Billionaire farmer Gerry Harvey on making money in ag

FOR THE LOVE: Billionaire retailer Gerry Harvey's love of agriculture has taken him on a sometimes bumpy ride.

Gerry Harvey always wanted to be a farmer and even won a scholarship to agricultural college before a twist of fate saw him become a multi-billionaire retailer.

To pay for his education, he studied part time and held a door-to-door sales job, where he met future business partner, Ian Norman.

"I always used to think by the time I'm 30, I'll have enough money to buy my own farm," Mr Harvey said.

"When I got to 30, I was making so much money, if I became a farmer and made nothing, it would be embarrassing so I kept putting it off.

"So at the end of the day, I kept opening shops because it was a thousand times more profitable than being a farmer for me."

Even so, Mr Harvey is undeniably now a farmer. He might not be hands on but his extensive agricultural investments range from cattle to cucumbers.

No stranger to the horse racing industry, Mr Harvey's ag interests include Westbury Stud in New Zealand, with its hundreds of thoroughbred broodmares and Vinery and Baramul thoroughbred studs in NSW which also host a few hundred cattle in NSW.

He also owns a 500-head Angus cattle operation at Bundella in NSW, Security Foods with its decades-long Wagyu cattle business in Victoria and NSW, and a $30-million, 5-hectare glasshouse in Peats Ridge, NSW, where 65 million cucumbers are grown a year.

Mr Harvey is particularly proud of the Peats Ridge facility's productivity, which he said ranked among the best in the world, but it did cause a stir amongst locals in the early days.

"I drove up there and on the posts were 'No, Harvey, no' and I thought 'What the hell is this?' and found out there was a rumour going around that I had a marijuana farm," he said.

"At no stage, from my point of view would Harvey Norman have a marijuana farm, they'd sack me from Harvey Norman."

No matter which of his agricultural enterprises he talks about, though, the common theme is innovation and diversity.

Coomboona calamity

So, while agriculture has become the darling of rich-listers, this particular billionaire isn't in it for the money. For Gerry Harvey, it's just for the love of agriculture.

He loves watching things grow, whether it's in his home vegetable patch or on a grand scale, and he loves to see the best of the best in operation.

But there are limits.

"I lost $75 million on a dairy farm," he said.

Mr Harvey invested $34 million of Harvey Norman money in a joint venture with businessman Alex Arena into one of Australia's largest dairy farms, Coomboona, in 2015 while the financial press was talking up rivers of 'white gold'.

"Coomboona made sense at the time because we went into it with a guy who owned the property and had $30 million of his own money in there," he said.

"He claimed he knew what he was talking about but, unfortunately, he didn't and he was wrong on so many things and at the end of the day, it was just going to get worse and worse so I just said, 'Mate, we'd better pull the plug on this'."

Coomboona was sold by administrators to the Perich family in 2018 for $40m.

"He (the joint venture partner) wanted to be the biggest dairy in Australia with the best cows in Australia and, in his defence, he probably had 100 of the best cows in Australia, cows that were milking over 60 litres a day," Mr Harvey said.

"He did have that part right but his infrastructure, rate of growth and all sorts of other things, were wrong. Designs for buildings were wrong that he'd swear were the best in the world."

The dairy misadventure drew sharp criticism and dented the big retailer's share price.

"I was one of the people that pushed it and it was a bad mistake," Mr Harvey said.

"If you asked me, 'Do you want to go into a dairy farm?' now, I'd say, 'I have no interest whatsoever, at all, in going into a dairy farm'."

Ag’s profit lag

Mr Harvey said, in his experience, retailing generated much higher returns on investment than agriculture and that if he wanted to "make real money", he would open another store rather than buy a farm.

"If you're doing cattle or sheep, especially over the years, you're looking at very poor returns for the outlay of money," he said.

"You might have $10m invested in a sheep or cattle enterprise and, if you make $300,000 or $400,000 a year, you're going okay.

"So there's no money in it but the money is in the appreciation of the land and, admittedly, there's a long-term proposition.

"I've argued for years, going back 40 years ago, that land's overpriced, everyone's mad, and I've been totally wrong because, every year, if it doesn't go up, it plateaus and goes up a bit later."

Land price doubts

While Australia's record high agricultural land prices had helped many farmers retire with unexpected wealth, Mr Harvey said, he thought it made new purchases less attractive.

"Is this a good time to buy a farm at the moment? I'm a bit shy. So when we've had three years of drought, that's when I'll probably buy another farm."

Indeed, Mr Harvey's most recent land acquisition was a 16-hectare luxury property in Narooma. Webster Nolan Real Estate agent David Nolan wouldn't reveal the price, but said it was a record for the region and bettered the $9 million to $11m indicative range quoted during the marketing campaign.

But Mr Harvey said it didn't signal any change of direction in his property investment strategy. It was the uniqueness of the land, a point surrounded on three sides by Wagonga Inlet with 1.2 kilometres of private water frontage, jetty and guest cottages, that was its allure.

"People go and pay $50 million on a waterfront place on Sydney Harbour but the water is much cleaner in Narooma," he said. "Would you eat a fish caught in Sydney Harbour?"

Ambitions strong

Despite that talk of coastal living and fishing, Mr Harvey is quick to say that, at 82, he's every bit as ambitious as he was at 22.

He thought agriculture was a great choice for people who loved the land and animals.

"Doing something that you love is much more important than doing something for money," Mr Harvey said.

"If you make money and you're not happy, what's the point?

"I think it's a wonderful way of life but if you're going to do it to make money, I'd say don't do it.

"If you love it, the way property prices go, one day, you'll probably just sell the property and use it as a type of superannuation and you've still had a good life."

Good times in farming could never be guaranteed, he said.

"If you're a farmer and you've been having two of the best years we've ever seen, enjoy it, because it's not going to last," Mr Harvey said.

"It's wonderful at the moment because you see so many tragic stories on the land of people committing suicide, and I know quite a few over the years, because you can go through seven years of drought and you make no money and and it's a really hard life and then then you can have this wonderful ride.

"It's a wonderful lifestyle when it's good."

Source: Marian Macdonald, Queensland Country Life, 21 February 2022