Landcorp dairy conversion under review

(Photo: The Nation)
(Photo: The Nation)

State-owned farm manager Landcorp is having a "good hard look" at a massive dairy conversion project it's involved with in the wake of a plunge in dairy prices.

Finance Minister Bill English says the project was put in place from 2005 and "the world looks a bit different now".

He told The Nation today that Landcorp had limited choices in the long-term contractual arrangements for the project.

"That's something the government is digging into in a bit of detail because we do need to understand exactly what their obligations are and what choices they have," he said.

Landcorp have indicated they're having a good hard look at the project and they're "a bit uncomfortable with it", he says.

He did not name the project but Landcorp has been involved in a bold plan to convert 25,685ha of former forestry land to dairying in the central North Island.

The Wairakei Estate is the inspiration of three New Zealand families who set about creating one of the largest pastoral farms in the Southern Hemisphere, according to the Landcorp website.

It's been dubbed one of the boldest developments in New Zealand's agricultural history. Landcorp runs the farms when they are converted to dairying.

At present the Wairakei Estate, north of Taupo, where conversions began in 2004, has 17,000 dairy cows and by 2021 there will be 43,000 cows, the Landcorp website says.

Dairy co-operative Fonterra has slashed its farmgate milk price for this season by $1.40 to $3.85 per kilogram of milk solids.

That'll leave few farmers able to make a profit, with Dairy NZ estimating that $5.70/kgMS is the industry average break-even point.

Fonterra chief executive Theo Spierings has said the situation is serious.

NZN

Share to Facebook Share to Twitter Share to Email
Share to Facebook Share to Twitter Share to Viber Share to WhatsApp Share to Email