The Hound's not-so favourite government department, the state-run farmer formerly known as Landcorp, has proven that it is not just a poorly-performing entity but that it can’t even pick winners with the current Government policy.
Total revenue from operating activities increased 37% to $241.7 million.
The growth in revenue reflected a recovery in prices as favourable weather boosted production volumes for dairy, sheep and beef products. Landcorp's expansion of dairy production across the country combined with record milk solid prices contributed to the strong performance.
Landcorp CEO, Steven Carden, says various business decisions taken in 2013/14 meant Landcorp could approach the coming year with confidence, despite the prospect of lower prices.
"We're very focussed on initiatives to raise productivity and efficiency across our operations.
"We have strengthened our productive capacity and secured economies of scale through new partnerships with landowners like the Hauraki Collective, introducing a state of the art Farm Management software system, and a company-wide initiative to reduce costs and streamline decision-making at the farm level.
"We've also made solid gains in feed production per hectare and have achieved a 10% lift in dairy production" he says.
Landcorp's total shareholder return (or comprehensive income) was $115.9 million compared with a $1.5 million loss the previous year. The increase was mainly due to a $36.7 million unrealised gain in the market value of livestock and a $67.6 million revaluation gain on land and improvements.
High dairy prices and success with partnerships for expanded production increased milk revenue by 70% to $129 million.
Expenses for 2013/14 increased 15% to $207 million due to the start of the sharemilking arrangement with the Shanghai Pengxin Group and expansion of the Wairakei Pastoral Dairy conversion programme. Purchased feed also increased as Landcorp increased production to exploit high forecast milk prices and to offset the effect of the dry conditions experienced in the North Island in early autumn
Carden says, despite the bottom-line impact of the projected fall in milk prices for 2014/15, Landcorp is well placed to continue to record sustainable profit growth over the medium term.
"In addition to our productivity improvements, we have a strategy focused on significantly improving our environmental footprint and driving a big lift in the calibre of our people and their safety on-farm.
"In the medium and long term, we will be taking significant steps to reduce our exposure to commodity price cycles. In part, that means maintaining a diverse portfolio of species farmed - including a renewed emphasis on expanding our red meat production in our lamb, beef and venison categories. This will involve collaborating with other farming groups, such as iwi, interested in joining our contracts or establishing new ones with us.
"We also plan to ensure our products are targeted at niche markets where we can have a direct relationship with the customer," he says.
Landcorp will pay the shareholder an increased dividend of $7 million for 2013/14. Debt has been reduced by $56 million to $172 million over the course of the year, following the sale of various farms in the North Island.