Europe's disaster brings warning

By TOM CLARKE

While this country's primary industry looks to prosper from Europe's animal health woes, it must be vigilant at home, says the man who is to head what is said to be the world's biggest farming operation.

Chris Kelly takes over as chief executive officer of Landcorp next Monday, replacing Neil Prichard as head of the state-owned enterprise which owns 112 farms totalling 386,000ha which carry about 1.5 million stock units.

New Zealand is seen as a "rather nice and pure source of fresh meat and particularly of dairy products," he says.

And while it is free from disease, he believes the industry here still needs to demonstrate to other countries that it can trace processed animals back to their farm in the unlikely event of an outbreak, or if higher than acceptable chemical residue levels are found.

It needs, too, to be vigilant against such things as nitrogen runoff from pasture damaging the environment.

"You're never perfect and there are always areas that can be improved, and that's certainly what we're striving to do at Landcorp."

Mr Kelly says Landcorp is the world's biggest farming operation, bigger even than Australia's largest sheep stations and Tasman Agriculture, the next biggest holding in New Zealand.

The company had revenues of $100 million last financial year and earnings before interest and tax of $18 million, excluding asset sales of $7 million.

It is benefiting from strong the growth in international commodity prices which he attributes to the recent World Trade Organisation round of negotiations which has seen a run down in animal stocks in the United States, and to the bovine spongiform encephalopathy (BSE), or mad cow disease, in Europe.

BSE - and now the foot-and-mouth outbreak in Britain - could be beneficial, long-term, to this country's meat trade, he believes.

"The BSE issue has helped us because we can source beef, but also because many of the calf-rearing units in the European Union, that used to use animal feed, now use milkpowder. That has helped us as well."

Mr Kelly says it is unusual for New Zealand to enjoy high international commodity prices in US dollars and a low New Zealand-US cross rate.

The convergence means that we are getting higher prices in US dollars which, when converted back to New Zealand dollars, provides even better returns.

Mr Kelly believes the strong commodity prices will continue at least into next year.

"The international commodity agricultural scene is cyclical and it would be unfair of me to suggest that the current bonanza will continue indefinitely, because it won't," he says. "But because of the short international supply of dairy products, beef and the like, it's looking pretty good for next year."

Mr Kelly joins Landcorp from the Dairy Board where he was global head of strategic industry relations and previously strategic planning manager and general manager of corporate planning.

He has been an independent business consultant, general manager of Pitman-Moore New Zealand Ltd, and a veterinary lecturer, surgeon and adviser. He is chairman of AgVax Developments Ltd, an AgResearch subsidiary commercialising new products in the animal pharmaceutical field.

The Landcorp chairman, Alison Paterson, says that in his six years as chief executive Mr Prichard has driven it to become a successful, profit-oriented farming business.