Landcorp to sell nine sheep and beef farms spread over 14,000 hectares
Landcorp is about to sell nine of its 140 farms as part of "reconfiguring its portfolio", but the sales are not a sign the state-owned enterprise is under financial stress says chief executive Steven Carden.
Six of the properties are in the South Island and three in the North. They are all sheep, beef and deer farms, and iwi will be offered first right of refusal on the properties. All up they amount to just over 14,000 hectares.
Ngai Tahu stand to be the biggest beneficiary if it indicates an interest in any of the six South Island farms. The iwi already manages 52,000 ha of rural land in Canterbury, the West Coast and Otago.
They include dairy properties near Christchurch and 36,000 ha over three high country stations at Lake Wakatipu, farmed as sheep, deer and cattle breeding operations.
The six South Island farms are Jericho (1353 ha) and Mt Hamilton (4769 ha) in Southland, and Copper Rd (1508 ha) in Otago. On the West Coast there are three: Raft Creek (482 ha), Burkes Creek (1019 ha), Mawheraiti (1448 ha), part of Cape Foulwind.
In the North Island they are Waiteti (911 ha) near Mangakino, Rangedale (1576 ha) in north Wairarapa, and Tangimoana (1032 ha) in Manawatu.
Landcorp said the decision to sell was made in May and staff were told then in order to give them time to plan their futures.
Since then the company has been checking valuations and talking to iwi and the Office of Treaty Settlements (OTS).
It was about to give formal notice to the OTS and Ngai Tahu.
"OTS have three months to decide whether to buy any of the three North Island farms; Ngai Tahu has one month to determine interest in the South Island ones," a Landcorp spokesman said.
"Depending on the response we'll then be looking to engage sale agents. Realistically, we might see a couple of South Island farms on the market by the end of this year," he said.
Carden said there was no element of financial duress involved in the decision. Its latest result for the 2015-16 year showed it recorded a net profit after tax of $11.5 million, largely thanks to a $7.4m profit on land sales.
It reported a net operating loss of $9.4m on revenue of $209m and for the second year in a row did not pay a dividend to the Government.
Carden said the sales were part of a three-pronged strategy. They were to exit from arrangements with parties that were not working, such as the sharemilking contract with Shanghai Pengxin; to focus on developing the Pamu brand with products like sheep milk; and to free up capital for investment.
Most of the land that the farms were on was "good" as opposed to marginal.
"It's a question of reconfiguring our portfolio. Over the last 30 years Landcorp has bought and sold 140 farms," Carden said.
Labour Primary Industries spokesman Damien O'Connor was unconvinced the sales were not due to financial pressure.
"I'm concerned they are selling assets at a low point of the market, and when they say size and scale is an important aspect of their business," O'Connor said.
Ngai Tahu were asked for comment but have not yet responded.