Imagine a bustling Australian dairy farm, home to thousands of cows. This is the reality for Prime Dairy, an Australian investment group that is on track to amass a herd of 10,000 cows by 2027. This impressive objective is set to become a reality with the recent acquisition of another 700-hectare dairy farm in Tasmania. As of now, the dairy-savvy professionals at Prime Dairy manage a 8,600-strong herd across Australia and look upon the future of dairy farming in the country with great confidence.
Prime Dairy, the dairy arm of Melbourne-based fund manager Prime Value Asset Management, is not just about the cows. The investment group also puts its financial prowess to work managing equities, income securities, direct property, and other alternative investments. Their ambition is to generate minimum returns of 12% for their investors.
“If we can make corporate dairy farming work in Tasmania, we can make it work anywhere,” says Kirsti Keightley, General Manager of Dairy Investments at Prime Dairy.
Keightley joined Prime Dairy in 2018 as the group was exploring the possibility of starting an agri fund. Her passion for demonstrating the viability of corporate dairy farming in Tasmania and her strategy that revolves around purchasing farms in high rainfall areas—with either irrigation or a secure water source—has proven instrumental. Her responsibilities include managing a bustling team of 80 staff on the investment group’s dairy farms and communicating with potential investors, a majority of whom are Australian.
To date, Prime Dairy has invested a staggering AU$250 million in 11 dairy farms and 4 supporting farms. By the next season, these investments are set to yield milk from 9,000 cows. The ultimate goal? A sizeable herd of 10,000 cows spanning across 5,800 hectares by 2027. The farm has ambitious production targets too, with an aim to produce 43.13 million litres of milk by 2024, and 45.28 million litres by 2025.
While some Australian dairy farmers bow out of the industry due to climate challenges, labor shortages, or poor prices, Prime Dairy asserts the future of its farms are secure. A whopping 90% of their farms are located in Tasmania—a region believed to be least affected by climate change due to its mild climate, generous rainfall, and readily available irrigation water.
Reflecting on the condition of the dairy industry, Keightley asserts that the introduction of a code of conduct for processors and a guaranteed minimum milk price has slowed the departure of farmers. Dairying in Tasmania is growing steadily, with an annual growth rate between 2% and 3%, even while the rest of the country witnesses a decline of approximately 5%-6%.
The recent acquisition of their 13th dairy farm from VDL was the 11th purchase made during 2021. Since then, Prime Dairy has committed significant capital expenditure, delivering strong dairy production. The Prime Value Dairy trusts aim to maintain a minimum return of 12% over the medium to long term. This includes quarterly distributions of 5-7%, derived from a blend of regular income generated from milk sales and land value appreciation.
