New Zealand Update

The latest dairy auction saw prices decline by 1.9%. Whole milk, which is a key price indicator for the Fonterra payout, was down 1.2%.

Fonterra’s payout forecast for season 18/19 has been revised down from $7/KgMS to $6.75/KgMS. The farm-gate price for the 17/18 season now ended is $6.79/KgMS including a 10 cent dividend.

New Zealand’s terms of trade rose 0.6% in the June quarter.

The NZ commodity price index fell 1.1% in August and 0.5% yoy.

New Zealand Dollar/Interest Rates

New Zealand Dollar

Vs            USD         0.66058

EUR         0.57056

GBP         0.50656

AUD        0.91479

New Zealand Interest Rates

NZD cash rate is 1.75%.

The NZ 10yr bond rate is 2.61%.

Deal Themes

—      Gold organic kiwifruit development with annual average yield of 18%+

—      Existing gold kiwifruit conversion to organic

—      North Island regional focused impact investment pastoral dairy

—      High value organic apples

—      South Island impact investment, regenerative dairy.

Noticeable Trends

The following are trends we are seeing in the market:

—      Conventional farmland investment strategy for overseas investors remains difficult to get through OIO.

—      Regulation around water quality is an increasingly significant issue and is influencing farmer decision making. It is driving interest in exit or moving to more regenerative systems.

—      Growth of impact investment interest as a means to improve specific environmental performance in New Zealand whilst generating return. Impact Investment is being seen as a compelling and efficient use of capital for mission driven investors in particular.