Pāmu Braces for $30m Hit From Rising Farm Costs
State farmer Pāmu is bracing for a $30 million hit from soaring farm input costs this financial year.
Last week, the company released its half-year results to December 2024. Those results saw earnings before interest, taxes, depreciation and amortisation (EBITDA) jump 13% and its net profit after tax (NPAT) rise by 25%.
It’s a marked improvement on the company’s 2024 full-year result which saw EBITDA drop 17% and NPAT drop to $3.1 million.
However, Guerin says that he’s cautiously optimistic about the result as the sector’s economic conditions show early signs of improvement.
“We are seeing some improved confidence in the sector, that’s playing out in terms of the Federated Farmers survey… we’re seeing improved commodity prices for our farmer-growers,” he told Dairy News.
The most recent Federated Farmers Farmer Confidence survey saw farmer confidence at its highest level in over a decade, surging from -66% in July 2024 to +2% in January 2025.
“Interest rates are in our customers’ favour and hopefully that plays out in terms of improved confidence levels as well,” Guerin says.
However, he says the sector is still facing its challenges. “Not everything is looking up, there’s a few challenges within the sector,” he says.
“There is the conversation across the sector about what do tariffs look like for rural New Zealand, but until we see that detail, that’s just a conversation at the moment,” he adds. “Until we see that detail, we’re just getting on with life as the rural sector tends to do.”
Guerin says PGG Wrightson is “reasonably confident” for 2025.
He says there are more signs pointing towards improved farmer confidence and improved business outcomes for the retailer and its farmers than there are towards a negative year.
“There could be some movement in input prices for our farmers,” he says, adding that if those input prices were to rise, it could be a problem.
“There is a weaker New Zealand dollar. That does improve commodity prices for sales output, but it does result in some higher input prices for our farmer clients. We’ve seen that recently with some of the fertiliser companies bringing their prices up.
“Commodity cycles do come and go, but if you look at the average and you look at the market indicators right at the moment, there are a few things that would suggest this has a wee way to run at the moment, but it doesn’t take much to knock some confidence,” he concludes.
