Syndicated ownership on the rise

Fluctuating farm prices and commodity returns are putting pressure on traditional farmownership models, with syndicated buyers increasing in Southland. Investors last year put $43 million into farm syndication company MyFarm, which settled on six NZ properties, four in Southland. The region is popular for syndicated investment because ofrelatively lower farm prices and less land pressure compared with regions such as the Waikato. Among the Southland farms signed up by the company last year were a 205ha, 630-cow dairy farm at Roslyn Bush and a 159ha dairy farm at Dacre. MyFarm director Andrew Watters said the purchase prices were about $40,000 a hectare and it was that level of affordability that was attractive to the company. MyFarm had 10 syndication farms milking between 6500 and 7000 cows in Southland, on about 24,000ha. The company believed farm prices were close to or at their low point in the cycle, with all dairy farm assets "“ land, stock and shares "“ at lower prices compared with past boom years reports The Southland Times. Land prices were down about 25 per cent on the 2008 peak prices, while cow prices were also down. Milk price increases had also helped boost interest, Mr Watters said. "Southland is simply the best bang for the buck. While good farms are still expensive enough, for the price per hectare we can still get better quality land and better dairy farm businesses than we can in the North Island. "I think we can probably be looking to four to five syndicates a year in Southland, but focusing on quality and economic return. "There was a time in 2008 where we couldn't afford to buy a farm. You could write out a cheque and buy it but the returns didn't seem to support the prices people were paying." But the market was more realistic and the prospects of getting a 7 per cent return on a moderate level of debt was better in Southland than the North Island, he said. He believes the family run farm would continue to be the most popular model.