Furniture and appliances retailer Harvey Norman has defended its decision to diversify into dairy farming and cattle breeding, telling shareholders it is confident a $34 million investment in one of Australia's largest dairy farms will deliver returns.

The retailer faced a backlash from investors after revealing on Wednesday it had acquired a 49.9 per cent stake in dairy operator and cattle breeder Coomboona Holdings for about $25 million and had advanced about $9 million to the company.