AUSTRALIAN investment company Prime Value has paid $62.5 million for 2200 hectares of dairy country and around 4000 milkers plus 1000 young cattle to expand its holding in north-west Tasmania.
The land and cattle were sold by Chinese businessman Xianfeng Lu, who bought 19,000ha including the historic Woolnorth property in 2016 from the Van Diemen’s Land Company.
It allowed Mr Lu to establish the Van Dairy operation, which on Friday said in a statement that the sale was part of its commitment to return 10 per cent of its area to Australian ownership.
Prime Value manager of dairy investments Kirsti Keightley said the 11 farms purchased from Van Dairy were ideal additions to the company’s initial dairy purchase in Tasmania made in July last year.
Prime Value opened its dairy portfolio by purchasing a farm in south-west Victoria in 2019, and added another in the same region last year.
Ms Keightley said the Prime Value model offered a boutique option for investors including “mums and dads”, and described it as a “family corporate”.
She said the dairy fund, which sits in Prime Value’s alternative asset class, offered an investment option for employees wanting to build capital while working in the industry.
“In New Zealand, you can start as a worker, and then become a contract milker before buying your own dairy,” Ms Keightley said.
“We’ve basically just copied that.”
Ms Keightley hails from the Waikato dairying region of New Zealand, and has a 25-year family involvement in dairying in south-west Victoria.
Staff on the ground
All of Prime Value’s Tasmanian farms will be run by the company’s recently expanded team.
“We have managers on those farms and an operations manager who we’ve taken on three weeks ago.”
On its website, Prime Value said the dairy farms owned prior to the Van Dairy deal were milking 1900 cows estimated to produce more than 11 million litres of milk in 2019-20.
“We will supply milk to the domestic market for the foreseeable future and we also intend to establish a dairy beef operation to rear the young bull calves from our breeding program,” it stated.
Region in demand
In October last year, Property Central reported the possibility of a selldown in Mr Lu’s Tasmanian dairy assets.
Ms Keightley said while the Prime Value dairy portfolio was not closed, nor was it looking for another large-scale asset.
“At the moment we’re probably in the consolidation phase.”
The properties sold by Van Dairy are all located “outside the gate”, a road which forms part of Woolnorth’s boundary in the Togari district.
They are also within 20 kilometres of Smithton, in the Circular Head region, home to around half of Tasmania’s dairy herd.
The off-market transaction was conducted by Nutrien Harcourts Smithton agent Tony Maguire, who said the sale reflected the popularity of Circular Head and nearby King Island for dairying.
“It’s Tasmania’s most reliable rainfall district with about 1200-1500 millimetres a year, and there’s the quality of the soil,” Mr Maguire said.
He estimated agricultural land values in Circular Head had gone up by around 20pc in the past 12 months.
“I think that’s happening Australia wide.”
Van Dairy’s management of dairy effluent has been a problem for the company, and it has been issued with nine Environment Protection Notices by Circular Head Council in relation to standards enforceable under Tasmanian law.
In April, Tasmania’s Environmental Protection Authority (EPA) director Wes Ford said while the management of dairy effluent impacts beyond the boundary of a farm were normally a matter for a council, the EPA can involve itself where there are significant allegations of environmental harm.
“In this case, the role of the EPA has been to support the Circular Head Council in its application of the State’s environmental legislation, and the EPA has determined that it is now appropriate to provide investigative support to the Council.
“I trust that Van Dairy Limited is committed to investing in the appropriate infrastructure and management systems to ensure the dairy effluent is managed in an appropriate and contemporary manner, both in the short and longer term, and I will be engaging with the company on this basis.”