Why MyFarm is returning to dairy after a 9-year absence

MyFarm has built up a $550 million portfolio largely outside dairy, establishing 39 investor syndicates across 11 different sectors including vineyards, apples, avocados, kiwifruit, hops, cherries, mānuka honey forests and rural commercial property. Photo / NZME

Rural syndication firm MyFarm has returned to dairy after a nine-year absence.

Since 2014 MyFarm has built up a $550 million portfolio largely outside dairy, establishing 39 investor syndicates across 11 different sectors including vineyards, apples, avocados, kiwifruit, hops, cherries, mānuka honey forests and rural commercial property.

In 2022 MyFarm was the underwriter and lead broker for a $30m debt securities issue by EastPack Limited, one of New Zealand’s largest kiwifruit post-harvest operators.

MyFarm executive chairman and part owner, Grant Rowan, said the right dairy farm investment today would give MyFarm investors a diversification option, with the outlook for positive financial as well as new sustainability outcomes.

“Whilst dairy exports at circa $20 billion 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,” Rowan said.

He said the dairy industry’s “transformation” over the past nine years had encouraged MyFarm to re-enter the market.

“There is much stronger focus on leadership, business performance and customer demand for sustainable foods,” he said.

“That, combined with the benefits of being invested in co-operative agribusiness make it a good time to re-enter the sector.”

Fonterra, the country’s biggest dairy co-op, yesterday reported a 50 per cent increase in first-half profit and doubled its first-half dividend.

Rowan praised Fonterra’s leadership and strategy of maximising the value of New Zealand milk.

He said the industry is now well set up to become an international leader in low-carbon-emissions food production.

In its recent half-year announcement, Fonterra confirmed a tax-free capital return of 50 cents per share.

The international dairy market, which drives the milk price farmers receive, also appeared to be in relative balance, Rowan said.

“While there is production capacity in the USA, supply is relatively static or falling in Australia, New Zealand and the EU, which between them represent 75 per cent of international exports.

“Meanwhile global demand for high-quality dairy nutrition continued to grow at about 1 per cent a year.”

As a consequence, the milk price and on-farm operating margins have risen, despite cost inflation.

Sustainability and the need to reduce greenhouse gas emissions were among the “mega trends” affecting the farming sector.

Rowan said MyFarm’s new dairy farm offers will have more emphasis on the benefits of exposure to investment in the sector’s key co-operatives.

With the current offer, Rimu Dairies, 25 per cent of funds raised will be invested in potentially high-dividend-yielding co-operative shares, namely in Fonterra and herd improvement company LIC.

MyFarm is seeking $7.2m from wholesale investors to establish Rimu Dairies Limited Partnership, which will purchase a 172ha dairy farm in Southland.

Three-quarters of the investment will be in dairy land, with 25 per cent targeting investment in co-operative shares, LIC and Fonterra.

MyFarm was founded by Rowan and Andrew Watters, both dairy farmers, in 1990.

Between 1990 and 2014, MyFarm actively bought, developed and managed dairy farms in Southland and Canterbury.