New Zealand is extremely well positioned – as a high quality, low cost producer – to capitalise on the demand and supply imbalance in global dairy markets.
- The essence of pastoral farming in New Zealand is the relatively low production cost per unit of milk, which ensures it can remain competitive and maintain margins.
- New Zealand – the global leader in dairy exports, and a low-cost producer – is well positioned to profitably exploit rising dairy commodity prices.
- Ownership in farmland also provides a shareholding in New Zealand’s largest company – Fonterra Co-Operative.
- Now is an excellent time to invest based on stability in land market and strength of the basket of global dairy commodities.
- New Zealand is the only developed nation to have signed a Free Trade Agreement with China.
- China is gradually reducing tariffs on dairy imports from New Zealand to zero (by 2019)
- New Zealand’s value market share of dairy exports to China rose from just over 20% in 2008 (pre-Free Trade Agreement) to over 40% in 2011.
- The Ministry of Primary Industries is forecasting a strong milk price in the medium term.
- The Fonterra milk price has averaged $6.26/kg MS over the previous six years.
- New Zealand is a business and tax friendly, and corruption free investment country.
Performance of New Zealand Land
New Zealand land prices have performed well over the past decade, underpinned by the growing demand for agricultural commodities.
- New Zealand Dairy farms returned an average 10% p.a.to investors over the past decade to 2009-10. This has been made up of operating profits and capital appreciation of land.
- Rural land has appreciated at 8% p.a. since 1950.
- Rural land prices in New Zealand are showing signs of firming from their lowest levels since 2008, especially in proven climatic locations like Southland.