Australia's largest mainland dairy farmer, Ace Farming, has brought in a major US-based investor to buy up two huge dairy farms in southern NSW, giving the industry a big boost of confidence following a difficult period for farmers.
Ace Farming has spent more than $15 million purchasing Balboora Farm at Finley, NSW, as well as a large dairy farm at Blighty, NSW.
The company will take over management of more than 2000 milking cows.
Ace Farming founder and chief executive Jeremy Bayard, who has built the company into the largest dairy farming business on mainland Australia with a portfolio of more than 20 dairy farms, confirmed the two farm sales were proceeding.
"The acquisition of these farms is part of our ongoing investment strategy to buy quality farms for our investors where we see value for money," Mr Bayard said.
Jeremy Bayard established Ace Farming in 2007. He has built the company into the largest dairy farming business on mainland Australia.
"These farms offer both value for money and scope for growth," he said.
The deals come just as Dairy Australia released a report this month highlighting the difficult season experienced by many farmers in the southern export-focused states and how that had caused cash flow management challenges that hurt confidence and milk production.
Senior analyst John Droppert said confidence had dropped from 67 per cent in the National Dairy Farmer Survey in 2016 to 53 per cent in 2017 while profitability was at a three-year low.
However, a third of farmers are expecting to grow their herd size in the next year and two thirds anticipated their production would increase in the next three years. Input costs are also likely to improve.
Ace Farming Company, which kept a low profile as it grew, has been making farm acquisitions for European pension funds, US private equity funds and family offices.
Mr Bayard declined to comment on details of the US investor or pricing of the deals but said the long-term future for the dairy industry in Australia was changing for the better and that would attract further capital.
"A confluence of global events has weighed on the industry over the past 18 months, which has caused pain.
"Australia is now being forced to follow the other 'quasi free-market' major dairy exporting countries of New Zealand and the US, where the means of production at the farm level continues to be consolidated," Mr Bayard said.
"This does cause attrition, but it also creates opportunity."
"Ultimately it makes for more sustainable dairy farming businesses and a more profitable and competitive dairy industry."