A lift in meat prices has contributed to an improved forecast for Pāmu, which has revised its full year EBITDAR (Earnings before Interest, Tax, Depreciation and Revaluations) forecast to between $73 million and $78 million. This compares to the previous forecast of $61 million.
Chief executive Steve Carden says the increased forecast for the year ending June 2020 was pleasing and demonstrated both a lift in milk and meat prices, plus a strong focus on productivity improvement on farm and securing premiums for its products.
“The improved milk price principally reflects the revision in Fonterra’s forecast milk payment to $7.00 – $7.60 per kg of milk solids, while the strong beef and sheep prices are being driven by strong global demand for protein, particularly from China,” he says.
The state-owned enterprise’s diversification strategy has seen a lift across both dairy and meat, with good production volumes and carefully managed costs outweighing negative factors such as the unusually wet spring conditions on the West Coast and in Southland, explains Carden.
“Our farm teams have done a great job on lifting farm performance through focused pasture and livestock management. As well, we are making good progress on key initiatives such as the transition to organic production on more of our dairy farms, price premiums from the likes of A2 milk , greater efficiency in fertiliser use, and the planting of additional trees on less productive land.
“While the forecast assumes that no significant weather or pricing events occur in the remainder of the year, we are well positioned to produce an improving return for the shareholder this year,” Carden says.
Pāmu is the brand name for Landcorp Farming Ltd.