1. WHAT GOES IN: When Mother Nature was divvying up the assets, she bestowed upon New Zealand the perfect climate for growing abundant grass. This might seem like a boring sort of inheritance, but not to a farmer whose livelihood depends on his ability to feed animals. New Zealand grows more grass than just about anywhere else on earth. Fortunate really, because your average dairy cow eats around 90 kilograms of grass every day.
2. THE ENGINE ROOM: The slow gastric process of converting grass into the liquid currency we know as milk involves a good amount of chemistry and a little bit of magic. As you know, milk gets turned into all manner of things and shipped overseas to help feed the world. As luck would have it, New Zealand is home to Fonterra, the powerhouse of our industry and the world’s largest dairy processor. Like being in the playground at primary school, it’s handy to have the big guy on your side.
3. THE UDDER: To a dairy farmer, a cow’s udder is like an ATM-it’s the place to go when he needs money. The average cow produces more than 4000 litres of milk per annum. The average dairy herd is 402 cows. Mathematicians will tell you that’s enough milk to fill 16 average size swimming pools or, founded off at today’s milk solid price, about $1.2 million dollars in gross income.
4. THE COW’S BACK: For a piece of the action without getting their hands dirty, savvy investors have been riding around up here for years. Apart from earning an average return of 13% between 1992 and 2012*, they’ve cottoned on to the simple notion that the world’s population is going mad and there’s not enough protein to go around. This is all good for New Zealand and it’s all good for you. So come on up and let’s celebrate with a glass of milk.
*The usual investment lawyer’s disclaimers