New Zealand's largest rural investment syndicator MyFarm Investments is moving its focus away from its dairy farming origins and expects future growth to come from smaller overlooked areas, such as fruit.
Source: 1 NEWS
The rural investment firm was set up in 1990, initially investing in dairy farms which it syndicated to investors.
It has since diversified into sheep and beef farms, horticulture and mussel farming and has more than $500 million of rural assets under management.
About half its assets are dairy farms, with some 30 per cent in sheep and beef farms and 20 per cent in other investments.
But the company expects its dairy investments to shrink as farms are sold when investments mature while the proportion in other areas grows.
"Our firm has been around in the investment space primarily focused on pastoral for 20-odd years and we obviously rode the dairy boom through the mid-2000s and through to 2013-14 and we still love dairy," chief executive Andrew Watters said.
"But it's hard to make an investment case for dairy at the moment."
He said the industry faced "some headwinds" with debt, tighter requirements around the environment, animal welfare, and health and safety, a variable milk price, and uncertainty around future capital gains.
Mr Watters said while pastoral farm investments were expected to produce a cash return of four to five per cent, horticulture was achieving between seven to 15 per cent.
While he is a dairy farm owner himself, Mr Watters said MyFarm has moved outside its core skill set into permanent crops like kiwifruit, pipfruit, viticulture and other types of food production such as mussel farming - where it stepped back from day-to-day management and instead partnered with operators.
He said the company was eyeing new investments in previously overlooked industries which were relatively small but fast growing.
"There's quite a bit to look at and be excited about," he said.
"Anything to do with food production where we think there is a sustainable competitive advantage and there is good cash returns we will look at."
Later this year, MyFarm will embark on the second stage of its mussel farming project, and it expects to have a crack at Manuka honey, he said.
Its recent investment syndicate in the Rockit apple industry attracted 67 investors with an average investment of $195,000.