Independent opinions on dairy

The investment advisory sector hasn't always considered farming an obvious choice.  As an investment, farming lacks liquidity - you can't ring someone and sell your stake tomorrow.  And generally people look at average statistics and dismiss agriculture as an investment because annual yields are too low.

These views overlook the value of a targeted investment into a high performing dairy or sheep farm.  Although liquidity isn't a strength, investors can exit from a dairy farm when it is sold or through a share sale.  And the strengths are that land is a solid tangible investment, that top quartile (South Island) farms are able to generate returns above 6 - 7% p.a. and that farmland tends to increase in value with productivity growth and as a result of increasing product prices.

A couple of independent commentators have highlighted the strength of the farming sector in recent publications - and they are worth a read.  Brian Gaynor of Milfold Asset Management notes some interesting statistics on the growth of the dairy industry and Terry Hill notes the new interest in agriculture from investment funds and wealthy individuals.

For Terry Hill;

http://www.stuff.co.nz/business/opinion/5722488/Global-commodity-boom-driving-farmland-bids

Brian Gaynor;

http://www.nzherald.co.nz/business-editors-picks/news/article.cfm?c_id=1501981&objectid=10755665

It is rare for an investment to tick all of the boxes of risk, returns and liquidity.  But in a balanced portfolio there should be room for a (dairy) farm investment?