Signs ru­ral mar­ket is start­ing to re­cover

Matamata Chronicle - - Your Paper, Your Place - COM­MENT

Af­ter two chal­leng­ing years with low re­turns and an un­cer­tain in­ter­na­tional mar­ket out­look, dairy farm­ers at last have some rea­sons for op­ti­mism.

With the Global Dairy Trade auc­tion gain­ing steadily over the past two months and Fon­terra’s pay­out pro­jec­tions in­creas­ing ac­cord­ingly, our econ­omy’s most im­por­tant sec­tor ap­pears to have emerged from its trough.

Farmer con­fi­dence is head­ing in a pos­i­tive di­rec­tion, with one of the bankspon­sored ru­ral sur­veys show­ing that, over the past three months, the per­cent­age of farm­ers ex­pect­ing prospects to im­prove has in­creased sig­nif­i­cantly and, among dairy farm­ers, op­ti­mism now sits at a nine-year high.

Al­though that sen­ti­ment is ev­i­dent in the ru­ral prop­erty mar­ket, it still has some cau­tion at­tached.

Farm­ers are pre­par­ing to act to en­hance their busi­nesses, with some right on the point of do­ing so.

Fon­terra’s ris­ing pay­out will give con­fi­dence to both sell and pur­chase land.

Those con­sid­er­ing of­fer­ing prop­erty to the mar­ket can be more cer­tain that they will re­ceive a good price, while those look­ing to buy can ex­pect a bet­ter re­turn on their in­vest­ment.

Those farm­ers who cut back on in­puts dur­ing the mar­ket down­turn are now likely to ben­e­fit from their re­sis­tance to ad­ver­sity.

En­ter­ing a more pos­i­tive phase, how­ever, those plan­ning to trans­act dairy prop­erty need to be re­al­is­tic and put them­selves into the minds of po­ten­tial pur­chasers, who will be scrupu­lous in their assess­ment of a par­tic­u­lar farm’s busi­ness case, en­sur­ing that they can op­er­ate prof­itably be­fore com­mit­ting to pur­chase.

Lo­cally, prospec­tive pur­chasers are ask­ing for good sup­port blocks, with farms suit­able to grow maize and run re­place­ment stock in par­tic­u­lar de­mand.

Those farm­ers who are look­ing are well-re­sourced and ready to buy so a num­ber of trans­ac­tions of such prop­er­ties are likely through the spring.

One or two sales of good prop­er­ties over the next few weeks should set the tone for the ru­ral prop­erty mar­ket for the rest of 2016.

Richard Leach, based in Pu­taruru, sells ru­ral prop­erty for PGG Wright­son Real Es­tate, from Mata­mata through the Cen­tral Plateau to Taupo.


Richard Leach.

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