Thursday, March 28, 2024

Super Fund is sure of agri sector

Neal Wallace
The New Zealand Super Fund has spent only a third of the $1.2 billion it has earmarked for Australasian primary sector investments but its holding might now veer from stock to crops and horticulture.
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So far it has $400 million invested in New Zealand’s and Australia’s primary sectors, mostly in dairy, which shows its confidence in food production.

But its NZ direct investment portfolio manager Neil Woods said its 22 dairy and two beef farms could be the extent of its livestock holdings and future investments could be in cropping and horticulture.

It already owns a Marlborough vineyard and extensive forestry holdings.

As a guide, 3% of the $40 billion fund would be invested in rural land-based industries, equivalent to about $1.2 billion, but a factor in determining investments is whether they are of sufficient size to justify the management cost.

The NZ livestock farms are managed by FarmRight and investment has been made upgrading effluent and irrigation systems and installing high standards of animal welfare and health and safety including a decision to phase out palm kernel feed.

Last financial year it added two beef farms in Southland and Hawke’s Bay, which were bought to grow out cull calves bred on the dairy farms and to lessen exposure to Mycoplasma bovis.

Late last year it also took a stake in the Australian beef stud Palgrove, which runs 5000 registered cattle from its base in Queensland but also has livestock and farms in New South Wales.

Internationally, the fund has $2.3b invested in forestry and timber industries in NZ, Australia, Brazil, Uruguay, Chile, Guatemala, Cambodia and via a holding in a separate investment fund, in the United States.

Woods said fund managers see long-term growth and investment stability in food production given global population growth and the rising wealth of many in Asia.

The fund began buying land-based industries eight years ago because there were few other vehicles through which to invest in the sector.

In June the NZ Super Fund took a 27% stake in international fresh fruit and vegetable grower and marketer NZ Gourmet but Woods said taking an equity stake in primary sector processors other than what was needed for product access is unlikely because it is harder to quit than shares.

NZ Gourmet produces and markets fresh capsicums, blueberries, asparagus, tomatoes, strawberries and cherries to customers in NZ, the US, Australia, Mexico, Peru and Ecuador.

Recent media coverage questioning the ethics of NZ sourcing phosphate rock through Morocco and a disputed part of Western Sahara, prompted the fund to seek clarification from the industry, which, Woods said, confirmed for him there are few alternatives.

“We talked to the fertiliser companies and the producers from Morocco to try and understand the situation.”

From those discussions Woods said the reality of the situation materialised.

“From what we can see it would be difficult for NZ agriculture to not use it. 

“It’s not easy getting an alternative supply.”

The fund was established by the Government in 2003 as a global investment fund to help finance universal superannuation.

It has more than $5b invested in NZ including significant stakes in Kaingaroa Timberlands, Kiwibank, Datacom, Fidelity Life and Metlifecare. 

Woods said the fund’s rural investment is a vote of confidence in the sector.

“NZ is a strong place in which to play because we produce food of high quality which we export around the world.”

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