Dairy farm investment company MyFarm is syndicating another Canterbury farm and is on the lookout for investors with a minimum $250,000 stake.
The Feilding-based company's latest property is in the Amuri Basin, and it expects to find the remaining $2 million to $3 million to complete the syndication in the next few weeks.
Director Andrew Watters said changing market conditions had freed up the property market with more farms available since 2008-09 when little was sold.
"We have bid on probably seven to eight farms and were successful with a couple, but there is a lot of strong interest. The beauty of the blip on the milk price is we have been able to get our hands on a few more farms."
Watters said the dairy industry was passing through a global phase of milk oversupply with prices softening from previous levels.
Behind this "headwind" the New Zealand milk industry still could rely on the dynamics of big urbanised growth and wealth in countries such as China, he said.
Europe and the United States had a higher cost structure to produce milk than New Zealand and the effect of lower milk prices and a drought in the Midwest would squeeze their margins and put the brakes on their milk production, he said.
"In my 25 years' experience the downturns tend to be short and sharp and like 2008 we came out of it pretty quick."
Watters said China's growth might not be as fast as before, but could not be underestimated.
MyFarm paid $44,000 a hectare for the 216-hectare dairy farm which has a three-year milk production history after being converted from a sheep property.
The farm's 750-cow herd produced 337,000 kilograms of milksolids last season, averaging 1650kg a hectare or 400kg-410kg a cow.
Most syndicate investors will put in between $250,000 and $1m.
Watters said MyFarm was attracted to the Amuri Basin because of its reliable water through the local irrigation scheme.
He said the latest farm had attracted good investor interest and would likely be taken completely by Kiwi investors and expat Kiwis.
At the last Amuri Basin syndication about a third of investors were from Canterbury and many of the rest were dairy farmers. The mix has broadened lately to some sheep farmers and extending to business owners and professionals such as bankers, accountants and lawyers wanting to diversify.
Watters said this combination of professionals would provide a good set of governance skills for the farm's board of directors. MyFarm would manage the farm's daily running.
He said dairy farms were not overvalued as they were still receiving an earnings before interest, tax, depreciation and amortisation (ebitda) margin of 35 per cent, which was higher than most businesses trying to get to a margin of 15 per cent.
"What is relevant is the profit margin, not the cost. We know that Canterbury dairy is the most profitable land in the country in terms of margin generation so it justifies the price."
MyFarm's portfolio now extends to 44 farms.
- The Manawatu Standard
The lower drink-driving limits from December are:Related story: Drink-drive limits lowered