State farmer posts record results
State farmer Pamu has delivered its strongest operating result on record.
Minister for State Owned Enterprises Paul Goldsmith has told Dairy News that he's not happy with Pāmu's performance.
However, he has ruled out an immediate sale of Pāmu, which manages 360,000ha of sheep, beef, dairy and deer farms.
His comments came in the wake of Pāmu reporting a net operating profit of $3 million for the half-year to 31 December 2023, compared to $15 million in the 2022 half-year. Challenges posed by a sharp reversal in global dairy prices, plummeting lamb prices, and adverse weather events have impacted the SOE's profitability.
Pāmu says sustained damage from last summer's cyclones continues to impact the bottom line as it invests in recovery: reinstating infrastructure and work to re-grass low pasture, repair or replace damaged fences, clear slips, and maintain farm tracks.
Goldsmith says he expects all SOEs to operate "as successful businesses, and to be as profitable and efficient as comparable businesses that are not owned by the Crown".
"I am not yet satisfied that Pāmu is achieving this, and I expect it to take steps to improve its performance and the returns it provides to the Crown," he says.
"I will be writing to Pāmu with my expectations for the coming year."
Pāmu chief executive Mark Leslie told Dairy News that it is great to have clarity from the Crown and we look forward to receiving the letter of expectations from the Minister.
"Our refreshed strategy in FY2023 and focus for subsequent years is firmly on closing the gap in profitability through performance acceleration and operational excellence.
"We are also conscious of the expectation to balance performance and the environment while being a safe, responsible employer."
The previous National Government, led by Sir Bill English, announced just before the 2017 general election that if re-elected it would sell Pāmu. However, Labour formed a government with the support of NZ First.
Goldsmith points out that the coalition agreements, with NZ First and ACT, do not include any plans to sell Pāmu.
He says Pāmu provided a briefing to its incoming shareholding ministers, which he was satisfied with.
"I have met with Pāmu to discuss the company's opportunities and challenges and expect to engage regularly with the company going forward."
The Government is also in the process of appointing a new Pāmu chairman following the death of Dr Warren Parker in December.
"The appointment of a new chair for Pāmu is proceeding through the normal Cabinet process. An announcement will be made in due course," he says.
Despite posting a lower half-year net profit, Pāmu is forecasting an improved full year result, between $9m and $19m.
Leslie says the change in forecast is largely a result of the positive uplift in the global dairy trade index and gains from the wider forestry business.
"It assumes that there will be no further deterioration in the exchange rate and that livestock prices hold through the season," says Leslie.
"Despite challenges facing the primary sector, Pāmu strives for operational excellence with an emphasis on innovation, sustainability, and being a safe, responsible employer."
