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Speaker 1: The Rural Report with MSD Animal Health home of selve

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Speaker 1: XM plus b ends it's only salmonella vaccine.

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Speaker 2: Jamie Mackay, Host of the Countries with a solo Jamie.

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Speaker 1: Hello, Heather. I don't think you'd catch nicol or Willis balling,

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Speaker 1: would you?

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Speaker 3: Nah?

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Speaker 2: I don't think so. No, I think, And you've just

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Speaker 2: struck on something there that we've been discussing in the shows.

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Speaker 2: Takes a certain woman to cry, I think. But listen,

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Speaker 2: tell me what's your understanding of why Land Corp. Gets

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Speaker 2: into funny things like milking deer. Are there rules that

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Speaker 2: force them to do that or do they just do

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Speaker 2: it because I think it's a fun idea.

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Speaker 1: No. I think they've kind of got a mandate. And

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Speaker 1: I don't know if this is a written mandate or

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Speaker 1: in legislation to be a bit of a guinea pig

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Speaker 1: for farming for the nation. And they are doing some

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Speaker 1: good stuff, they're probably doing some stuff I disagree with.

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Speaker 1: And I think my good friend Grant McCallum, Laura told

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Speaker 1: me he's suggesting they should be having a profit at

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Speaker 1: two hundred million, which is what ten percent of the

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Speaker 1: ten percent return on their asset value I think nearly

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Speaker 1: two billion. I think Grant might be being a wee

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Speaker 1: bit tough on them there, simply because there would be

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Speaker 1: a number of farming ventures. In fact, not many would

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Speaker 1: make a ten percent return on capital invested.

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Speaker 2: What is a standard return, let's say on assets? Right,

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Speaker 2: a return on assets? What would be standard?

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Speaker 3: Oh?

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Speaker 1: Look, I mean she's five or six percent. I would

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Speaker 1: say if you could do that in farming, you would

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Speaker 1: be doing pretty well. I mean you might get that

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Speaker 1: in a dairy farming operation. The kiwi fruit might be

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Speaker 1: a bit higher, but sheep and beef traditionally have been

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Speaker 1: lower than that, at like two or three percent.

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Speaker 3: But Palmu or Land Corp.

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Speaker 1: I get confused, what they call themselves these days are

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Speaker 1: way below that, and there is a question on whether

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Speaker 1: they're relevant and whether they're a good use of our

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Speaker 1: tax payer money.

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Speaker 3: But there is an issue with selling them.

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Speaker 1: Of course, if we did sell Parmu, it would effectively

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Speaker 1: flood the landmarket and probably make farmers across the board

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Speaker 1: properties less.

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Speaker 3: But certainly at the moment.

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Speaker 1: They would argue they're having a better a year this year,

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Speaker 1: but I would question their farming profitability and weather during

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Speaker 1: these tough times and I just heard you talking about

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Speaker 1: deficits and what have you. Whether the government needs to

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Speaker 1: be in the business of farming, because let's face it,

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Speaker 1: the government isn't as good at doing business as private enterprise.

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Speaker 1: So ultimately, I don't think we should be in the

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Speaker 1: business of land corpor palmu. Remember it was lands and

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Speaker 1: surveys back in the days, and they used to settle

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Speaker 1: young farmers on ballot blocks. Maybe they need to go

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Speaker 1: back to something like that. I don't know, but even

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Speaker 1: that heather is effectively a subsidy for the farmers who

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Speaker 1: were settled.

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Speaker 2: You worried about the dairy price.

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Speaker 1: I've gott to weave a skin in the game myself,

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Speaker 1: and you know, like commodity prices are always cyclical, and

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Speaker 1: ten dollars where we are at the moment and where

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Speaker 1: we will finish up for this season when they finally

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Speaker 1: announce it in September, it'll be ten dollars. It might

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Speaker 1: have be we but more is a really good price.

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Speaker 1: And I just think you can't defy gravity forever. I'm

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Speaker 1: involved in a dairy farming partnership and I know that

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Speaker 1: we fixed AOD of thirty percent of our milk at

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Speaker 1: nine point fifty and I was happy with that. So

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Speaker 1: I'm I'm a big fan, Heather of taking the taking

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Speaker 1: the things you can't control into your own control eye

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Speaker 1: fixing milk price and fixing interest rates, because it cuts

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Speaker 1: out a couple of the things you can't control, because

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Speaker 1: you can't control international commodity prices and you can't control

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Speaker 1: the weather when you're farming. So look, I did hear

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Speaker 1: expert comments commentary yesterday from someone on ENZX saying, no,

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Speaker 1: this is just a bit of a blip. It's this

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Speaker 1: time of the year when there's a lot of milk

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Speaker 1: coming on in the Northern Hemisphere in there and Fonterra.

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Speaker 1: I spoke to Anna Pellore, the chief operating officer on

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Speaker 1: yesterday's show, and she said to me, no, we're still

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Speaker 1: good with ten bucks. So they probably know more about

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Speaker 1: it than me. But you know, a bird in the

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Speaker 1: hands worth two in the bush.

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Speaker 2: Jamie, good to talk to you. Look after yourself, Jamie McKay,

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Speaker 2: Host of the Country. Look, I'll just talk you through

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Speaker 2: return on assets right so at the moment, the return

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Speaker 2: on asset that you would get this is basically what

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Speaker 2: we were just talking about, Jamie. And know how much money.

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Speaker 2: How much money these guys make, given that they've got

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Speaker 2: twelve assets of two billion dollars as Land Corp. The

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Speaker 2: standard return in the good years a return on assets

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Speaker 2: for a dairy farm would be six to eight percent.

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Speaker 2: Some say they can get it up to twelve percent,

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Speaker 2: but let's just let's be conservative and be fair. So

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Speaker 2: you're looking at six to eight percent, and this is

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Speaker 2: in the good years, and we are in the good

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Speaker 2: years right now, right, and sheep and beef farms you

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Speaker 2: should be in the good years doing about five percent.

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Speaker 2: So dairy and remember Land Corp's doing all of this

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Speaker 2: right So, sheep and beef good year you should be

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Speaker 2: getting about five percent. Dairy you should be getting about

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Speaker 2: eight percent. Land Corp Is getting about three percent. So

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Speaker 2: they are quite obviously underperforming and can do better. How

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Speaker 2: much better, I don't know. Probably don't hold out hope

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Speaker 2: for the slot.

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Speaker 3: I think for more from hither Duplessy Allen Drive. Listen

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Speaker 3: live to news talks.

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Speaker 1: It'd be from four pm weekdays, or follow the podcast

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Speaker 1: on iHeartRadio