Big changes for Van Dairy

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A part of the historic Woolnorth farm in north-west Tasmania has been sold by Van Dairy owner Xianfeng Lu.

About 6000 hectares have been sold to the TRT Pastoral Group, which intends to run beef cattle on the property.

Van Dairy operated the biggest dairy farm group in Tasmania.

A number of the 27 Van Dairy farms had been under investigation over effluent management earlier this year.

Van Dairy sold 12 farms in May for more than $60 million.

Melbourne-based asset management company Prime Value bought 11 dairy farms about six months ago for $62.5 million and has undertaken significant works to improve the environmental management, animal welfare and productivity.

Prime Value Dairy Trust portfolio manager Elizabeth Blackhurst said they saw this acquisition as a significant turnaround opportunity, as well as an opportunity to draw together a substantial landholding in one of the most productive parts of the world, secured by exceptional rainfall and irrigation opportunities.

“Since the farms settled in May, we have been working closely with the regulators while we remediated the effluent systems and raised the standards of operating. We’re very pleased with progress,” Ms Blackhurst said.

The Tasmanian Dairy Industry Authority and the Environment Protection Authority have both approved Prime Value’s farm remediation works.

Early steps to optimise the investment have involved selling off two non-core farms from the portfolio, contracting to purchase two other properties to create a more contiguous landholding, acquiring a ‘support block’ at nearby Seven Mile Beach to provide for winter grazing and rearing young stock, and leasing another large dairy farm and ancillary land to further increase milk production.

By December 2021, Prime Value Dairy Trust will own more than 3000 hectares across 12 farms in north-west Tasmania and two in south-west Victoria.

The company will be milking about 6000 cows producing an estimated 32 million litres of milk and 2.5 million kilograms of milk solids in 2021-22.

Prime Value dairy investments manager Kirsti Keightley said the Togari farms in north-west Tasmania were some of the best dairy farms in the world due to their reliable rainfall, quality water and excellent pasture growth.

She said Prime Value was in the process of consolidating the Togari farm holdings, with plans to decommission five smaller dairies and build two larger dairies.

“The new dairies will run more than 1000 cows each and create greater efficiencies.”

The new equipment and dairy producing capacity from these farms will also be positive for capital growth, according to Ms Keightley.

She said the Seven Mile Beach farm, which settled in September 2021, was a strategic purchase allowing the cows to be wintered there, while the leased dairy farms will also be used to winter cows and raise young stock.

She said Prime Value was also investigating opportunities to add further value via dairy-beef.

“There is high demand for grass-fed, traceable animals, which secure a premium sales price. People want to know where their animals come from and we can meet some of this demand.”

Mr Lu said while he sold 12 of the "outside farms" earlier this year, he still owned almost 17,000 hectares of agricultural and conserved land.

According to Mr Lu, the company employs 140 local residents, making it one of the largest employers in the region and a major contributor to the Circular Head economy.

He said recently Van Dairy was progressing plans to construct two north-west factories to package and produce high-quality powdered milk.

He said his company was seeking licence approvals from authorities to develop a packaging facility on a site at Somerset, while on Woolnorth they have plans for an organic powdered milk factory.