Fortuna founders David and Kay Dodunski, Dairy Holdings shareholders Colin and Dale Armer, and Southern Pastures' directors Graham Mourie and Prem Maan.
This story was first published in May 2024.
They contribute billions of dollars to New Zealand’s economy and are responsible for thousands of milking cows and farm hectares. So who are the country’s largest dairy farmers? Jamie Gray uncovers the big players in the dairy sector.
After dairy’s rollercoaster ride of the past decade, 10 big names have emerged as the country’s top producers.
In recent history, the sector has gone through a milk price bubble, a debt crisis, all the while facing increased competition from other land uses.
Added to that has been a big strategic shift from the country’s dairy company, Fonterra, away from volume for the sake of volume to maximising the value of New Zealand milk.
While production has come off its peak, it remains quite elevated, despite declines in the dairy herd.
The experts put that down to better genetics.
In the 2022/23 season, dairy companies processed 20.7 billion litres of milk containing 1.87 billion kilograms of milksolids, down fractionally from the previous season.
However, average milk production per cow was 393 kg of milksolids (made up of 221 kg milkfat and 173 kg protein), a 1.8 per cent increase.
Average milksolids per effective hectare (1125 kg) also increased and was near 2020/21 levels, according to Dairy NZ data.
Cow numbers have continued to decline in recent years. The total cow population in 2022/23 was 4.67 million, a decrease of 3.46 per cent from the previous season.
There were 10,601 herds 195 fewer than the previous season. The national average herd size was 441, which was eight cows lower than the previous season.
Former bank economist Nathan Penny, who now works as an economist for the Queensland Government’s Department of Agriculture, notes that there has been a slowdown in the expansion of the dairy industry in general.
“Milksolids production has been pretty flat for five or six years now, so there is not that rapid expansion,” he says.
Penny says that, due in part to environmental regulations, dairy has become a lot more complicated.
“There is a lot more regulation in play than was the case five or 10 years ago, so dairy farming does lend itself to more sophisticated businesses who can manage that.
“That trend of consolidation will continue and some of these companies may get bigger, even though the industry itself is not getting bigger.
“Some people are leaving the industry – some of the smaller farmers who can’t quite keep with the regulation, and who don’t quite have the energy to do it, and who move into semi-retirement by moving into beef farming.”
In the Bay of Plenty, kiwifruit is muscling in on dairy land.
“It’s not a big trend but it is part of the mix,” Penny says.
“The industry as a whole is not growing but some of these 10 companies may still grow as they hoover up of the smaller businesses.”
The big operators have economies of scale at the management level, which is where the small “mum and dad” farms are struggling, he says.
“They do not have enough headroom to do all of the things that they are now required to do.
“As the poorer-performing farms fall out, what you are left with is the higher-performing farms which are continuing to improve through things like improved genetics.
“And as things get tougher, the weaker farmers and businesses will exit the industry and have done so.”
Heavy demand from China saw Fonterra’s milk price soar to $8.40 per kg of milksolids in 2013/14 but the following slump to $4.40 in 2014/15, then to $3.90 in 2015/16 was devastating for farm balance sheets.
Milk prices have stabilised in recent years - and hit a record $9.30 a kg in the 2021/22 season, but on-farm costs have also escalated considerably.
In the leadup to the slump, expansion had driven up farm debt, to the point where the Reserve Bank cited it as a risk to the financial system.
The Reserve Bank is more relaxed about dairy farm debt these days, saying in this week’s financial stability report that the near-term risks to the agriculture sector have eased with the recovery in dairy prices.
The bank noted that dairy prices are often volatile, and this has been the case again in the past year.
In August 2023, the midpoint of Fonterra’s milk price forecast for the 2023/24 season was $6.75 per kg.
Since then, international dairy prices have recovered.
However, the Reserve Bank noted that debt servicing costs have increased considerably.
While varying across farms, a majority of farms currently pay between $1.0 and $2.5 per kg.
The bank said that around 7 per cent of farms pay more than $3 per kg in debt servicing, and that this proportion has been increasing.
Penny said that in its heyday, farmers tended to “throw various types of feed at cows to maximise production”.
Now, maximising production is no longer the way the industry thinks.
“Farmers are thinking about maximising efficiency and profit, which is not necessarily loading up your cows with as much feed as possible.”
Some farmers have now focused on pasture only, using fewer supplements, and some processors are willing to pay a bit extra for that style.
Penny says dairy’s big expansion mid-way through the decade was fueled in no small way by bank debt.
“The banks led the way and were a big part of the equation when the industry was expanding rapidly.
“A lot of it was bank-funded, and the banks, if you asked them honestly, would probably say that they got a bit carried away.
“So, there has been a move by the banks to fund on the basis of cashflows and they are not really looking to fund on potential for capital growth.”
Here are the top 10 New Zealand dairy farmers:
Self-described as Fonterra’s largest milk supplier and shareholder, Dairy Holdings consists of four dairy farming units that manage 60 farms and 20 grazing blocks in the South Island.
According to the company’s website, the business runs approximately 52,000 milking cows producing 17.81 million kg of milk solids annually.
On that basis, Dairy Holdings is the country’s largest dairy farming business.
Over the years it has gone through several ownership changes.
The company was formed in 2000 as a large-scale farming partnership between businessmen Allan Pye, Allan Hubbard and Colin Armer.
After the financial crisis, a major ownership shake-up occurred due to the receivership of Hubbard’s finance company South Canterbury Finance.
Receivers sold South Canterbury’s 33.6 per cent stake in Dairy Holdings for $56.4 million to existing shareholders while some US shareholders at the time also sold out, followed by Pye himself.
In 2018 there were three shareholders – Colin and Dale Armer, Turdair Holdings (controlled by Temuka farming couple Margaret and Murray Turley) and Jagewi Ltd (a joint venture consisting of JD & RD Wallace, John Luxton and Luxton family interests and Auckland businessman Paul Benjamin).
In 2020 Jagewi sold out to Canadian pension fund subsidiary Sooke Investments, which would then on sell its 24.9 per cent stake to Melbourne-based investor Aurora Dairies. Meanwhile, Turdair with 33 per cent would be restructured as Turdair Puainuku Pastures – a limited partnership that includes Māori interests through Tama Asset Holding Company, an entity associated with Ngāti Tama ki Te Waipounamu Trust.
The current shareholding structure has Colin and Dale Armer owning 41.98 per cent, Aurora Dairies 24.99 per cent and Turdair Puainuku 33.03 per cent.
The Armers are big dairy farmers in their own right (See #7 below).
Dairy Holdings is chaired by former Fonterra director Greg Gent.
State-owned Landcorp is at number two, although its slice of the dairy pie has diminished over time.
Landcorp, among its many roles, manages properties that are subject to Treaty of Waitangi claims.
“Most of the change over the last 10 years would have been from the number of dairy farms going out under Treaty of Waitangi settlements,” CEO Mark Leslie says.
Leslie says Landcorp’s focus has been on making sure the production side of the operation is equally balanced with sustainability.
Between 17 and 18 per cent of Landcorp’s milk solids are produced by organic farming systems.
About 50 per cent of all its dairy calves reared will go into dairy beef and the company wants to get that to 75 per cent in the next few years, Leslie says.
“Organics has worked well for us, and those organic farms are at the top end of our most profitable farms,” Leslie says.
Land use changes have been part of the equation for Landcorp’s production decline.
“We have diversified across the network into forestry and in regenerating into native trees.
“But equally, in Northland we have diversified into avocados, berries, and other horticulture crops up there, and that’s had an impact on our dairy unit near Kerikeri.
”To sum up, we will continue to be a large dairy farmer, but equally we are balancing that up around other aspects around sustainability and the social licence to operate.
“Organics and the land use changes that will play into that.”
Chinese interests emerged as major players in the New Zealand dairy industry when Shanghai Pengxin Group invested more than $500 million, including the controversial 2012 purchase of the former Crafar Farms in the North Island for $200m.
A year later the group acquired an additional 3942 hectares in the South Island after taking a 74 per cent stake in Synlait Farms in a $85.7 million joint venture.
In 2015 those assets were transferred to Hunan Dakang Pasture Farming Co, of which Shanghai Pengxin retains a 55 per cent stake with the remaining 45 per cent held by public investors. The New Zealand operations were housed in two entities, Theland Farm Group and Milk New Zealand Dairy Limited.
In 2017, Milk New Zealand Dairy was restructured as a 100 per cent subsidiary of Theland New Cloud Digimart (Shanghai) Ltd and later that year the Alibaba Group and its founder’s capital venture company acquired a 57 per cent stake with Hunan Dakang retaining a 33 per cent stake and minority shareholders the remaining 10 per cent.
There were 29 dairy farms under this structure with 16 in the North Island housed in Theland Tahi Farm Group and 13 South Island farms in the “Purata Farm Group”.
Some 577ha have since been on-sold by Theland Purata, the Herald understands.
The New Zealand Superannuation Fund, formed in 2001 to help the government offset future national superannuation costs, is another big player in the sector.
The Super Fund has been invested in dairy since 2011 and today it makes up approximately 65 per cent of its total New Zealand rural portfolio by value, which is worth $800m or 1.1 per cent of the fund’s assets.
It has 7,428ha in dairy with 25 farms in Canterbury, Southland and Waikato running 22,655 cows.
The fund says its dairy farm manager, FarmRight, has delivered significant environmental improvements on these farms since 2010, including reducing greenhouse gas emissions per ha by 8 per cent.
“We have also reduced nitrogen per ha use by 33 per cent on dairy and beef farms and 40 per cent across our whole rural portfolio, while continuing to deliver strong commercial returns,” the fund’s portfolio manager, Bryan Bennett, says.
FarmRight was founded in 2000 by Lumsden farmer Tony Cleland as an investment management company focusing on the agribusiness sector.
The business has expanded from an original three managed dairy farms to 59 properties in New Zealand, which include dairy farms, beef farms, orchards, vineyards and hop gardens.
“With over one billion dollars of assets currently under management FarmRight focuses on providing a full range of investment management solutions to well-governed, long-term institutional and private investors,” FarmRight says.
FarmRight’s management team includes chief executive Jim Lee, while Ed Tapp is general manager of the Super Fund’s portfolio.
Established in 2008, rural investment company Craigmore Sustainables manages more than 25,000ha of farming, forestry and horticultural properties across the country.
Craigmore is New Zealand owned and operated while its assets are foreign-owned, mainly European.
The company, which is focused on producing sustainable food and fibre, today has total assets of more than $1 billion with 60 properties.
Its dairy operations span 22 farms with 21 milking platforms and one grazing farm in the South Island. The company says it produces 80 million litres of milk each year.
Craigmore gets its name from the Elworthy family’s 4200ha Craigmore Station in the foothills of the Southern Alps, now owned by Bridget and Forbes Elworthy.
About $400 million of its assets are in South Island dairy farms, $400m in horticulture and about $200m in forestry in the lower North Island. The company has about 230 direct employees and is managed by chief executive Che Charteris.
Dairy investment fund Southern Pastures - the company behind Lewis Road - has 10 farms in South Waikato and nine in Canterbury.
The company has a heavy emphasis on sustainability and climate change mitigation.
“We are very much focused on what our customers and consumers want,” executive chairman Prem Maan says.
Southern has a business-to-business model, and exports wholesale ingredients to various customers around the world.
It’s also big in butter, through its Lewis Road brand.
Southern, which has been going for 12 years, goes very light on antibiotics, which it only uses in extreme circumstances.
“We believe that our type of farming is very close to regenerative, and is better for the environment,” Maan says.
Southern started with 16,000 cows but is now close to 15,000 with only a slight decline in production.
“We think dairy done properly can be part of the environmental solution and that it does not have to be a problem.”
Southern Pastures is funded by a range of New Zealand investors and European Pension Funds, including Sweden’s API.
Founding shareholders include Prem and Lynnette Maan, former All Blacks great Graham Mourie, White Aluminum founder Phillip White and former fund manager and investment banker Taari Nicholas.
Trinity Lands - headed up by Fonterra’s chairman Peter McBride - has extensive interests in dairy and horticulture.
The company’s directors of Trinity Lands are appointed by the shareholding trusts Lichfield Lands, Longview Trust and Hillview Trust.
According to its website, Trinity was inspired by the philosophies of famous American industrialist and philanthropist R. G. LeTourneau, the founding directors dreamt of establishing a business for doing good in the community.
McBride is the grandson of Lichfield Lands and Longview Trust founder, Robert Auld.
He has been involved with Trinity Lands since it was created to bring together the three founding Trusts in 2011 and has been CEO since 2017.
Trinity also has horticulture assets, including 178ha of Kiwifruit orchards. Its dairy farming business is managed by Andrew Archer.
The Armer Group is a family-owned dairy farming business based in Te Puke with farms in the Bay of Plenty, Central Plateau and Taumarunui areas.
From sharemilking beginnings Colin and Dale Armer have grown the Group to 15 dairy farms and three support blocks milking 14,000 cows by operating a farming system based on high pasture utilisation developed out of Ruakura No 2 Dairy and other research undertaken in the 1990s.
The Amers are also the sole remaining foundation shareholders of Dairy Holdings Ltd in the South Island which owns and operates 58 dairy farms plus supporting grazing blocks.
Founded in 2000 by a group of dairy farmers from New Zealand, including Gary and Barbara Townshend, and an Irish couple, Grasslands originally comprised 1608ha running 19,500 stock units, mainly merino sheep in Hororata, Canterbury.
Since then, it has morphed into a global dairy farming business. In New Zealand, Grasslands operates nine farms in Canterbury with 8200 cows producing 3.2m kg of milk solids and seven farms in Southland with 6000 cows producing 2.25m kg of milk solids. It supplies both Fonterra and Synlait.
The company also operates a New Zealand pasture-based grazing system in South West Missouri with more than 11,500 cows on 15 farms. The US operations, under the name Free Range Dairies LLC, supply premium grass fed milk to Dairy Farmers of America, Zeal and the a2 Milk Company.
Grasslands employs 86 fulltime staff in New Zealand and around 60 in Missouri.
Grasslands has four directors, including Deborah Marris and Simon O’Connor in New Zealand and Vincent Curtin and Michael McCully in the US.
Its share register is vast and includes individual dairy farmers, investors and businesspeople.
The three largest shareholders are:
There are several other Grasslands shareholders, including Heritage Farms and Inisfree Ltd, which each hold more than 5 per cent.
Established in 2012, Fortuna is an amalgam of several Southland farms operating under a corporate structure with equity partnerships.
The company’s roots go back to the early 1990s when founders David and Kay Dodunski moved to Southland and started out with just 125ha and 216 cows.
In 2012 multiple farms were grouped together to form the Fortuna Group, which went on to become one of the fastest-growing dairy operations in the lower South Island.
Fortuna, which is now 25 per cent owned by Craigmore Sustainables, has over 15,500 dairy cows and 5366ha across 21 dairy farms.
Shareholders include the founding family, long-term employees and agricultural investors.
Outside shareholders are subject to a minimum investment (currently set at $750,000) and/or being able to satisfy specific investor criteria and passing suitability tests.
Fortuna’s board members are David Dodunski, chairman Mike Fleming (who is also a director/shareholder of Heritage Farms), Tom Richardson, Stuart Taylor and Neil McAra. The company CEO is Matthew Richards.
In 2017, Fontuna commissioned New Zealand’s first dairy methane recovery plant which turns effluent into electricity, which powers the cow shed and cuts its emissions by around 10 per cent a year.
The company says it spends 10c per kg less than most farms on fertiliser applications, through testing and “smart” variable rate applications.
“We are an inter-generational farming business so we have to think about tomorrow,” David Dodunski says.
“It’s important we leave the land in a much better condition than we found it.”
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
- Additional reporting: Duncan Bridgeman.
Family say there are two people who may have information but are yet to be located.