3 Apr 2024

Govt urged to sell farming body Pāmu into private ownership

7:22 pm on 3 April 2024
The fences at Pāmu's Edenham farm has been damaged by Cyclone Gabrielle.

Cyclone Gabrielle in February 2023 damaged a number of Pāmu farms. Photo: Supplied / Pāmu

An agribusiness accountant says selling Pāmu could boost government finances by $2 billion.

The state-owned farming company - previously known as Landcorp - runs 110 farms around the country, with a mix of dairy, sheep and beef, deer and forestry.

Last month, Minister for State Owned Enterprises Paul Goldsmith told Pāmu the company needed to lift its game, but said selling the company was not on the government's agenda.

But agribusiness accountant Pita Alexander said Pāmu had passed its use-by date and outgrown its original purpose.

Pita Alexander.

Agribusiness accountant Pita Alexander. Photo: Supplied/Alexanders

He suggested the government sell down Pāmu's assets over a number of years to New Zealand farmers or local private investors.

"This suggestion has been referred to in previous years. A way back, Landcorp was fit for purpose; right now, they're not fit for purpose.

"They own 83 farms, manage another 29. If the private sector owned these farms, they would operate them more efficiently than Pāmu."

Alexander said when it came to running a for-profit business, it was hard to beat someone who had skin in the game - like most family-run farms.

He said the assets had been well-managed, and in the past were useful for technology transfer and developing new ideas, but the return on investment was now too low to make the company viable.

"It has often been suggested that it acts for a lot of industry good and it has done in the past, and it maybe still [will], but that's not a good enough answer for the government, which has $2 billion involved.

"When the government has got $2 billion involved, they need to think what's the return and the return here for many years now has been poor - [there is] no other way of describing it."

If the government ever needed $2 billion to spend in better areas, now would be the time, he said.

Alexander suggested a gradual sell-down of assets.

"There will be surveying involved and almost certainly some capital costs to achieve the splits referred to, but the units being sold will need to be soundly standalone units.

"Some units could be leased to young [New Zealand] couples - they would need to purchase the stock

and plant, but lease the land for, say, a six- [to] nine-year period on a sensible market-related basis."

He suggested sales should all go to individuals, rather than large corporates, and that the whole sell-down could take up to 10 years.

As a rule, New Zealanders did not like selling public assets, but sometimes such actions were a "no-brainer" and this was one of them, Alexander said.

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