More changes ahead for farmers
Recent Real Estate Institute statistics indicate the number of farms sold nationwide in the three months to March 2016 dropped almost 10 per cent since last year.
Farm values, however, remain unchanged.
In South Waikato, while the market for dairy farms is subdued and farm listings are short, interest from people seeking 200 to 280 cow farms is re-emerging, alongside corporate buyers interested in farms with capacity for a minimum of 1000 cows.
Steady demand continues for dry stock properties, possibly reflecting dairy’s softer outlook.
Elsewhere in the country, demand for beef, horticulture and viticulture land is running high.
With markets uncertain, prudent farmers are scrutinising the future.
One issue we must educate ourselves on is impending regulatory change governing water and nitrate use.
Regional water plans are an important issue, most immediately in parts of the South Island.
My PGG Wrightson Real Estate colleagues advise that new land use regulations are already impacting Canterbury and Southland property transactions.
Similar change will eventually reach South Waikato.
These new regulations define farming zones according to river catchments, classified based on the incidence of nitrates leaching to groundwater and surface water.
Zones with greater nitrate concentration are more strictly regulated.
Farmers within each zone must monitor and modify land use to minimise their collective impact on water.
Every farm will require a unique Farm Environment Plan.
Land use management tools that evaluate nutrient use, optimising production and environmental outcomes, form the basis of these plans.
Nitrate leaching to groundwater is the critical issue, possibly affecting stocking rates, fertiliser application and effluent spreading.
This influences profitability and land valuation. Some farmers may need to consider alternative land use. This system will reach us soon enough, bringing significant impact for many. Farmers need to prepare accordingly.
Like any change, with good information, the process of adaptation becomes easier.
PGG Wrightson’s team of technical field representatives can help with preparation of nutrient budgets and Farm Environment
Paul O’sullivan is Bay of Plenty and Central Plateau Real Estate Manager for PGG Wrightson Real Estate Ltd. Since he began his career in real estate in 1978, he has negotiated sales in excess of $850 million worth of properties, including dairy, sheep and cattle, forestry, waterfront and agriscience projects.