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Listen to some and you'd think Waikato's rolling hills were paved with gold, not lush grass. Fonterra's recent dairy payout forecast has served only to confirm a perception that farming, and dairy farming in particular, is a sure road to riches.
But land prices are soaring in tandem with dairy payouts, which means there are now more opportunities for investors to make some money out of farming without having to get up before dawn and milk a cow.
Fonterra is reviewing its capital structure, with its farmer owners voting later this year on plans that may include a partial listing on the NZX.
Other ways for Queen St farmers to take part in the world commodities boom are expanding, with acceptances for a $60 million "AGRIFund" private capital investment offer being tallied up this weekend.
The offer, designed to open up the agricultural sector to a wider group of investors, closed on Friday.
Fund spokesman Andrew Watters, a director of rural funds management company AGInvest, which will manage AGRIFund, says New Zealand is now starting to see the impact of a world food shock that will "steeply increase the value of its dairy products and agricultural commodities".
It's a medium to long-term shift, says Watters, reflecting global population growth, the westernisation of diets to animal protein-based foods (particularly in Asia), and a trend towards planting arable land for bio-fuel instead of food.
AGRIFund is targeting an internal rate of return of 15 per cent per annum on equity invested. Its managers plan to invest 50 per cent in high potential pastoral farms and 50 per cent in agri-businesses.
Watters says that there are a few reasons why the wider public should look at agriculture for investment opportunities.
"Firstly, it's quite a big part of the economy, both in terms of its contribution to exports, but also its contribution to GDP."
He says the wider influence of agriculture is about 17 per cent of GDP.
"In terms of having a wider diversified investment, it's a pretty big sector to miss out on. This is actually a pretty big chunky part of the economy.
"Fundamentally it's a very sound investment, particularly if you're investing in the right places.
"Land as an investment is secure, it's very bankable, it's underpinned not only by the performance of dairy and lamb and wool, but in many farming areas, farms are getting closer to town and they appreciate.
"The reality is sheep and beef and dairy have, on average, returned around 12 per cent per annum for the past 10 years. And while that's not as good as the sharemarket over the past five years, over an extended period it's a pretty comparable performance."
A quarter to one-third of this growth is "cash" says Watters, while the rest is capital growth.
Watters has been travelling the country presenting the AgriFund to a wider audience - brokers and investment planners, along with the public.
"It's certainly been an education. People are not used to the sector being put in front of them, so it's a relatively new thing for them."
Someone who knows the dairy industry well and the wider agricultural investment scene is Rural Portfolio Investments managing director Craig Norgate.
He says investors wanting to cash in on the world commodities boom don't have to restrict themselves to this country.
New Zealand Farming Systems Uruguay, set up last year, already owns more than 12,000 hectares of South American farmland.
NZFSU is getting ready to list on the NZX later this year, after raising about $250 million.
Norgate told the Herald on Sunday that these shares - which he says have a large waiting list of interested investors - are a good way of getting a part of the global dairy boom. And since the shares will be listed, are also the most liquid way of investing in agriculture.
Norgate says there has been a lot of capital going into the dairy industry over the past 15 years in the form of equity partnerships - the more common way for the Queen St investor to get into farming.
Such arrangements usually involve an active farmer, passive parties and perhaps a share-milker.
"That's a structure that has evolved very strongly over the past 15 years as a way of farmers getting on to increasingly larger properties without having to come up with all the capital themselves," says Norgate.
"And there's lots of people prepared to put up private capital but not have to get up and milk the cows."
Farm consultants, companies such as AgInvest and real estate agents often put together these kinds of deals.
As land values soar and farms get bigger, Norgate says that there will start to be "more flexibility" around capital structures.
"That will help existing farmers as well though - both to diversify and intensify. Still the vast majority of the increased capital value of the dairy industry if you like has accrued in the past 15 years has gone to hands-on farmers, but there's also an awful lot of external capital as well."
Norgate said earlier this year that provided there was not too much uncertainty around Fonterra's new capital structure, "conditions are right for a rapid evolution of farm business structures".
"Farmers now have the tools to unbundle their returns from cows, land and dairy company shares, reconfigure them in whatever form they choose, and add additional associated assets either in New Zealand or offshore."
ASB Securities investment adviser Stephen Wright says one issue with agricultural investments, such as those being offered by AGRIFund, is their lack of liquidity - that there is no secondary market for investors to sell their stakes.
"I'm not saying we only do things that we can sell in a secondary market such as the stock exchange - but that's what we prefer," says Wright.
"It's not to say it's a bad investment. All sorts of people have got into private equity and hedge funds - all sorts of things.
"They've all got the same issues and many can do really well."
