State-owned farmer Landcorp says it will pay a $10 million special dividend to the Crown arising from Fonterra’s sale of its Mainland consumer business.

The company, also known as Pāmu, said the special dividend reflected a strong outlook for the business and the capital repayment of $9.5m received from Fonterra following the sale of its Mainland consumer business to France’s Lactalis.

Landcorp is one of Fonterra’s biggest shareholders.

Including the special dividend, Pāmu will have paid $25m in dividends to the Crown in the 2025/26 financial year.

Pāmu chief executive Mark Leslie said the payment reflected continued balance‑sheet resilience.

“This special dividend reflects the progress Pāmu has made in strengthening performance and building balance‑sheet resilience,” Leslie said.

Strong performance across the business has delivered a net operating profit of $26m at the half year, with Pāmu on track for a record full‑year profit of between $97m and $107m.

“As we reach the midpoint of our five‑year reset, this performance has given the board confidence to make this payment,“ Leslie said.

“Over the past three years we have been focused on lifting on‑farm performance, improving productivity, and running a tighter, more disciplined business."

As a state-owned enterprise, Pāmu manages its land and farming portfolio to deliver a financial return, return land under Treaty of Waitangi settlements, and to grow New Zealand agriculture.

The special dividend represented the pass‑through of a non‑operating capital receipt and is separate from the Pāmu ordinary dividend policy and operating results, the company said.

State Owned Enterprises Minister Simeon Brown said the special dividend demonstrated confidence in Landcorp’s financial position.

“I’m pleased to see the continued improvement in Landcorp’s performance, with recent half-year results pointing to a strong full-year outcome, supported by improved operations and favourable commodity prices.

“This progress reflects disciplined management, a sharper operational focus, and a clear commitment to delivering value for taxpayers.”

The windfall arising from Fonterra’s sale of its Mainland consumer business looks set to provide a boost for the local economy.

The co-op will next week send farmers and investors $3.2 billion – the capital repayment arising from the sale to French dairy giant Lactalis.

They will also receive $700m from a 16c special dividend arising from Fonterra’s share of the consumer business’ earnings before the sale went through, combined with a 24c interim dividend announced last month.

By adding in monthly milk payments, the total comes to $5.4b.

The big cheques come at a time when the commodities gods are smiling on New Zealand food producers in the form of strong demand, firm prices and a beneficial exchange rate, but also amid heightened uncertainty arising from the Gulf war.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.