Calls for Efficiency: Landcorp Under Scrutiny as Profits Drop

• Minister for State-Owned Enterprises, Paul Goldsmith, has expressed dissatisfaction with the performance of state-owned farming company Landcorp, following a significant drop in half-year profits from $15 million last year to $3 million.
• Landcorp’s CEO Mark Leslie remains optimistic, citing potential improvements in farm operations and ongoing recovery efforts from Cyclone Gabrielle’s impacts.
• Amidst calls for efficiency, an agribusiness accountant suggests selling Landcorp could inject $2 billion into government coffers, advocating a gradual sell-down to local investors.

The New Zealand government has signaled a need for heightened efficiency and profitability from Landcorp, the state-owned farming entity, after a concerning drop in its financial performance. Minister Paul Goldsmith highlighted the issue following a recent meeting with Landcorp executives, noting the company’s profits had plummeted to $3 million in the last half-year, down from $15 million in the comparable period.

Despite these challenges, Landcorp CEO Mark Leslie described his discussions with Goldsmith as constructive, focusing on strategies to enhance farm operations and revenue.

Leslie emphasized the ongoing efforts to optimize farm performance through improved pasture management, reduced stock wastage, and better reproductive outcomes. He also pointed out the financial burdens from recent cyclone damage and projected a recovery with a full-year profit forecast between $9 million and $19 million.

However, the dialogue around Landcorp’s future includes stark assessments from financial experts like Canterbury-based agricultural accountant Pita Alexander, who argues that the company has outlived its original purpose.

Alexander proposes a phased sell-off of Landcorp’s assets to New Zealand farmers or local private investors, a move he believes could raise about $2 billion for the government. He emphasized that transitioning ownership to the private sector could lead to more efficient operations, suggesting that private family-run farms tend to perform better in terms of profit-making.

While the Minister has ruled out immediate sale plans, the government’s continued scrutiny of Landcorp underscores the broader expectations for state enterprises to match or exceed the efficacy and profitability of their private counterparts.