Dairy falls from favour with MyFarm investors
If the MyFarm Investments business is any barometer, the days of dairy growth would appear to be over, with investors seeing a rosy future for horticulture.
Chief executive Andrew Watters, who launched the investment vehicle in 1990 with a primary focus on dairy, said it had been a ‘‘great last 10 years’’ but new money was tending to go into other asset classes.
Other indicators of change include large numbers of dairy farms for sales with few buyers, plummeting consents for dairy conversions and tighter bank lending standards.
Last month MyFarm announced that a $13 million investment into orchards growing the mini-apple brand Rockit had been oversubscribed. The Ra¯kete Orchards partnership attracted 67 investors at an average investment of $195,000. This follows investments in wine in Marlborough, kiwifruit in Te Puke, and another apple orchard in Hawke’s Bay. Watters said MyFarm shifted away from its dairy focus in 2012 ‘‘as a matter of necessity’’. Out of more than $500m of assets, about half are dairy, 30 per cent sheep and beef and 20 per cent in other investments. ‘‘Dairy’s been in our blood and is still in our blood. Being a dairy farmer is not a bad situation as long as costs and debt are under control.’’
Watters said it would take some time before it was clear where dairy was heading. Even if the dairy payout rose to the $8/kg plus heights of several years ago, he did not believe it would see an upsurge. ‘‘If dairy prices rose you might see some farm development and people buying neighbouring farms but regulatory and legislative requirements are a lot tougher. Dairy returns at $6 are still reasonable.’’ ANZ analyst Con Williams said the dairy farm sales market was sounding the most cautious tone of all the sectors.