The state owned farming enterprise, Landcorp, is reviewing its profit forecast for the year, as it grapples with low milk prices and the worsening drought in parts of the country.
The country's biggest farming operation has made a net half year operating profit of a $1 million, compared with more than 12-million for the first six months of the previous financial year.
Landcorp said it was still on track to make a modest profit for the full year.
But it's forecast of one to $6 million is significantly below the $30 million operating profit it made last year.
Chief executive, Steven Carden said it was revising that forecast, which was under pressure from declining milk production.
"The major impact on us has been the milk price and in terms of climatic conditions, while we had a pretty good spring and certainly a good pre-Christmas, the dry conditions coming into the new year have certainly set us back a fair way and the very dry January has been a significant problem, especially in our dairy business, where production is going to be off-budget.
"So we've been culling cows fairly judiciously for well over a month now, and we'll continue to do so, and in our red meat part of the business, we are very careful about the store lamb market. We normally purchase 20 to 30 thousand store lambs in January and February and we are unlikely to do that to the same extent this year, given the feed situation across most of our farms."
