The government has been advised to sell the large state-owned enterprise Landcorp Farming, in a strategic review released under the Official Information Act.
Photo: courtesy Beef and Lamb NZ
The independent financial consulting firm Deloitte did the review in 2014 and under the Act the report has been released to agricultural markets publication AgriHQ Pulse.
The 100-page report from Deloitte states the asset-rich, cash-poor nature of farm ownership is not well matched to the government's fiscal objectives.
It shows that from 1987 to 2001, Landcorp made total operating profits of $144 million and paid $314m of dividends, partly funded by asset sales to the Crown.
After 2001 Landcorp branched out from sheep and beef and into dairying and deer farming.
It now has about 140 farms, which were last valued at $1.6 billion, but in the past two years it has not paid a dividend to the government.
AgriHQ reported that during the period to 2013 Landcorp spent about $180m on capital investment and moved to align dividends with operating profits, with capital from land sales reinvested principally into the development of dairy farms.
AgriHQ said that this was creating tensions with its government owner, which prefered dividends to be paid before reinvestment and growth in the business.
The report said there was no compelling reason for Landcorp to be in Crown ownership and private ownership could be beneficial.
It said another option was the sale to New Zealand investors such as the NZ Super Fund with a management contract.
