May 19, 2020

 

Van Leeuwen Group sells nine South Canterbury farms

 

 

Van Leeuwen Group is selling nine South Canterbury farms, including 3,509 hectares of freehold land, extensive infrastructure, irrigation shares and a supply contract to Oceania Dairy, Stuff reported.

 

The Van Leeuwen Group where Mycoplasma bovis was first identified has several dairy and drystock farms, and what has been described as the world's largest robotic dairy barn.

 

The van Leeuwens said it was the right time to sell, having grown their business "substantially" over the years.

 

"Along with a capital re-structure, we recently finalised a new vision for the business which is primarily focused on optimising and growing our robotic barn farming operations.

 

"Our aim is to be a market leader in farming systems that are sustainable with new environmental regulations, ensuring the business is well positioned to capitalise on future dairy profitability due to growing scarcity of supply."

 

The contagious cattle disease Mycoplasma bovis (M bovis) was first detected on a South Canterbury farm owed by The Van Leeuwen Group in 2017.

 

A dairy farm in Southland was later identified as the source of the disease, which has no cure and spread to hundreds of farms around the country.

 

The nine farms for sale by The Van Leeuwen have been cleared of M bovis for more than a year and a half.

 

The properties will be sold by Colliers International, through an international expressions of interest campaign.

 

Ruth Hodges, national director of rural and agribusiness at Colliers, said it was an incredibly rare opportunity to purchase a profitable large-scale dairy operation.

 

Hodges said, "The portfolio offers strong projected returns that are expected to be particularly appealing to institutional and corporate investors. The net yield on investment has been independently forecast at up to 7.3% on an owner-operator basis and 4.24% on a passive leaseback basis. The strength of these returns, and the sheer scale of the portfolio, add up to a truly unique offering for the New Zealand market."

 

The Van Leeuwen Group's vision is to optimise its existing robotic barn farming operations as well as invest in future growth.

 

The farms offered for sale are traditional, pasture-based dairy farms and non-core support farms that do not fit strategically with that vision.

 

The portfolio comprises six pastoral dairy farms and three dairy support blocks at Morven, Ikawai and Waihaorunga, with a total farm area of 3,298 hectares.

 

This is comprised of 1,973 hectares of dairy farm land, including 1,708 hectares of milking platform; 159 hectares of leased land; and 1,536 hectares of dairy support land.

 

Prospective purchasers have the option to own and operate the farms outright, or buy the properties as a passive investment, with external operational management via a long-term leaseback.

 

Hodges said New Zealand's dairy industry had shown its resilience with less impact than other sectors at present.

 

"Historically, during times of crisis, food production remains absolutely core and investment flows to these types of assets," she said.

 

"The long-term outlook for dairy proteins is still very strong. New Zealand's production is not increasing, meaning supply in the future will remain tight and prices firm."

 

Richard O'Sullivan, rural and agribusiness director at Colliers said the farms are all within 30 minutes of each other, with support blocks well located to the dairy farming hub.

 

"The farms currently produce some 1.84 million kilogrammes of milk solids and further gains in production are available to an incoming purchaser via improvements to irrigation infrastructure."

 

The farms for sale have been operated under a traditional, pasture-focused seasonal supply dairy farming system, predominately using a grass-based level 3 system.

 

Temperate climatic conditions with the addition of irrigation mean a steady pasture growth curve can be relied on season to season, without the risk of prolonged summer drought conditions restricting pasture growth rates.

 

There has been a mix of management across the dairy farms including sharemilker contracts, contract milkers and direct farm management.