Dairy exports can grow in value while they are unlikely to grow in volume, rural investment company MyFarm’s executive chair, Grant Rowan, says.
New Zealand’s largest rural land syndicator is returning to the dairy industry some nine years after its last offer in that industry.
MyFarm built its management base and reputation on dairy farm syndicates largely for non-farmers in the 1990s and early 2000s.
But since 2014 it has built a $550 million portfolio of 39 syndicates across 11 industries, mainly in horticulture and rural commercial property.
Rowan said the time has come to get back into dairying as a diversification option for investors looking for sustainable and ethical profitability.
“While dairy exports at $20 billion annually are unlikely to grow in volume, they can definitely grow in value as the industry responds to customer demand for nature-based, low-carbon products.”
He said the dairy industry’s transformation over the past nine years has encouraged MyFarm to re-enter the market.
“There is much stronger focus on leadership, business performance and customer demand for sustainable foods.
“That, combined with the benefits of being invested in co-operative agribusiness, make it a good time to re-enter the sector.”
Rowan praised Fonterra’s strong leadership and clear strategy on maximising the value of NZ milk.
He believes the industry is well set up to become an international leader in low carbon emissions food production.
The dairy industry now measures and benchmarks emissions, and adopts best-practice technology to reduce emissions, including breeding more carbon-efficient livestock, and afforestation.
MyFarm is currently marketing the Rimu syndicate to raise $7.2m to purchase a 172ha dairy farm in Southland operated with a sharemilker and 400 cows.
The investment will be 75% into farmland and buildings and 25% into Fonterra and LIC shares.
Target returns are 11% in year one, because of the Fonterra dividend and already announced cash return, and 7.5% thereafter.
The minimum investment is $50,000 and the offer closes on April 6.