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The country's biggest farmer is pulling out of dairy and moving into sheep milking.
In a move that illustrates the current parlous state of the dairy industry, the country's biggest farmer is pulling out of dairy and moving into sheep milking.
As part of its shift away from dairying, Landcorp's arrangement to develop further dairy farms in the Central North Island for a private investor, Wairakei Pastoral, is being reviewed.
The state-owned farmer's strategy will be revealed in the coming weeks, chief executive Steven Carden told Rural News.
"What this is going to show – in general terms – is to slow down the amount of dairy development we are looking to do nationally. We have finished the dairy development work in Canterbury and we may do a small amount of dairy development work in a couple of discreet areas – only where the economic and environmental hurdles can be overcome," he says.
Carden hints that the four Wairakei Pastoral dairy farms coming on line may not go ahead in quite the way originally envisaged.
The move away from dairying – a strategy which Carden says is supported by the Government – is aimed at improving cash flow and reducing exposure to the very highs and very lows of the global milk price. He says this exposure puts real pressure on Landcorp's bottom line and is not conducive to long term investment.
"We want to get away from that."
Sheep milking is one of several new initiatives and Landcorp wants to position itself as a producer of high-earning, value-added products. Its new sheep milking operation, near Taupo, has attracted both local and international attention.
"We like the environmental footprint for sheep milking," Carden told Rural News.
"What we particularly like is that we are developing a product which first of all tastes great.
"It's got some pretty amazing nutritional characteristics and it's being really carefully developed and marketed in a way that's going to position it as a true, premium brand," he says.
"Secondly, what we like about it is there is a lot of IP that is being developed in building the farm systems – particularly driving the yields that are required and to produce at the scale that we need to meet the demand."
Carden says if he could build businesses that had those two characteristics each time – the demand side and the supply side – that would make Landcorp a very, long-term, sustainable profitable company.
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