Landcorp scales back Waikato dairy plans

New Zealand’s biggest farmer, Landcorp, has decided to pull out of dairying at the Wairakei Estate near Lake Taupo just a week after it posted a net operating loss in the first half of its financial year, blaming the dairy decline.

 However, the state-owned farmer says it will revise its land-use programme at Wairakei Estate near Taupo “with the aim of lifting both the financial and environmental performance of the farming operation.”

Landcorp says it will significantly reduce dairy’s footprint from the original plans and instead include alternative uses for the 14,500ha of former forestry land it leases from Wairakei Pastoral (owned by Rich Listers and Auckland property developers Ross Green, Mark Wyborn and Trevor Farmer).

Under the new plan, the land leased from Wairakei Estate would be used for dairy (irrigated and dryland), dairy support, sheep milking and other potential uses being investigated.

The land-use changes reduce the risk of phosphate and sediment loss and bacterial contamination and should result in a significant drop in the levels of nitrogen leachate. It is also expected to improve the profitability of Landcorp’s development, located 15 kilometres from Taupo.

Landcorp chief executive Steven Carden, says Landcorp’s strategy is to connect the food New Zealanders produce on their farms with high-value consumers around the world under the new Pāmu brand.

“To do that, we need to exceed their expectations about how that food is produced, whether it is the standard of care for the animals, the people who work on the farm, or the environmental impact of producing that food.

“Landcorp’s new direction includes a focus on developing new products such as sheep milk. These new products are not only niche and premium, they also require new farm systems that meet growing consumer expectations of their food. We would like the Wairakei Estate to become the centre of such innovation as Landcorp looks to expand in these new areas.”

Wairakei Estate currently comprises 13 dairy farms with 17,000 cows over 6400ha.

The new land-use model will see the eventual number of dairy farms on the Wairakei Estate reduced from the 39 farms originally planned when the estate is fully developed.

Mr Carden says Landcorp’s scientific modelling, done in conjunction with external environmental and farm systems experts, indicates the new land-use programme and smaller dairy footprint will result in a significant reduction in the level of nitrogen leached.

The amount of capital invested in the project is expected to be approximately $25-35 million, lower than originally planned.

Landcorp’s dairy support operations such as rearing young stock and winter grazing will be self-sufficient and be run largely within the confines of the estate rather than at other farms.

Landcorp plans to invest in covered stand-off areas on the estate to aid the wintering of cows to protect animals and pasture and ensure the option of delivering year round milk for its customers.

“This will also protect against over-grazing in the summer, improve the survivability of pastures, provide shade for cows and ensure we can capture more nutrients at key times of the year and stop it leaching into the waterways,” Mr Carden says in a prepared statement.

“We’re acutely aware that we do not want to create any legacy issues for sensitive water catchments in the communities we operate in, anywhere around the country. The expectations that consumers and the public, in general, have about how their food is produced is changing quickly, so we need to continually rethink our farming practices to keep up with them.

“This decision makes environmental and economic sense. We’re working hard to ensure our farming system is profitable and productive for the right reasons and reflects our commitment to being open and transparent about our operations.

“We’ve invested significant time and energy to explore an alternative land-use programme for Wairakei Estate.

“In arriving at this decision, Landcorp consulted with a wide range of dairy and agri-business experts along with our own Environmental Reference Group, a select group of external environmental experts that Landcorp consults on its farming activities. We also worked with the landowners who share our commitment to creating a large-scale farming enterprise every New Zealander can feel proud of.”

Ross Green, one of the owners of the estate, welcomed Landcorp’s new plans for Wairakei Estate, in the same media statement.

“From the outset, we wanted the estate to be a showcase for environmental protection, economic development and future-focused farming. This proposed land use has our support and we look forward to continuing to work with Landcorp to ensure the development is an exceptional exemplar for the agricultural industry.

Dr Mike Joy, a freshwater ecologist at Massey University and outspoken critic of dairy farming’s impact on New Zealand waterways, believes Landcorp’s decision represents a significant win for the environment.

“As a member of Landcorp’s ERG, I’ve challenged Landcorp on its dairy programme at Wairakei. It is pleasing to see them proactively changing tack on the development to significantly reduce its environmental footprint.”

Federated Farmers says it is also pleased to see Landcorp taking a proactive approach to reducing nutrient pressure in the broader Waikato catchment and reducing the amount of water sourced for its activities, according to its president, William Rolleston.

Last week Landcorp said it had expectations of a bigger loss for the full year, reflecting a decline in milk prices. Following the net operating loss of $8.9 million in the six months ended December 31, compared with a profit of $1 million in the year-earlier period.

Revenue fell 5% to $108.8 million as milk revenue slid 22%, it said.

Landcorp forecast a full-year net operating loss of between $8 million and $12 million.

Follow NBR on Facebook, Twitter, LinkedIn and Instagram for the latest news and free on-demand audio from NBR Radio.