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From Global AgInvesting
March 18, 2019
Milltrust International and Milltrust Agricultural Investments (MAI) have announced the acquisition of a 24.9 percent stake in Waitonui Milltrust Agricultural Holdings (WMAH), a newly launched entity owned in partnership with a consortium of New Zealand investors.
The announcement of the WMAH acquisition represents the consolidation of a string of investments made over the past six months that together culminate in the formation of a large-scale, integrated dairy and beef farming enterprise. With assets valued at more than $125 million, WMAH manages a portfolio of farms and related assets totaling 3,500 hectares across both the North Island and South Island. Combined, the farms milk 10,000 cows and produce more than four million kilograms of milk per year, making WMAH one of the largest suppliers to Fonterra, the top dairy processor in New Zealand.
“We are delighted to have established this new farming venture together with a group of like-minded and high-calibre New Zealand farmers,” said Griff Williams, CIO, MAI. “The scale and asset quality of the farming portfolio combined with a proven and high-performing management and operations team will result in continued production efficiencies and herd improvements.”
MAI launched its Buy & Lease (New Zealand) Fund in 2016 as a vehicle by which to provide investors the ability to gain exposure to capital appreciation and a fixed return, while not being exposed to operational risks associated with running farms.
Founded in 2016, The “Buy & Lease” farmland fund strategy, which was developed in the form of a regulated Irish domiciled collective vehicle(ICAV), will be managed by Milltrust Agricultural Investments to provide contractually guaranteed rental yields in addition to gains from appreciation in land value.
”Investment in agriculture as an asset class can provide significant benefits including income generation, inflation protection and exposure to the very real themes of global food demand and land scarcity,” said Williams upon the Fund’s launch.
Through its carefully curated and diversified portfolio of cash-flow positive and environmentally responsible farms, MAI’s investment mission is designed for investors seeking a reliable and steady income. As such, the Fund will receive an annual minimum 5.5 percent yield on the investment with the potential for greater future earnings through capital gains over time.
MAI states that the investment thesis for New Zealand, pasture-based dairy farming remains strong. And indeed, New Zealand’s production model, and its close geographic proximity to high-demand Asian markets, saw the country offering its farmers the highest prices for milk in the world, as of July of last year. As the calendar turned to 2019, China was ranked first in dairy imports, accounting for 26 percent of global shipments. Of this volume, New Zealand accounts for 40 percent, significantly outpacing all other suppliers. Concurrently, a new report issued by the Global Dairy Trade revealed that the first dairy auction of 2019 reflected the third consecutive increase for global dairy prices, rising another 2.8 percent.
Due to its small population size, New Zealand exports up to 90 percent of its dairy output. With market proximity and a high level of consumer trust for New Zealand milk and dairy products, MAI and the farms in the WMAH portfolio are also serious about environmental and animal stewardship.
“WMAH is focused on ensuring best practice in the area of environmental sustainability and animal welfare, both of which are prerequisites for any MAI investment,” said Williams.