Dairy Farm Investment – Buying Into a Stable Industry

Dairy farm investment is a great option for investors as it is very popular and financially beneficial. It is usually arranged to make sure that best practice dairy farm management can be carried out by various equity managers on any given investment farm. The dairy industry makes up around a quarter of the export industry. Dissimilar to sheep which are mostly grown for their lamb and wool, cows are a much more lucrative option for the farming industry. They produce milk which is mostly used to manufacture things such as butter and cheese and a whole range of other food ingredients and nutritional products.

The importance and necessity of dairy farming makes it a good financial option because of its guaranteed demand. New Zealand heavily relies on the dairy industry for economic health and because there is enormous international demand for milk based products it is logical that so many investors are looking to this sector as an investment farm prospect. Dairy farms stand for a perfect financial opportunity for New Zealanders and overseas investors and over the past ten years the dairy farming industry has provided outstanding and stable returns and a secure asset.

Capital outlay on farms is usually decided by a cost benefit analysis and this is followed by a strategic shift to areas in technology and farming practices that enhance and ensure cow performance is top notch. Equity managers are a very important part to a business’s viability and performance. They give stability to a business’s performance as long term management steadiness provides for continuous knowledge and development. Such farms are founded and function in a way that will make certain that they perform at a sustainable intensity and meet all local and national regulations that are presently in place so investors know their assets are not in the wrong place.

The main production areas in New Zealand include: Waikato, Taranaki, Southland, Northland, Horowhenua, Manawatu and Westland. For those investors new to this agricultural industry, the milking season in New Zealand typically operates from 1 June to 31 May each year. New Zealander’s herds mostly consist of Fresian and Fresian-cross cattle. The largest milk processing companies in NZ include: Fonterra, Tatua Co-operative Dairy Company, Westland Milk Products and Synlait.

New Zealand is one of the world’s most competent and proficient dairy farming economies and has a large reputation for producing comprehensive international research, practices and products. There are over 13,000 farmers and between them they produce 1.25 billion kilograms of milk solids annually from around 3.5 million milking cows. This just goes to show why dairy farm investment is a lucrative option. If you are considering investing in the rural industry, then this sector is the perfect choice as it is forever improving and expanding. Find out more about this financial opportunity today.

Land Investment Strategies for a Flat Market

The best thing about a land investment is that they aren’t making any more of it. The worst thing about land is that until you do something to improve the property chances are good that you’re going to need to pay real estate taxes or even a mortgage payment on real estate than does not bring in any income. Here’s how to know when owning land makes sense.

What Types Of Land Ownership Makes Sense In Today’s Market?

1) Land that you’re going to live on. If you’ve found the perfect spot for your retirement home and you’re close to retiring, right now is a great time to get a low price on that lot you’ve had your eye on. Take your time and negotiate hard, because you might be the only buyer they see all year long.

2) Land for your existing business or farm to expand upon. The best time to pickup land is when prices are low. If you know that you’re going to need to acquire land in the next two or three years, why not get it now and take advantage of a great deal.

Land Investment Deals To Avoid In Today’s Market

1) Most development projects. There is a reason that development projects come to a stop when real estate prices drop. I’ve seen quite a few land investment deals that came crashing down once the market turned. The reason for this is that the time line for a piece of land that requires development can be three to six years. If the market turns while you’re part way through your land investment project, then you could be in trouble.

2) Land investment deals that are far away from you or out of the country. Yes, the grass does always seem greener on the other side of the fence. To play it safe, avoid any development deal that is not within driving distance of your home town. This may be overly conservative, but until you’ve done at least several deals, it’s good advice to follow.

Land Investment As A Long Term Hold

The ideal piece of land to own is a property that is able to cover its holding costs while waiting for the market to turn around or for the path of progress to catch up with your investment. Some of the more common methods of creating income from your land while waiting to develop it are:

1) Holding land as a golf driving range – It doesn’t cost much to set up a driving range and this is a way of improving your swing while creating the income you need to cover real estate taxes and other holding costs.

2) Longer term hold of your land investment as a mobile home park – This is typically for longer term holds because mobile homes aren’t really very mobile. The upside is that a properly run mobile home park can create some considerable income from your land investment.

3) Farming of crops or cattle on your land. Make sure you look into your local laws as some areas allow lower taxes on land that can be temporarily zoned as agricultural.

Finally, make sure that no matter where or when you are making a land investment, you have the ability to wait for the best market conditions before you need to develop your property.

Investment Farm – A Wealth of Opportunities

Investment farms are becoming increasingly popular and there are several key factors that you need to know to invest in farmland and consequently get good returns. Farm investment into land and the operating business gives investors the best straight forward link to the returns available from agriculture. The dairy industry and high performance sheep and beef farms provide the most direct gains from food demand trends in industries that are globally competitive and have steady industry structures and well proven cash flows.

Some of the options you have to invest directly into the agricultural business include owning a farm and leasing it out. This gives investors exposure to changes in land values. You will see as returns and profits from farming increase so will the value of the land and rent provides cash returns. You may find however find tension between the owner of the land wanting to manage the farm in a way that will ensure its long term value will be guaranteed and increase, where as the tenant of the farm land may want to manage the land in a way that will provide short term returns. You also have the option of investing in a share milking company or a contracting company as this can provide you with strong cash returns.

Investing in an operating farm business via buying the farm outright or through being involved in a syndicate will give an investor direct exposure to commodity returns, land value increases, increasing farm productivity and operating efficiencies. An example of this is the dairy giant Fonterra as their shares make up 10-15% of the assets which gives additional exposure to returns from this large company. Capital gains in this scenario happen through the appreciation of farmland’s value and this can be strengthened through development and productivity gains. Through this investment option however the revenues can be repeated due to climate effects, and changes in commodity prices and exchange rates. Although this can be avoided by buying the right investment farm land and using a conservative debt structure and input costs usually change together with the commodity prices.

You can also invest in listed agricultural stocks as this provides a liquid exposure to agricultural returns. Investing in listed stocks directly will lead to the price movement being magnified. Investing in futures is another option and this provides exposure to movements in commodity prices. Agricultural commodity prices usually react over the long-term so this is a good long term option. Investment farms are a compelling investment opportunity. Food and soft commodity prices are experiencing record highs in correlation with the global population growth and investing in this industry will see you with good returns as investment opportunities increase.