Asian investors go big on New Zealand’s dairy

Investment in dairy and milk processing in New Zealand has increased dramatically over the past two years, accounting for over half of all disclosed agribusiness investments in the country, according to a recent report released by KPMG on foreign direct investment.

China and Hong Kong represent 49 percent of the investment in agribusiness with the majority of them in the dairy sector, while the US is the largest acquirer of land in the country.

Agribusiness attracted approximately 11 percent of total investment, with only energy and power (17 percent) and real estate (13 percent) taking larger shares.

A large portion of agri investment is linked to milk processing, at 31 percent, and dairy at 20 percent, for a total of 51 percent. This compares to the 2013 report’s 37 percent figure.

The report’s authors said: “We expect this to slow with the decline in milk prices globally. However, this may be offset by speculative buying of farms in the event forced sales occur in this sector.”

Forestry only accounts for 7 percent of investment, with Canada and the US in the lead. However, some of these transactions were confidential, and it is likely actual the figure is higher.

In terms of land acquired, however, forestry accounts for 56 percent, followed by sheep and beef at 30 percent. Land acquired in the past five years represents about 5 percent of New Zealand’s total agricultural and forestry land area.

Overall, approximately 59 percent of foreign direct investment comes from North America, Australia and Europe, while Asia accounts for 33 percent of total investment.

Read Foreign Direct Investment in New Zealand: Trends and Insights.