Australian investment group Prime Value Asset Management has acquired 11 'outside-the-gate' dairy farms for $62.5 million from the troubled Van Dairy Group in north-west Tasmania.
The price includes 5000 cows and yearlings.
The properties were put on the market earlier this year, as VDL grappled with the fallout from a leaked audit report that showed it faced significant effluent management concerns.
Tasmanian Greens Senator Peter Whish-Wilson had piled on the pressure, calling on the federal government to intervene on whether the company had met its obligations under the Foreign Investment Review Board's 2016 conditions of sale.
The buyer of the 11 farms, Melbourne-based Prime Value Asset Management, is a long-standing, boutique fund manager, which already owns two dairy farms in south-west Victoria and one other in north-west Tasmania.
The company made the move into agriculture five years ago with the acquisition of citrus farms in the Sunraysia.
It has promised to sort out the issues of environmental concern at the newly acquired properties.
Prime Value alternative assets portfolio manager Elizabeth Blackhurst said the fund manager believed Tasmania's Circular Head region offered some of the best farmland in Australia, with consistent rainfall and a temperate climate.
It was ideal for sustainable and profitable dairy farming.
"We also believe by focusing on our environmental and social responsibilities, and the welfare of our animals, we can create a farming portfolio that delivers long-term benefits to the community and strong, consistent returns for our investors, many of which are self-funded retirees and SMSFs (self-managed super funds)," she said.
"Our Prime Value Dairy Trusts are attracting more interest from investors who are looking for reliable and diversified sources of income."
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Prime Value's dairy investments manager is south-west Victorian and former New Zealand dairy farmer Kirsti Keightley, who has a long background in successful dairy farming.
"Prime Value is a hands-on manager willing to take the time to acquire, turn around and build quality assets," she said.
"We already manage a farm in Tasmania near these farms, so this acquisition makes perfect sense for us.
"We're excited by the potential of these farms and with a falling national herd and falling national milk production, we believe this is the right time to be expanding our portfolio.
"We have been in dialogue with the Tasmanian Dairy Industry Authority, EPA Tasmania and Circular Head Council and we look forward to working with them, the community and local businesses to transform these assets.
"We welcome new investors as we build our agricultural portfolio."
Sale welcomed
Circular Head Mayor Daryl Quilliam and Senator Peter Whish-Wilson said they hoped VDL would use the funds from the sale to address the concerns at the remaining VDL farms.
"There have been recurring management issues around maintenance, the need for investment and the need to repair and improve capacity in effluent systems," Senator Whish-Wilson said on Friday
"They are working with the Tasmanian regulator and Dairy Australia now and clearly they're working with Fonterra very closely to fix problems at Woolnorth.
"I've been on this guy's case for five years.
"He's raised the money; let's see it reinvested back in the property and the communities of the north-west.
"Now is his opportunity to do the right thing and honour his promises he made the Treasurer, the Foreign Investment Review Board and the Tasmanian people.
"I'm optimistic he's going to do that."
Cr Quilliam welcomed the sale news.
"They are all farms outside the gates of Woolnorth," he said.
"It is going to free up a fair amount of funding for him, so he should be able to spend a bit more money on Woolnorth itself."
Cr Quilliam said council staff and the Environment Protection Authority were monitoring Woolnorth.
He said "a fair bit" of remediation work had been done in recent times, but more was needed.
Cr Quilliam understood some of the sale proceeds would go towards improvements.
Chinese businessman Mr Lu bought Woolnorth in 2016 for $280 million.
His company, Van Dairy, said the farms that were sold were smaller farms and were sold as part of a commitment to have 10 per cent Australian ownership of the property.
The sale included 5000 cows and involved 2200 of the 19,000 hectares Mr Lu bought in 2016.
Mr Lu said the sale showed demand for dairy in the region was high.
"This shows that farming in North-West Tasmania is very popular," Mr Lu said.
He said annual rainfall in the region reached 1000 millimetres and the average annual temperature was about 12 degrees, which was very suitable for the development of the dairy industry.
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Sean Ford
The Advocate Newspaper, Tasmania. Business, economics, politics, crime.
The Advocate Newspaper, Tasmania. Business, economics, politics, crime.
Carlene Dowie
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
