Your farmland is likely to appreciate more in value than your stock

Over the last fifteen years, returns on rural farmland have continued to exceed the farmers weighted average cost of capital, as illustrated below:

Rural Land Returns
  Total Return Weighted average cost of capital
Past 5 years 18.7% 8.5%
Past 10 years 10.5% 9.0%
Past 15 years 12.5% 9.7%
Source: National Bank of New Zealand

Given that the value of dairy animals has been reasonably static while rural farm and land values have improved significantly, we offer the capital-constrained farmer the opportunity to release the cash value tied-up in livestock.

Average dairy farm values, as measured by the price paid per hectare and the price paid per kgms have continued to climb. The average sale price of rural dairy farms has risen 400% (or 200% inflation adjusted) in the last twenty years to a 2005 value of $1.8m. Doesn’t it make sense to invest your wealth in the assets that appreciate the most i.e. land?

The Australian example has shown that through the application of good animal husbandry, a controlled genetic improvement breeding program, the supply of relevant farm management information to the farmer and regular contact by field officers, the income of the dairy farmer and the herd production figures can be significantly increased.

Our herd equity release concept is aligned to the popular and widely accepted modern investment model of using other people’s money to generate wealth. This is known as leveraged investment, a concept widely promoted by the famous international investment advisor and author of many investment books, Robert Kiyosaki.

Our dairy herd lease programme provides 100% finance of the value of your dairy herd as an off balance sheet finance facility, enhancing your capital efficiency. And the great thing is that you won’t have to part with any shareholder equity in your farming business! It’s simply a financial arrangement to release the cash value in your livestock.

 
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