Investment

We have an active approach to farm investment and look to facilitate investment in farm businesses where we can leverage our operating experience and core competencies to improve production while preserving gross margin.

We look to facilitate investment in farm businesses where performance has suffered due to capital and or operational constraints which we are able to remedy as part of our strategy and forward management planning.

Our added value approach also enables us to contemplate development opportunities such as conversions, irrigation and further land development to increase the effective area farmed and therefore production.

We carefully consider the costs of inputs required to generate top line growth and establish a forward management plan that provides for optimum performance.

We understand the unique challenges of farm management in a pasture based dairying system and our management team are adept at developing and maintaining top performing pasture based farms.

• New Zealand has 11,700 dairy herds and 4.5 million dairy cows and heifers in milk (2010/11) with an average herd size of 386 cows. Stocking rates average 2.77 cows per ha.
• Friesian and Jersey/Friesian cross breeds are the prevalent dairy cow breeds in New Zealand making up 80% of the breed population.
• New Zealand produces about 2% of total world production at around 17.3 billion litres per annum however, unlike most other countries approximately 95% of its dairy produce is exported rather than consumed domestically.
• New Zealand is the world’s largest butter exporter (44% of all traded butter).
• New Zealand is also a major exporter of skim and whole milk powders (27% and 38%, respectively, of world trade).
• Dairy is one of New Zealand’s largest industries, contributing approximately 25% of total merchandise export earnings ($NZ10 billion in 2008-09).
• Development of functional foods is a growing trend in New Zealand’s dairy industry, and includes products such as low-fat, high calcium and protein milk, and biomedical and biohealth products, such as colostrum-based health supplements.
• Britain and the European Union are New Zealand’s most valuable market for butter. The primary markets for casein and cheese are the United States, Japan, and the European Union, with New Zealand being the world’s largest exporter of casein and caseinate products. New Zealand’s most important milk powder markets are in Central and South America, and Southeast Asia. New Zealand also has the two largest milk powder plants in the world, these being in Hamilton and Taranaki.
• The temperate climate is perfect for Dairy Farming and 95% of milk production is from grass. Cattle are wintered outdoors. Crops used for dairying are brassicas and maize silage.
• The main Dairying Areas are Canterbury, Southland, Taranaki and Waikato, but most areas have at least some Dairy Farming. Eighty-five % of dairy farms are located in the North Island, with one third of all New Zealand dairy farms located in the Waikato/South Auckland region. Taranaki is the second most heavily populated region at 17%. South Island dairy farms account for 15% of the national total.
• The Dairy cattle population in New Zealand for the end of 2006 was estimated at around 5.2 million, with the total number of cows & heifers in calf or in milk being estimated to have risen to 4.25 million.
• The average production is 334 kilograms of milk solids per cow per year and 923 kilograms of milk solids per ha. (Solids are fat and protein).
• Dairies are predominantly Herringbone averaging between 14 to 40 cups per side. Rotary sheds are the norm for herds over 500 cows with on average 50 to 60 cups.
• The average calving season starts around the 20th July (mid-Winter) over an 8-10 week period with the bulk of cows calving in the first 4 weeks. Artificial Breeding – 85 % of the national Dairy herd is mated from 10 weeks after start of calving for a period of 6 weeks. 

The global population has risen at an average annual rate of 3% since 1950. The world’s population is expected to increase to 8.5 billion by 2025 and to 9 to 14 billion by 2050.

While the global population is rapidly increasing, the amount of arable land per person is declining due to increased urbanisation and global deforestation.

As the world population increases and the average annual income rises, especially in developing countries, the established trend is that people will seek a higher quality of food by moving towards a protein based diet. This increase in protein demand will continue to fuel prices of land, livestock, fertiliser and animal feed.

While population and protein demand continues to rise, arable land per person is declining. We believe the ongoing urbanization trend competing for land resources and the growing demand for dairy protein provide an attractive long-term investment opportunity to secure robust absolute returns.
 

Kauri favours structuring each new farm investment within a New Zealand domiciled Limited Partnership. A Limited Partnership is not a tax paying entity and allows income and capital returns to flow directly to investors on a pre-tax basis providing a tax efficient method of investment.

A Limited Partnership comprises a General Partner who manages the Limited Partnership (a Kauri entity) and one or more Limited Liability Partners (investors) who enjoy limited liability provided they do not take part in the management of the Limited Partnership.

Each Limited Partnership is to be structured with an Advisory Board to ensure that investors’ interests are well represented while ensuring the protection of their limited liability status. Investors vote members to the Advisory Board which meets to discuss the business of the Limited Partnership regularly throughout the year.

Bank finance (if any) is provided to the Limited Partnership on a non- recourse basis (no requirement for guarantees from investors) and is secured by the assets of the Limited Partnership.

Kauri promotes investor participation at Annual General Meetings and investors are encouraged to attend in order to meet and get to know the Kauri management team, discuss the latest trends within the farming and agri-business sectors, listen to key presentations from leading industry commentator’s and to meet with other like-minded investors from around New Zealand and further afield.

Unless clearly identified, all Kauri investment opportunities are exclusively limited to those investors that fall within section 5 (2CC) of the Securities Act. There are no offers to the Public unless expressly stated and any such offers would be accompanied by a registered prospectus in compliance with the Securities Act.

The importance of independent advice is reinforced before any investment decision is made.
 

We have a deep understanding of rural markets and have access to off-market investment opportunities long before the rest of the herd arrives. If you are thinking about investing in farm property you should be talking to us.

You can view our current Investment Opportunities page or register to Become a Kauri Partner.

To speak with our investor relations team call 0508 KAURI FUNDS