Rural market stays resilient despite dairy payout drop

Fonterra’s lowered milk payout this season has failed to put a dent in farm prices and sales compared to a year ago.

According to the Real Estate Institute, there were 486 farm sales in the three months to December, a 30 per cent fall on the previous three months to November and 12.3 per cent lower than the same period a year earlier.

The median price per hectare for all farm types was $28,781, up 19 per cent on a year ago levels.

South Waikato mimicked those national trends, PGG Wrightson regional real estate manager Paul O’Sullivan said.

Going off the last five sales in the district, the average sale price per hectare was about $45,000, he said.

REINZ rural spokesman Brian Peacocke said the rural market was proving resilient despite the fall in global dairy prices.

Volumes and prices indicated a ‘‘strong degree of confidence among the ranks of vendors, purchasers and financiers in the medium to longer term future of the pastoral industry’’.

REINZ’s dairy farm price index, which adjusts for differences in farm size and location, rose 11 per cent compared with a year ago, and Peacocke said dairy farm sales were particularly strong in Waikato with record prices for farms in good locations.

Dairy farm buyers were active in Rotorua and Taupo, and there were solid prices for sheep and beef properties in Hawke’s Bay.

O’Sullivan, who sold his first property in the South Waikato in 1978, said the district was still one of the most favoured areas for dairy farming, in the North Island.

But he said he expected the effects from the payout drop to kick in soon.

‘‘I’m expecting prices to firm or soften a little.

‘‘In times of economic restraint there won’t be a lot of farms for sale, there’s usually less movement not more.’’

He said demand was already outstripping supply.