Pos­i­tiv­ity start­ing to re­turn

South Waikato News - - Rural Delivery - PAUL O’SUL­LI­VAN

In re­cent weeks, find­ing dif­fer­ent ways to op­er­ate un­der the re­duced pay­out, dairy farm­ers have grad­u­ally be­come more pos­i­tive.

They have mainly fo­cused on re­duc­ing in­puts and, hav­ing taken steps to adapt to lower re­turns, farm­ers’ con­fi­dence is reap­pear­ing.

Po­ten­tial pur­chasers are start­ing to en­quire about farms for sale and a more pos­i­tive ap­proach is reemerg­ing.

While the sec­tor was chang­ing gear, farm­ers were dis­in­clined to buy or sell land.

That has now changed: Farm­ers have made de­ci­sions to mod­ify their busi­nesses, al­ter­ing day-to­day man­age­ment in the face of for­mi­da­ble chal­lenges. Some are now ready to en­gage again in buy­ing and sell­ing land. How­ever, dur­ing the hia­tus, a per­cep­tion gap de­vel­oped be­tween would-be buy­ers and sellers about the value of ru­ral prop­erty. Based on how this cy­cle works, it may take a while to bridge that gap.

That said, a num­ber of po­ten­tial buy­ers are cashed up from past sales and are now look­ing to re­turn to own­er­ship. As and when they com­mit to pur­chase, they will pro­vide the re­quired mar­ket im­pe­tus. On the back of re­newed ac­tiv­ity, more po­ten­tial sellers may list farms in the spring.

Mean­while, my PGG Wright­son col­leagues in our live­stock business ad­vise that, fol­low­ing de-stock­ing in spring and sum­mer, de­mand for in-calf dairy heifers and herds is cur­rently heavy. Good stock are now hard to find. Au­tumn live­stock sales un­der­score dairy farm­ers’ re-emerg­ing con­fi­dence. Ris­ing one-year-old dairy heifers are also in de­mand from farm­ers seek­ing to raise and trade them in the fu­ture, which is an­other af­fir­ma­tion that prospects are look­ing up.

Mean­while, the life­style prop­erty sec­tor na­tion­wide is boom­ing. Real Es­tate In­sti­tute sta­tis­tics in­di­cate that, com­pared to the same pe­riod last year, for the three months ended April 2016, life­style prop­erty sales rose by 22.5 per cent.

Prices are ris­ing steadily. For ex­am­ple, a cou­ple of re­cent South Waikato small block sales ex­ceeded $800,000, which is pre­vi­ously un­heard of. Peo­ple are chas­ing the ru­ral dream, and choos­ing to move to our dis­trict be­cause it is cen­trally lo­cated and pro­vides value for money.

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 agri-sci­ence projects.

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