Government appoints three new directors to Pāmu board
The Government has appointed three new members to the board of state farmer Landcorp Farming Ltd, trading as Pāmu.
The result released last week – a net operating loss of $9.4 million on revenue of $209m for the year ended June 30 – was largely a dairy issue, he says.
“No surprises for anyone, I guess, in that respect,” Carden told Rural News.
“Our dairy revenue is off about 15%: a combination of price falls and production falls as we have scaled back our dairy production and our cost structures to reflect the dairy price.”
The taxable profit of $11.5m was attributed to higher livestock valuations and land sales.
“The positives are the really tight cost controls across the business,” Carden claims. “We saw this coming for a long time as other farmers did, so cost control has been very strong and our farm working expenses are back about 9%.
“We continue to make a lot of progress on the strategy so we can keep investing in the Pamu value-add strategy we are developing and develop our alternative products like sheep milk.
“We have introduced new systems across our business that will help us in our procurement, and our farm operating expenses at the moment – which is really good.”
Carden refers to much good work happening in the business and it is unfortunate the financial results don’t necessarily reflect that.
Asked when the results of the strategy are likely to show, he says everyone recognises that to move a business away from being exposed to commodities like milk takes a while.
“We’ve done a lot to scale back our number of dairy conversions... and look at alternative land uses.
“I would expect for the next two-three years we are going to remain exposed to commodity movements.
“Like everyone else we are hoping to see the milk price continue to climb as it has over the last month,” he says. “Our exposure to premium markets and moving away from commodity pricing should feature more in our revenue and overall performance.”
He says the end to the Shanghai Penguin contract and its impact on the bottom line result will depend on where the milk price is.
“While [the milk price] is low we won’t have a loss, but if it goes high we will miss out on that profit; but we are freeing up about $25m capital by reallocating that livestock to other parts of our business,” Carden says.
“This is consistent with reducing our exposure to commodity milk.”
Landcorp’s Pamu brand is now being used for domestically sold venison, for sales of grass-fed beef into the US, development of alternative dairy options like organics and grass-fed options.
“Increasingly we are exploring what we can do in alternative products like sheep milk or deer milk or other land uses we are currently working through.”
