PDI a new ownership pathway?

However, others are not so sure.

MyFarms director Andrew Watters told Rural News the cost of dairy farms now means new pathways to ownership for young farmers must be developed, and new company Pastoral Dairy Investments' (PDI) offering is an example of that.

And rather than overseas ownership, with 50/50 jobs becoming increasingly scarce it's better young farmers have a shot at taking a 10-30% stake, he argues.

"We need new pathways...we will certainly be offering that through PDI –there's an opportunity to buy a 10, 20 or 30% share in a farm."

MyFarms will manage the farms for PDI which launched a public share offer to raise $25m to buy eight to nine large dairy farms, mostly in the South Island.

PDI says its point of difference to other farm equity investments is the low level of minimum investment. At $20,000 ordinary non-rural Kiwis will have their first real opportunity to invest in dairy farms, it maintains.

But $50m from "co-investors" is also being sought, and PDI says it's keen for the farm managers it employs to invest in the farm. Farm managers will be able to use stock, plant and/or cash as capital for their co-investment and it will allow young farmers to use the farm as collateral for some debt.

But in Southland, one of the areas PDI is scoping for farms, dairy farmer Russell MacPherson says he personally believes New Zealand should ask itself, as a society, do we really want corporate farm ownership?

"New Zealand's history is based on family farms, one family one farm. Those farms are productive and there are very few environmental issues. If you own that land you are not going to do anything detrimental to that environment because you live in it and you have ownership.

"As a society do we really want to have what we have in England where farms are owned by absentee land owners?"

But Watters says the value of a 700-800 head farm is a big issue.

"Family ownership will always dominate but there's going to be more and more corporate ownership – better it's corporate than overseas."

Federated Farmers Sharemilkers chairman Ciaran Tully says people moving from management to operating their own sharemilking/contract businesses will find opportunities within equity arrangements such as PDI.

"However, there is a balance point between equitable returns to a 'hands on' farmer, and the dividend streams for  'hands off' owners. This can create tensions between milker and owner when milk price is constricted and dividend streams are the focus of investors.

"For those looking at investing as an equity manager, careful scrutiny should be made of sunset clauses and the ability to grow their own businesses."

A report commissioned by Feds Dairy Section, with support from DairyNZ, is looking into farm succession and will be finalised late autumn.