Landcorp Farming Limited (trading as Pāmu) achieved EBITDAR (earnings before interest, tax, depreciation, amortisation and revaluations) of $61 million for the year ended 30 June 2021 (2020: $65 Million) showing the underlying strength of its diverse farming operations and strategic approach.
The company will pay a dividend of $5 million to its shareholder, the New Zealand Government, while focusing most of its surplus cashflow on debt reduction.
Pāmu Chairman, Warren Parker, described the result as very pleasing and evidence of further progress in executing the company’s strategy and dedication of its people.
“Pāmu is evolving its portfolio of assets to meet tomorrow’s consumer’s needs and societal expectations for sustainably produced high quality food and fibre. The company’s diversification strategy to achieve best land use such as expansion into forestry and horticulture is already contributing positively to the company’s outlook. Importantly this is well supported by and complementary to our core dairy and livestock farming businesses.”
Chief Executive Steve Carden said a rigorous focus on operating expenses and pleasing lifts in productivity in dairy and livestock farming operations drove the positive result, despite difficult market conditions for some red meat categories due to Covid-19’s impact on food service markets. The growing forestry portfolio of the company also contributed strongly towards earnings for the year and will help the company meet its emission reduction targets.
“As a diversified farming business, our capacity to offset any downsides in year-on-year returns with upsides across other aspects of our portfolio is growing.
“This result reflects the strategy we have been pursuing over the last seven years to lift farm gate returns, by diversifying and broadening our operations, where this makes sense, to ensure business resilience and as investments mature, increased earnings.”
“While pandemic-related disruption resulted in falling venison prices and increased farm input costs, these have been more than offset by higher milk revenue, the growth in carbon revenues and a reduction in operating expenses,” Mr Carden said.
Pāmu’s profit after tax was $29 million. Total revenue was $250 million in 2020/21, similar to the previous year ($251 million), with milk revenue accounting for 50% of all Pāmu farm operating revenues in the year.
“Despite farming less land due to land settlement, expiry of leases, and the conversion of lower-earning land to forestry, the company increased production from its livestock and dairy farms throughout the year through a strong focus on pasture management. This was done in manner careful to minimise environmental impact.
“Revenue from our dairy business saw an increase in productivity and revenue over the previous year, due to high milk prices and our focus on efficiently converting pasture to milk.
“While overall livestock revenue slipped slightly to $112 million because of lower meat prices in global markets disrupted by Covid-19, lamb and beef prices gained momentum during the final quarter. These gains together with Pāmu processing contracts for specific quality requirements helped even out declines in venison returns.”
Mr Carden said the company’s future was looking positive, with subsidiary companies Spring Sheep (50% owned), Focus Genetics (100% owned) and Farm IQ (26% owned) going from strength to strength. Pāmu’s food business, Pāmu Foods, is enjoying increased activity in the specialty milk areas, including organic and deer milk. This has been supported by our investment in medium sized milk drying capacity through milk processor Melody Dairies (35% owned) which was successfully commissioned during spring 2020. This is helping to meet the growing global demand, especially in the huge Chinese market, for specialised milk products. This aspect of the company’s dairy business complements our relationships with dairy processors for the supply of organic milk.
“Pāmu is focused on ensuring we have the right diversity of land uses with production and partnerships focused on supplying high-margin markets. As a farmer of scale, we are uniquely placed to collaborate with CRIs, Universities and other technology providers to innovate through farm scale evaluations – such as we are doing in Canterbury for bobby-free dairy production, both for our and the sector’s future social license.
“We continue to farm with a focus firmly on the wellbeing of our animals, our people and the environment. As climate change increasingly impacts on the biological systems we depend on and global consumers become even more concerned about the provenance of their food, we know that how we farm is just as important as what we farm. That is why our strategy targets environmentally and climate friendly farming practices that our customers increasingly demand,” Mr Carden said.
Pāmu is the brand name for Landcorp, a Stated Owned Enterprise, and one of New Zealand’s most innovative farmers and food businesses. It is also the name given to the quality products created by the company. Pāmu is the Māori word ‘to farm’ and reflects the deep connection New Zealanders have with the land, born from respect, and a genuine desire to protect and enhance the environments in which the company works. It’s a proud provenance that stands behind every product bearing the Pāmu name.