The state’s farming business Landcorp is paying a dividend of $27.5 million compared with $18m last year.
That is an impressive figure in isolation but not in relation to the company’s
$1,663,000 $1,663,000,000 of assets.
A return of only a little more than 1.6% on assets isn’t unusual for farms but it is an appalling return for a State Owned Enterprise.
Landcorp isn’t one of the assets National is proposing for partial sale. Nor should it be. The protracted sale of the Crafar farms show how difficult it would be to sell as going concern and the company would be a very bad buy – it is forecasting a dividend of only $15m next year..
But having $1,663,000 tied up in an operation which provides such a poor return on investment is not good use of public money.
The best strategy isn’t sale of the company as a whole but a gradual sale of the farms leading to the eventual winding up of the company.