Landcorp rejects suggestions from English to scale-back

  • 16/08/2015
Finance Minister Bill English (File)
Finance Minister Bill English (File)

By Tina Morrison

Landcorp Farming is rejecting a suggestion by Finance Minister Bill English that low dairy prices may prompt the state-owned farmer to scale back dairy farm conversions.

Mr English told The Nation programme yesterday that Landcorp is having a "good hard look" at the 26,000ha Wairakei Estate north of Taupo and is "a bit uncomfortable with" the project.

But Landcorp chief executive Steven Carden says the project is unlikely to be halted by short-term price fluctuations.

"We constantly review how we can make best use of the land across all our 140 farms around the country in terms of economic and environmental factors," Mr Carden told BusinessDesk.

"That's not impacted by a low or high payout. These are long-term developments and we look at the long-term payout expectations."

Landcorp, New Zealand's largest corporate farmer, is 12 years into a 40-year lease to develop and farm former forestry land in the Wairakei Estate.

Mr Carden said the conversion was going well so far, with 13 dairy farms now operating.

Once the conversion process is completed, the estate's dairy farming operations are expected to be the largest in the Southern Hemisphere, producing about 16 million kilograms of milk solids a year, according to an economic assessment by Insight Economics.

Mr Carden said Landcorp farmed in every region in the country and aimed to make the best use of land in an environmental and economic sense.

"Dairying has proven to be a very productive and efficient use of the land around the country, including the Central Plateau," he said.

Fonterra Co-operative Group, New Zealand's largest milk processor, this month cut its forecast payout to farmers in the current 2015/16 season to $3.85/kgMS in response to a slump in global milk prices, from $4.40/kgMS in the 2014/15 season and a record $8.40/kgMS in 2013/14.

Dairy NZ estimates $5.70/kgMS is the industry average breakeven point for most farmers.