Dairy farming has long been dominated by family owned enterprises, but could that be starting to change?
A company which has been buying up dairy farms and has big plans for increasing milk production says it’s been overwhelmed by investor interest ahead of listing on the Australian Stock Exchange next month.
Australian Dairy Farms already owns farms in south-west Victoria and is now looking to raise $14.5 million to buy more farms and increase milk production to 60 million litres within a couple of years.
Director Adrian Rowley thinks there’s a strong case for longer-term growth in the dairy industry and good returns from investing in dairy farms.
He says the level of interest from investors has been huge.
«We’ve spoken to everybody from large global pension funds that take strategic stakes in investments, through to fund managers in Hong Kong, to most of the brokers in Melbourne, fund managers that have smaller cap funds and family offices and private investors,» Mr Rowley said.
«We’ve been absolutely swamped with interest over the last few days.»
That’s despite global dairy prices dropping more than 8 per cent in overnight trade to their lowest level in two years.
According to Dairy Australia, about 95 per cent of all Australian dairy farms are currently family-owned.
Joanne Bills, a dairy industry analyst and director with Fresh Agenda, says while corporate and stock exchange listed companies have moved into other areas of agriculture, they’ve found dairy more difficult.
«A lot of the other broadacre industries, there are large parcels of lands, very extensive holdings, dairy farms tend to be smaller, so the models that we’ve seen over the years have been around aggregating a number of farms together and depending what management is in place on those individual farms, we’ve seen quite mixed success in terms of those operations,» Ms Bills said.
«It’s a complex industry and a management challenge that the investment community hasn’t quite comes to grips with.»
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