Why has Landcorp bought another farm?

Landcorp has bought a 1270 hectare property near Feilding,  which was owned by Tawera Land, which is in receivership.

The sale was another step in the process of selling the former farming interests of bankrupt businessman Ken Thurston.

The sale attracted bids from about 30 groups, in what was the biggest land-holding sale by one owner in the district.

I wonder how the under bidders felt about being beaten by an SOE?

Meanwhile, Landcorp chief executive Chris Kelly said the corporation planned to invest “significant capital” in the Feilding properties bought from Tawera’s receivers. The land was earlier reported to lack fencing and water systems.

Landcorp already makes a pitiful return on capital.

The last annual report (to June 30, 2010)  showed the company made only a $10 million net profit from $1.52 billion of assets.

 Buying more land and pouring money in to develop it won’t do anything to improve that.

9 Responses to Why has Landcorp bought another farm?

  1. Deborah says:

    Well, what’s the average return on capital made by farmers, excluding unrealised gains such as appreciation in land values? Taxable profit would be the figure to use, because it would be good to exclude the effect of unrealised gains on the value of land.

  2. Sinner says:

    That’s why getting ACT’s list vote a high as possible is so crucially important for NZ. Selling Landcorp is just another of Brash’s commonsense policies that NZ so badly, badly needs.

    How much longer is stupidity like this allowed to continue?

    Yet it will all be over in November!

  3. Raymond A Francis says:

    I agree with Deborah’s point regarding return and it is worth remembering the majority Landcorp’s acerage tend to be the rougher end of the spectrum like Molesworth Station

  4. homepaddock says:

    Farmers have traditionally farmed for capital gain although a lot – especially sheep & beef – found that a combination of low returns and falling land values meant they went backwards in recent years.

    Low return on capital might be okay for private businesses but is this the best use of $1.52 billion of pubic money?

    Landcorp has got some tough country but it’s also got some very good land, including dairy farms.

  5. gravedodger says:

    Another example of intelligent people gaining power in areas that although requiring a measure of common sense for some reason leave the common part of it at the door, become engorged with the apparent power and proceed to make nonsensical decisions.
    Landcorp grew out of a bureaucracy that procured farmland, from parts of large stations or in some cases whole large properties, largely undeveloped, set up rudimentary housing, often shared supporting infrastructure, subsidised financial structures as rewards in settling returned servicemen following the world wars. The forerunner was the Dept of Crown Lands and was administered by local Land settlement boards comprised of officials from Min Of Ag, State Advances, and local Farmers. As the returned men were all settled the scheme was continued for civilians seeking to “have a place of their own” but it floundered from the ultimate bureaucratic mistake of striving for maximum efficiency with little regard for climate, soils, and what constituted an “economic unit”.
    The settlement phase died very suddenly when the ’84’ crash crippled most of the recently settled who were suddenly totally exposed to the market and many went bust and were “exited” with a small package of capital.
    Looking back I had a lucky escape when the Canterbury Settlement Board was settling civilians on the “Valetta” settlement inland from Ashburton in the sixties. The farms were around 350 acres, 2/3 border dyked, no prospect of irrigating the balance and geared to run on 1200 xbred ewes and replacements. A theory based, ultimate minimum “unit” that had absolutely no room to cope with any reverse as there was no option in the terms of settlement to vary that formula. The survivors of what were in effect “slum farms” were the better operators who acquired less able farmers adjacent block and gained an economy of scale, albeit still small. I claim I was lucky in that I was rejected from the ballot and I often think it was because at the interview I challenged the straight jacketed thinking reflected in the settler conditions by suggesting such radical concepts of using crops designed to enhance soil quality by raising humus and fertility levels by means other than the sheep farming model being promoted. The settled farms of stoney soils had been savaged in the leveling and Dykeing development that had buried a lot of the topsoils and exposed other soils devoid of humas and fertility but that still grew grass with a hydroponic system of nutrients and water. From memory I think I mentioned unmentionable things such as “grazing” and “fattening”, using the guaranteed grass growth for better returns.

    Sadly as we now know that didn’t stop the bureaucrats who had inherited, along with the as yet unsettled property portfolio, significant areas of land that would never have been settled such as ‘Molesworth’ that had come back to Crown Lands due to the ravages of Rabbits that had driven the owners off, and like topsy, “it just grew”. Disposal just isn’t mentioned in the song book at Landcorp today, it only has empire building as a song, and being dominated by troughers, I mean ex polies and public servants, the madness will continue.
    I did give support for the acquisition by Landcorp, of the Crafar assets, to enable an orderly disposal that was outside the brief of the receivers but only under the proviso that the Crafar properties and all the other marketable land be also disposed with leaving the SOE to manage those properties mostly in DOC hands to be managed by leasing and in partnership models where there was a small chance of preservation, by occupiers taking action in areas such as weed and pest control and basic maintenance and not at the often idealistic whim of people with clear access to the funds of the New Zealand taxpayers, to build an expanding empire of farmland in competition with the farmers who, along with the rest of Taxpayers are financing the opposition.

  6. Rimu. says:

    Low return on capital might be okay for private businesses but is this the best use of $1.52 billion of pubic money?

    What a strange comment for a right-winger to say. In your world, aren’t private businesses supposed to be more ‘efficient’ than government?

  7. homepaddock says:

    Rimu – I’m not advocating that as good business practice. But if individuals or private businesses choose to accept a low income witht he limits that places on them now in the expectation/hope of capital gain giving them enough in the future that’s their business.

    It’s quite different for an SOE which is using public money and providing a very low return when there is such pressing need for more money in the public coffers.

  8. Dgr says:

    Interesting comments however if you break up Landcorp and sell it off piece by piece there is only going to be a certain group of people who can afford them and take it from me there home address won’t end in new Zealand .

  9. nigel dally says:

    Well landcorp makes apitful on there return no wonder they make any return at all.A lot of their dairy herds have a high percentage of old cows in basic terms is the private sectors culls some of their staff dont have enough experience but have degrees and cost the company millions in human errors but these people get employed because the are cheaper than the experienced person

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