By Gerelyn Terzo, Global AgInvesting Media
Australian agriculture investment manager Warakirri Asset Management, which oversees approximately A$3 billion (US$1.9 billion) in assets under management, is expanding its influence. Warakirri has announced the launch of a new Australian and New Zealand dairy strategy amid the planned introduction of a dairy fund for which it is targeting more than A$500 million (US$310 million) in fundraising from investors.
Led by Ben James, who is currently at the helm of Aurora Dairies, the new dairy fund pursues an own and operate strategy through a diversified portfolio of investment-grade dairy farming and infrastructure assets, boasting potential risk-adjusted returns of over 10 percent per annum.
Warakirri is no stranger to farm management, having exclusively overseen Aurora Dairies for a global institutional investor since 2019 and building it into one of Australia’s leading dairies platforms across dozens of farms in half-a-dozen regions represented in its portfolio. Now the firm is looking to offer new investors an opportunity to gain exposure to its dairy farm management capabilities.
Ben James, who is spearheading Warakirri’s new dairy strategy, pointed to forecasts for a “dairy supply gap” to 2030 that is creating a “substantial market opportunity for the dairy sector, telling GAI News, “Increasing demand and the persistent decline in smaller farmers from the dairy industry creates fertile soil for corporate investors such as ourselves to capture opportunities in the dairy industry.”
As one of the most food secure nations in the world, Australia is known for producing more food than it consumes. Dairy is a key rural industry for the country, generating billions of liters of milk each year and employing tens of thousands of Australians. However, Australia’s milk production has also fallen over the past two decades, commanding nearly three-quarters of domestic milk production just to meet its own needs. Rising demand from Asia coupled with food and water insecurity on the global stage suggest there is an opportunity for greater Australian dairy exports up ahead.
Investors have been flocking to the dairy sector of late for the two-pronged model through which they can earn capital gains and income.
Warakirri Managing Director Jim McKay told GAI News, “Dairy assets generate regular operating cash flow coupled with positive capital growth potential in the underlying land and water assets. Increasing population, increasing consumption per capita combined with shrinking global production provide favorable supply and demand dynamics.”
McKay went on to share that “significant long-term investment opportunities…exist in the dairy industry” amid a steady increase in demand for milk and dairy products both domestically and in the Asia Pacific region. He pointed to a global milk deficit in milk through at least 2030 of roughly 20 million tons of liquid milk supply, about a 17 percent deficit to total demand. Warakirri’s new dairy strategy is a reflection of what McKay described as the firm’s “high conviction that the dairy industry has a compelling structural imbalance that underpins long-term return on investment.”
James explained, “Dairy is the third largest food source by volume globally and not only is total milk consumption growing, but per capita consumption is growing with around 15 percent of all new food consumption via dairy products. Growing demand and shrinking production has supported milk price growth over the long term which has outpaced inflation, and which is expected to be supported by widening milk supply gaps. We are very excited about the future for dairy and the significant opportunity in front of us, as we continue to see significant upside across both short- and long-term fundamentals from large-scale operators such as ourselves which should drive strong competitive returns into the future.”
Last month, Warakirri announced the acquisition of a horticulture aggregation through its Diversified Agriculture fund, increasing its citrus exposure to 13 percent of the fund.
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