Butt out, Jones

Politician Shane Jones says his position as Associate Minister of SOEs, including Landcorp (Pāmu), gives him the right to have a crack at the quality of Fonterra’s farmer governance.

He would do well to look in his own backyard, or ministerial portfolios, for evidence of underperformance before attacking a privately owned company.

Landcorp just posted a net loss after tax of $11 million, quite a turnaround from the $34m net profit last year. Jones is noticeably quiet about this, preferring to draw attention to his favourite whipping horse, Fonterra.

Landcorp says the loss was due largely to a $22 million “fair value loss” on the valuation of livestock and forestry assets at June 30, 2019.  The comparable result for 2017-18 included a $25m “fair value gain” on biological assets.

Chairman Warren Parker and chief executive Steven Carden said net profit suffered from the impact of the valuation write-downs. Revenue was impacted by lower milk production due to drought.

“Like other New Zealand farmers, Pāmu saw relatively high dairy and red meat prices through 2018-19 which were offset by weather extremes lowering production volumes,” said Parker. 

“Most notably, summer and autumn rainfall was significantly below average across the North Island and parts of the South Island.”

Total revenue was down 2.4% to $241m (2017-18: $247m)  because of lower milk, livestock and carbon credit revenues. Carbon credit revenue of $3m from a recent allocation of carbon units is less than half of that received last year ($8m). 

Somewhat ironically, the company has declared a special dividend of $5m, largely due to a one off gain made on the sale of the company’s shares in Westland Dairy Cooperative. Jones has also attacked the quality of governance and recent sale of Westland.

Pamu’s poor result on behalf of its owner, the taxpayer, deserves an explanation from the ministers responsible, especially given the ongoing poor return on capital of this state owned asset. 

Don’t expect one from Jones. Much easier to use Landcorp’s shareholding in Fonterra as an excuse to continue his attack on a farmer owned, private asset and use his power to issue veiled threats about forcing changes to DIRA.

Fonterra is being held to account by its shareholders.

And if accountability is the call, how about running the rule over outcomes from the Provincial Growth Fund — Jones’ personal $3b slush fund?