Myfarm plans to buy an apple orchard
For the first time, rural investment specialist Myfarm has given people the chance to own a stake in the apple industry.
The Feilding based company has mainly dairy properties in its investment portfolio with 30 dairy farms, 10 sheep and beef properties, three kiwifruit orchards and two vineyards.
This is its first foray into apples and it plans to buy bare land and start an apple orchard with a company leasing the land and running the orchard.
Myfarm is looking for $3.3 million from investors to buy a 26 hectare property for development in Esk Valley, Hawke’s Bay.
Chief executive Andrew Watters said it only took five days for investors to come forward.
‘‘It is very exciting. The orchard, should start producing in the third year, with full production from the four years on.
‘‘Like kiwifruit in the Bay of Plenty, investors want access to the apple industry and to Hawke’s Bay.’’
He said Ministry for Primary Industries statistics showed the average Hawke’s Bay apple orchard achieved an 18 per cent cash return in the four years from 2013 to 2016.
‘‘The apple industry is benefiting from its investment over many years in new varieties and proprietary rights. Growers have also made impressive gains in orchard productivity and growing techniques.’’
Watters said Esk Valley Orchard Limited Partnership would be developed, leased and run by a Hawke’s Bay company, which would also have a share of the profits
‘‘Orchard Investments Limited (OIL) will have a 10-year lease. In the first three years of the investment OIL will convert the property into an intensive orchard with new apple varieties grown in hedgerows along existing vineyard structures.’’
Watters said Myfarm forecasted monthly cash distributions from September would average 5.9 per cent each year for the first three years, rising to 13.1 percent from year four.
The profits would be shared 50:50 from the third year.
He said Myfarm was branching out from dairy and sheep and beef farms and had bought a commercial building, vineyards and kiwifruit orchards and now was planning an apple orchard.
‘‘I think the horticultural industry is interesting. There is new technology, plant variety rights and they are all being used. And as well the tonnage, price has been up for the past few years.’’
Watters said Myfarm realised they did not have the expertise to run an apple orchard and that was why OIL was leasing the land and running the orchard.
‘‘We thought pushing dairy farm investment [would be] difficult and the payout is so variable.
‘‘Yes horticulture is still variable, but leasing helps us get around that.’’
He said Esk Valley Orchard was to be a limited partnership in which investors would each own a proportion of orchard assets and receive a proportion of orchard returns made up as a mix of base lease, with a share of profits plus the development margin which would come from the conversion.
Watters said investors had usually made their money in other ventures and were a mixture of professionals. He said most of them had a strong affinity with the rural sector.
He said the apple orchard syndicate was expected to include about 10-15 investors putting in between $100,000 and $1 million each.
‘‘The timing is probably not right now, but we are thinking maybe of manuka honey in the future.’’
Myfarm has more than $500 million of rural assets under management.