Our Track Record of Returns
Return on $1000 invested 1992 - 2014
Since 2000, returns from NZ dairy farms under MyFarm management have outperformed other New Zealand asset classes.
Between 1992 and 2014, MyFarm investors purchased $829 million of farm assets.
The chart at right compares how an investment of $1000 with MyFarm would have performed during this period against the same investment in a number of other asset classes. The returns from each are listed below:
- NZX50 $3,850
- NZX ALL Index $9,500
- 10-Year Government Bonds $3,710
- NZ Dairy Farm (based on Dairy NZ statistics) $10,830
- A MyFarm investment (based on an average of all MyFarm properties) $13,570
As you can see, $1000 invested in a MyFarm dairy investment would now be worth $13,570. In other words, an investment with MyFarm would have multiplied 13.5 times in value. (see Note 1)
Individual Farm Performance
The internal rate of return (IRR) from investing in a NZ dairy farm under MyFarm management is shown in the chart above.
The grey bars show the IRR for each of the 29 farms that have been sold. These farms achieved an average IRR of 23.9% p.a.
The green bars show the IRR for each of the 38 farms that remain under MyFarm management. Based on current market values, these farms have achieved an average IRR of 11.1% p.a. (see Note 2)
The context behind the numbers
In the 1990s, most of our farm investments were dairy conversions – because the value of an existing dairy farm was significantly greater than the cost of buying a sheep and beef farm, and converting it to dairying. Therefore it made good investment sense to find the right farmland for dairy conversion.
By the mid 2000s, more dairy farms were selling at a multiple of their milk solid production, which created opportunities for adding value by increasing production. In round terms, a 20% production gain resulted in 20% capital gain. From a syndicate investment perspective, our focus was on finding existing dairy farms that were performing below their production potential.
From 2009 to 2013, as a result of the global financial crises, farms were selling at below their long-term value. This made capital gains a compelling part of the farm investment story, and MyFarm significantly increased the number of farms under management as a result. It is notable these farms were established with lower debt and a greater focus on paying dividends to shareholders. (see Note 3)
Note 1: The financial data used to calculate this annual return across the portfolio of farms purchased and managed by MyFarm between 1992 and 2014 was provided and peer reviewed by our in-house chartered accountants. MyFarm’s track record data is independently verified every second year.
Note 2: Not included are two Tararua dairy farms, a Northland dairy farm and three Waikato dairy farms. These are farms where MyFarm has not retained the management contract for the operation of the property beyond an initial period of contract and therefore is not in a position to assess its value or performance.
The potential for New Zealand agriculture
New Zealand’s position as an agricultural producer is becoming stronger by the day, as the world struggles to cope with the protein demand created by the growth in middle class wealth. Read more here.