Pāmu Increases Profit Forecast Due to Exceeding Milk Production Targets

Pāmu, New Zealand’s state-owned farming enterprise, has adjusted its profit forecast for the financial year ending June 30, 2026, to between $80 million and $90 million. This revision is a significant increase from an earlier forecast of $69 million to $79 million and well above the $61.3 million target set in the company's Statement of Corporate Intent for FY26-FY28. The company attributes this increase to improved market conditions and operational enhancements.

Milk production has surpassed expectations, running 7.5% above budget, which translates to an additional 470,000 kilograms of milk solids. This increase is a result of enhancements in farming practices and herd management, contributing directly to higher revenue and profitability. Pāmu's Chief Executive, Mark Leslie, noted the importance of decision-making on the farm, especially given recent adverse weather conditions.

Beef prices have also exceeded forecasts by about 40%, driven by demand from the United States. This has allowed Pāmu to capture premium returns across 21.9 million kilograms of livestock carcass weight, further boosting revenue. In addition, the company has increased the percentage of dairy calves being reared, from 65.5% in 2025 to 72.2% in 2026, which has created new revenue streams.

Pāmu is diversifying its operations beyond traditional dairy and meat production to include horticulture and production forestry, aiming to stabilize earnings and mitigate commodity price volatility. Avocado and blueberry production are part of this diversification strategy, with early harvests progressing well.

The company's hedging program has partially offset lower milk price forecasts from Fonterra, highlighting the value of financial risk management. Pāmu's performance improvement has broader implications for discussions about the role and ownership of government farming operations in New Zealand.