with other industry breeders and use the power of Focus Genetics to breed animals with lower methane emissions, less need for synthetic animal health interventions and greater tolerance to hot weather.
I am conscious we can further improve the transfer of information to the farming sector and we are contemplating how we can work alongside industry organisations and consultants to achieve this. This will almost definitely include on-farm field days and increasing use of technology to relay developments in real time.
Finally, Pamu cannot succeed without outstanding people. More than 700 people work on our farms. They take pride in their work and contribute to the communities they live in.
Our investment in lifting on-farm health and safety is continuing to reduce lost time injuries to industry best practice and is creating a safe workplace culture where staff look out for each other and the visitors to our farms.
And, we are investing in the knowledge and skills of our people so that we can adapt and respond quickly to the new challenges and disruptors confronting farming.
Like every farmer, our staff each day seek how to farm things more efficiently, safely and produce more value for Pamu and New Zealand.
