New Zealand’s finance minister, Bill English, has said he is not ruling out the possibility for the partial privatization of state-owned farmer, Landcorp.

 

Following the sharp decline in global dairy prices, the company’s debt load has come under scrutiny, although its position has not seriously changed since its last public reporting.

 

The company posted shareholder funds of $1.5 billion and total liabilities of $360 million, however it posted a profit of only $1 million in the second half of 2014 – down from $13 million in the second half of 2013.  Landcorp owns 137 farms totaling 158,394 hectares and manages an additional 226,692 hectares of agricultural land. It has a total of 77,500 head of dairy cattle, 580,000 sheep, 82,000 head of beef cattle, and 105,000 deer.

 

The Landcorp board has been studying ways to raise capital and Mr. English stated that the company may sell off farms to improve its balance sheet, stating he “would expect Landcorp to sell off farms if that’s part of maintaining the sustainability of the business.”

 

As of yet Landcorp has not requested capital from the government, but the group is in contracts to develop dairy land on the North Island and will need to find the capital to support the projects.

 

Some government officials are concerned that Landcorp farms could be sold to offshore buyers that would not add value to the purchase, and who would be attracted by New Zealand’s low dollar and domestic dairy situation. This has led to calls for overseas buyers to be stringently tested to determine if they would be able to realize better returns than New Zealand farm managers.