Synlait's back
OPINION: After years of financial turmoil, Canterbury milk processor Synlait is now back in business.
Facing another year of low payout, Landcorp says it is shifting to lower intensity systems — reducing supplementary feeding and instead focusing on grass.
Chief executive Steven Carden told Dairy News the change to farming systems will bring about an "appropriate stocking level".
"We are using this downturn in prices as an opportunity to drive a more cost efficient business. It is a learning platform for us as for the entire dairy sector. We'll come out a stronger business financially as a result, but at a $4.45 payout no-one is going to be making much money."
Carden says the change in farm systems has in the last two years cut Landcorp's production costs by at least 15%, and savings are continuing.
"We have substantial cost reduction underway with the rollout of an online procurement system that will take about $10m costs out of the business in the next five years.
"We also have our dairy group focused on a LEAN ['just in time', minimising waste] manufacturing system developed by Toyota. This is designed to drive efficiencies by developing new processes to streamline a lot of our dairy operations." The outcome is shorter milking times and staff finishing work earlier.
Carden says the low payout this season is prompting Landcorp to scrutinise all capital expenditure so that projects achieve cost savings or greater revenue.
As part of Landcorp's value add strategy under the PAMU brand, it is planning to set up two new organic dairy farms next year – one on the North Island central plateau and the other in Manawatu.
"The organic farms are being developed to produce product mainly for export but we are also exploring local opportunities.
"There are people sceptical about organics in respect of the science, but you can't dispute -- particularly in dairy -- that organics seems to attract substantial premiums. Whenever I go into a supermarket I see organics attracting a significant premium."
In value add, Carden says Landcorp is producing winter milk for Miraka and is tied into the A2 milk programme with Synlait.
The challenge of a poor punt
Finance Minister Bill English told the recent DairyNZ Farmers Forum that Landcorp will not get any new capital to spend on its farms, as the Government imposes on SOEs a more rigorous process for new investment.
English described Landcorp as a poor investment, facing the same problem as other dairy farmers – low milk payout.
"It is dealing with a significant drop in earnings against a base of debt which will be a stretch to manage," English told 800 farmers.
"It's a low returning investment; we have $1 billion dollars tied up in that organisation and it pays taxpayers very little and in some years nothing, so it's a poor investment."
Landcorp is bracing for an $8 – $12m loss this year, largely reflecting recent downward revisions to forecast milk payments.
Despite the loss, the Government is committed to retaining Landcorp on its $270 billion balance sheet.
Newly elected Federated Farmers meat and wool group chair Richard Dawkins says he will continue the great work done his predecessor Toby Williams.
Hosted by ginger dynamo Te Radar, the Fieldays Innovation Award Winners Event put the spotlight on the agricultural industry's most promising ideas.
According to DairyNZ's latest Econ Tracker update, there has been a rise in the forecast breakeven milk price for the 2025/26 season.
Despite the rain and a liberal coating of mud, engines roared, and the 50th Fieldays Tractor Pull Competition drew crowds of spectators across the four days of the annual event.
Nationwide rural wellbeing programme, Farmstrong recently celebrated its tenth birthday at Fieldays with an event attended by ambassador Sam Whitelock, Farmers Mutual Group (FMG), Farmstrong partners, and government Ministers.
Six industry organisations, including DairyNZ and the Dairy Companies Association (DCANZ) have signed an agreement with the Ministry for Primary Industries (MPI) to prepare the country for a potential foot and mouth outbreak.
OPINION: It's official, Fieldays 2025 clocked 110,000 visitors over the four days.
OPINION: The Federated Farmers rural advocacy hub at Fieldays has been touted as a great success.