Dairy farm sales at low level
The latest REINZ rural property sales data is out and it’s a mixed bag.
Atotal of 87 rural properties were sold during December in the Manawatu¯ / Whanganui region and of those only four were dairy farms.
Of the remainder of farms sold 62 were lifestyle blocks, 13 were grazing farms and eight were finishing farms.
Richard Anderson of Rural and Lifestyle Sales, Feilding, says the market for lifestyle blocks is very strong and they are selling very quickly.
While there is currently little inquiry for dairy farms Anderson says they are selling but it depends on the general state of the farm and where it is located.
Anderson says there are a number of other factors that need to be taken into consideration. These are compliance costs, the level of compliance, the level of indebtedness and fluctuations in payout.
‘‘There are a whole lot of things happening that are contributing to a subdued dairy market, but on the flip side the payout is ok, interest rates are low, and because of a good season farmers are well ahead in production so it should bode well for the year ahead.’’
The campaign against ‘dirty dairying’ has not helped the industry.
‘‘Dairy farmers are generally very good when it comes to environmental matters but they keep getting lambasted.’’
There are people wanting to buy farms but they are looking for properties with good quality infrastructure, that are well located and have good soils.
‘‘Second and third tier dairy farms that have average to poor infrastructure are receiving little inquiry, although some of these are selling and being converted to sheep and cattle farms.’’
Anderson says low interest rates are a great help to farmers but he did issue a warning.
‘‘If interest rates were to double to say 8 per cent we would have very real issues in the dairy industry. There was a time when dairy farmers could produce there way out of indebtedness by growing more grass and increasing their milk production but they can’t do that these days because of the constraints and meeting N-leaching targets that are placed on them.’’
On a national level the latest figures released by the Real Estate Institute of New Zealand describe dairy farm sales in Manawatu¯ / Whanganui as holding par, as is Taranaki, there has been a significant reduction in sales throughout the Upper North Island, Waikato and Rotorua/bay of Plenty regions.
However, overall the figures show there was an 11.7 per cent increase in farm sales throughout the country in the three months ending December 2018 compared to the number sold in the corresponding three months in 2017.
REINZ rural spokesman Brian Peacocke said sales volumes for the three months ending December 31 2018 were stronger in all categories, compared to the previous three-month period, apart from horticulture sales which eased by 12 per cent.
‘‘From a climatic perspective, most regions enjoyed more rain than the norm, with resulting benefits to livestock via strong pasture growth and maize crops in particular have experienced the best growing conditions recorded for some years.
Peacocke says generally moral through the rural sector is very good with solid levels of production in the dairy sector, strong prices for sheep and beef and continuing optimism for output in the horticultural sector.
‘‘The major constraint balancing such optimism is the dramatic shortage of labour throughout the country, a factor that is impacting negatively on all sectors in the rural economy.’’
Nationally, the market for lifestyle properties saw a slight increase with 1775 sold in the three months ended December 2018 compared to the three months ended November 2018. However, the total of sales for the year of 7086 was down by 7.1 per cent on the number sold in 2017.
Of note was that the median price for all lifestyle blocks sold in the three months ending in December was $690,000, $34,250 up on the figure for the same period in 2017.
Peacocke says this was the strongest result seen in recent years.