The Government’s farming company has posted the strongest operating result in its history, two years after it was losing money and being talked about as a candidate for sale.
Pāmu, the state owned enterprise still legally registered as Landcorp Farming Limited, reported a net operating profit of $113 million for the year to 30 June 2026. That is up 131 percent on the $49 million it made the year before, and it is the highest figure the company has recorded. Net profit after tax, which includes revaluations of land and livestock, came in at $160 million against $120 million in the 2025 financial year.
The company paid the Crown $25 million in dividends during the year and has flagged a further $15 million to be paid in early 2027. It also cut net debt by $36 million. Return on equity rose to 9 percent from 7.3 percent, according to the results announcement released on 20 August.
Pāmu runs about 112 farms covering roughly 360,000 hectares, which makes it the largest pastoral farmer in the country by a wide margin. Its portfolio spans dairy, sheep, beef, deer, forestry and horticulture, so its results tend to read as a rough summary of what the whole primary sector is doing in any given year.
What it is doing this year is earning a lot. Global dairy and red meat prices have run hard through 2025 and 2026, and a farmer of that size feels the lift immediately. Chief executive Mark Leslie was blunt about how much of the result came from the market and how much came from the farms.
“Price has certainly helped, but our progress goes well beyond the market cycle,” Leslie said.
The production numbers support that. Pāmu produced 15.8 million kilograms of milk solids, up 1.8 million kilograms on the previous year, while its dairy cost of production fell 4 percent to $7.06 a kilogram of milk solids. Livestock production reached 22 million kilograms of product measured as carcass weight equivalent. The livestock cost of production rose 7 percent to $4.91 a kilogram of liveweight, though that is still down 14 percent on where it sat in 2023.
One of the quieter shifts is in what happens to calves born on the dairy platform. Pāmu reared 72 percent of its dairy calves as beef animals, up from 65.5 percent a year earlier and 49 percent in 2023. Rearing a dairy calf for beef rather than culling it turns a cost into an income stream, and with beef schedules at the levels they have been, that decision has been paying for itself.
“This is a fantastic result for Pāmu, and it belongs to our people,” Leslie said. “It reflects several years of hard work across our farms and teams improving how we farm, making good decisions every day, keeping a close eye on costs, and getting more from the land and animals in our care.”
The result matters more than a normal company announcement because of where the company has been. Pāmu lost $26 million in the 2024 financial year and $9 million the year before that, blaming falling livestock prices, high interest rates and the cost of repairing farms hit by Cyclone Gabrielle. The cyclone damaged 24 Pāmu properties, with seven on the East Coast of the North Island badly affected by slips and destroyed access tracks.
Those losses fed a long running political argument about whether the Crown should own farms at all. The ACT Party has campaigned for years to have Pāmu sold, arguing the taxpayer is carrying a business that private farmers run without state help. Associate Finance Minister David Seymour has put a rough figure of $2 billion on what the portfolio might fetch.
The pressure has not only come from ACT. In a letter to the board in mid 2025, State Owned Enterprises Minister Simeon Brown noted that Landcorp’s five year average total shareholder return was 2.6 percent and its operating return on equity was 0.4 percent, and that the company had not covered its cost of equity for at least a decade. The board was told to stop investing in, and to dispose of, non land assets and business units that could not clear that hurdle. Pāmu has been working through that list since, including an attempt to sell its Spring Sheep milk venture that did not find a buyer at the price it wanted earlier this year.
Brown was warmer this week. “Improved profitability, lower debt, stronger productivity, and increased returns to shareholders are all positive indicators that the business has made significant positive change,” he said.
A 9 percent return on equity is a genuine turnaround for a business that spent a decade below its cost of capital. Whether it holds is the open question, and Pāmu is not pretending otherwise. The company forecasts net operating profit of between $77 million and $87 million for the 2027 financial year, a drop of roughly a quarter to a third on what it has just banked.
Two things sit behind that forecast. The first is fuel and freight, with instability in the Middle East continuing to push input costs up. The second is the weather. Forecasters expect El Niño conditions, which in New Zealand typically means drier easterly affected country on the East Coast and stronger westerlies, and which historically has meant drought risk for exactly the sheep and beef districts where Pāmu holds a lot of land.
“Commodity prices, input costs, climate events and global uncertainty can all change quickly,” Leslie said. “Lower debt and a stronger financial position help us manage uncertainty.”
He added that the company expected “the operating environment to remain uncertain and more expensive than prior years”.
Pāmu also said it now has Farm Environment Plans in place across all of its farms, a requirement it has been building towards for several years.
For the Crown as owner, the practical read is straightforward. A company that was returning almost nothing is now paying dividends and retiring debt, and it is doing so in the middle of the strongest commodity run in years. The harder question, which the next Parliament will almost certainly be asked, is whether a good year at the top of the cycle settles the argument about ownership or simply makes the asset more attractive to sell.
Full coverage of the result is available from RNZ and Farmers Weekly.
Should the Government stay in the farming business, or is a record year the right moment to sell? Have your say in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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