Higher returns from beef and venison have contributed to a pleasing result for New Zealand’s largest farmer, the state-owned-enterprise Pāmu Farms of New Zealand (Landcorp).
The company has just released its latest annual report and says ongoing solid trading conditions indicate another profitable year is ahead.
Chief executive Steve Carden says the 2017 net profit after tax of $51.9 million, announced on 31 August, was very pleasing and reflected the higher returns from milk, beef and venison.
“As we enter the half-way point of the current financial year, our business is tracking well, However, any downward pressure in commodity prices as we head into 2018 will impact our result.”
Carden says the company had focused on both debt reduction and reinvestment back into the business more recently, as part of its overall business strategy.
“Pāmu is looking at how we can enhance shareholder value, by not just being a price taker at the farm-gate, but adding value right along the food chain.
“As an industry, agriculture needs to be changing and evolving what we produce in response to consumer demand,” says Carden, adding Pāmu is always looking at ways it can drive value and innovation in its business, which in 2016-2017 produced 9,519 tonnes of sheepmeat, 7,665 tonnes of beef and 1,995 tonnes of venison on its 125 farms owned and managed over 373,510 hectares.
“The world is changing rapidly and so is our business,” he and chairman Traci Houpapa say in their outlook in the report. “That spells huge challenge and opportunity for a large-scale farming and value chain business. Consider just three of the global changes of critical relevance to Pāmu: rising consumer demand for healthier and more sustainable foods; competitive advantages attached increasingly to information technology; and rising volatility in commodity markets.”
Consumer demand for healthier and more sustainable foods is a huge opportunity for Pāmu, they believe.
“We have the capitals and the New Zealand provenance to create and supply products of high value to consumers in selected markets across the world. Our value chain relationship with Duncan NZ Venison and Broadleaf, a Los Angeles-based speciality meats business, points the way – Pāmu venison expertly grown for supply to the American food trade, where natural grass-fed product from New Zealand earns a premium. We doubled our supply to this market in 2016-2017.”
New systems for growing and finishing Angus cattle to rigorous market-driven specifications, were another specific focus during the year.
“The US market is demanding more New Zealand grass-fed and hormone and antibiotic-free beef. We are working with various parties on opportunities for paddock-to-plate supply into that market. The superior taste of our beef is gaining recognition alongside health attributes associated with our farming and our animals,” says Houpapa and Carden.
“The superior taste of our beef is gaining recognition alongside health attributes associated with our farming and animals.”
New Zealand provenance and eating quality are also of high importance for the company’s lamb supply and it continues to explore emerging opportunities in New Zealand and internationally
IT developments bring both opportunity and challenge, enabling authentication of products and their qualities and tell provenance stories on the one hand, while empowering competitors and increasing consumer demand for information and producer commitment on the other.
“Our changing world demands transparency at every point in production and supply (while on-farm data collection and analysis also drive productivity gain.”
They point to volatility being an ever-present challenge for commodity producers and say the value-chain approach must be part of the solution, not only for Pāmu Farms but also all New Zealand farming. Initiatives include fixed price contracts for lamb, beef, venison and wool and various Pāmu-branded products .
In its strategy of striving for higher productivity, profitability and sustainability across its portfolio, Pāmu Farms is working to improve the genetics of its livestock by drawing on the programmes of subsidiary Focus Genetics (Focus). Better use of pasture and other feed crops, optimised stocking and a strong emphasis on animal health and welfare are also in the programme, according to the report.
Pāmu’s annual report shows the company’s total assets increased to $1.81 billion in 2016-2017, an increase of $27.9 million on the previous year. Debt reduced over the year from @219.6 million to $206.9 million.