The multibillion-dollar Harvard University endowment fund has achieved what the former owners of the Maniototo's Big Sky dairy farm only envisioned - profitably milking more than 6000 cows in a "super herd".
Harvard's New Zealand subsidiary was targeting production of 1.8 million kg of milk solids over three years, but fund managers yesterday declined to comment further on the operation, other than what is in its annual financial return.
Harvard's endowment fund purchased Big Sky from receivership in October 2010 for about $32 million, and had since expanded the herd about five-fold to 6318 cows valued at $9.83 million, turning around a $1.1 million loss in 2010 to a $4.87 million after-tax profit for the year to June 2011.
The farms of Ainwick, Tercio and Saran in the Maniototo, plus an adjacent Harvard property, Helenslea, are operated by Harvard subsidiary Cayman Islands incorporated and New Zealand-registered DF1 Ltd, which booked revenues bounding from $1.77 million in 2010 to $11.3 million in 2011.
Investments for the year totalled $8.3 million, including $7.9 to Fonterra, with the balance to local irrigation, fertiliser and rural supply companies.
The Patearoa farm was initially proposed in early 2001 as a "super farm", to run up to 6000 cows on 1600ha using supplementary feed, a proposal which prompted widespread criticism at the time.
Until its receivership and subsequent sale, Big Sky had been running up to 3300 cows on about 1300ha.
Harvard's interests in New Zealand include a large stake in the Kaingaroa forests.
The Harvard fund's acquisition of Big Sky mirrors that of its $1 billion, 184,000ha Kaingaroa forest purchase in the central North Island in late 2003, also following a partnership failure and receivership.
The forest has been described as the largest single man-made forestry block in the world.
The Harvard fund was initially the forest's second biggest owner, but later sold more than a third of its forest estate to the New Zealand Super Fund, BusinessDesk reported yesterday.
The $US32 billion ($NZ38 billion) Harvard endowment fund made an 18.8% return on its natural resource portfolio in the year ended June 30, which included the cutting rights to Kaingaroa forests. The overall portfolio returned 21.4% for the period.
Harvard's fund holds about 10% of its assets in natural resources which it says is mostly timberland, and agricultural and other resource-bearing properties on five continents.
The natural resources portfolio has been built up during the past decade by Andy Wiltshire, a New Zealander who started his career with the New Zealand Forest Service, the developer of the Kaingaroa plantation forest in the central North Island.
Mr Wiltshire is head of external management for Harvard Management, the fund's manager.
Harvard beat China's Citic to buy the Kaingaroa cutting rights from receivership in 2004. The price was not disclosed but it was believed to be near $US650 million.
The same forest was sold by the Crown in 1996 for $2.2 billion.
Since then, the New Zealand Superannuation Fund has acquired a minority interest in the Kaingaroa forest estate for about $300 million.
Big Sky beginnings
The Big Sky dairy syndicate formed in 2001 included Dunedin businessman Howard Paterson, who died in July 2003, and Auckland-based Rodney Humphries and farm founder from 1992 Ewan Carr; the pair later becoming bitterly estranged.
Blue Sky failed to sell for $20 million and when placed in receivership in March 2007 it owed about $30 million, which included about $17 million to the BNZ.