January 11, 2013

 

New Zealand's dairy farming investment to increase in 2013

 

 

After attracting strong interest in 2012, MyFarm dairy farm managers said that dairy farming investment in New Zealand will step up in 2013.

 

MyFarm Director Andrew Watters said, "The industry is entering a positive cycle in 2013, benefitting from rising global milk prices and greater investor focus on the sector.

 

"The successful US$525 million capital raising by Fonterra in December highlighted the attractions of dairying, but at the same time revealed the complexities of investing in the sector in New Zealand. Only by investing in dairy farms can investors benefit from rising milk prices," Watters said.

 

In the year to December 2012, 73 New Zealanders invested a total of US$35 million in four new My Farm managed dairy farm syndicates and eight established dairy syndicates. This compares with US$43.9 million in 2011, when 81 New Zealanders invested into 12 new dairy farm syndicates and 2010 when 68 investors invested US$44 million into nine new syndicates.

 

The lower number of new dairy farm syndicates compared to 2010 and 2011 reflected falling dairy commodity prices for the first half of the year and a lower milk price for most of the year.

 

The year 2012 also saw the successful launch of new investor partnerships that enable eligible investors to make smaller investments in MyFarm syndicates. More than 50 eligible investors have signed up for this US$20,000 minimum investment option to date.

 

Watters said that Fonterra's mid-December announcement of a US$0.25/kgMS lift in payout will be followed by more global dairy price increases and an end of season payout above the current forecast of US$5.90-6.00/kg MS.

 

In 2012 MyFarm syndicated to a good balance of new (52%) and repeat (42%) investors and also saw some US and European investors join syndicates alongside expat New Zealand investors.

 

Directors of recent syndicates have included the directors of listed companies, senior executives of multinationals; award winning dairy farmers, senior dairy industry executives, medical professionals, expat fund managers and sheep and beef farmers.
 

Watters said in 2013 MyFarm is planning to develop a secondary market to enable retail investors to participate in MyFarm syndicates.

 

MyFarm is currently offering investment in a Southland dairy farm, which has 23% production upside and is nestled within a cluster of MyFarm managed properties.