New Zealand’s MyFarm Investments has launched a $20 million cherry orchard development scheme in Central Otago that has attracted approximately $11 million in investments from more than 50 investors.
Founded in 1990, MyFarm Investments realized that although New Zealand farmland was a desirable investment asset able of generating healthy long-term returns, the barriers to investing in it were a challenge.
Through its farm syndication model, between 1992 and 2014 MyFarm began purchasing dairy farms, building a portfolio of farm assets valued at $829 million. Having sold 29 farms, the average internal rate of return was 23.9 percent. Rolling on this success, MyFarm has since diversified its investments to include beef, sheep, permanent crops, and manuka honey.
Today, the firm is further diversifying, moving into a high-value horticultural sector through its 96-hectare Central Cherry Orchard Partnership offering. For an industry that totals a mere 800 hectares across the country, this project represents a significant expansion designed to meet significant demand.
“…increasingly we are seeing Asian markets, and particularly China get a real taste for New Zealand cherries,” said Andrew Watters, CEO, MyFarm. “They are recognised [sic] for their exceptionally high quality and freshness, and New Zealand has become very competent at growing, harvesting and delivering them to market in very short time.”
Under the plan, MyFarm intends to develop 80 hectares of the 96-hectare Waikerikeri Valley property into a cherry orchard with the goal of planting 72,000 trees, or 900 trees per hectare, over the course of the next three years. Across the acreage will be planted about 10 different varieties of cherries to extend production throughout the growing season, and to dilute production risks such as damage from frost events.
“… most importantly we have been able to secure sufficient trees to plant 15 hectares straight away and all bar five hectares the following year,” said Watters. “This is in an environment where delays on tree stocks have been up to three years, so we are very fortunate to be able to get started straight away, with land already identified.”
To manage this high-value venture, MyFarm has partnered with export company FreshMax which will oversee both the development of the orchard and its ongoing production under the Central Cherry Orchard Ltd. Partnership.
Cherry trees take four years to begin producing fruit, however, once harvests begin, FreshMax will use existing processing and packing facilities, and will also use existing irrigation and fertigation infrastructure, noted Con Williams, head of investment research with MyFarm Investments.
A particular challenge already on the radar is the ability to engage the necessary skilled seasonal labor for the operation. As a means of attracting the needed workers, there also are plans to possibly build out accommodations for the staff to use during harvest from December to February. If purpose-built accommodations are build, for the remaining months of the year, the accommodations could be rented to tourists, providing an additional income stream for the property.
Estimates by MyFarm are that the orchard will return 12 percent per year starting in year six, and 38 percent per year starting in year 10 as the trees approach full maturity.
“Prospects for the New Zealand horticultural sector are particularly strong as the world seeks out high quality, healthy produce and cherries’ time has come with that – this will prove to be a very rewarding, groundbreaking investment for MyFarm and anyone sharing the journey with us,” said Watters.
-Lynda Kiernan