Friday, March 29, 2024

Life returns to dairy market

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Strong sales in Waikato, eastern Bay of Plenty and Canterbury put some life into the dairy farm real estate market during May, normally a quiet time for activity.
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Good prices were paid for sound properties in the Otorohanga area of south Waikato and near Whakatane, while the four sales in Canterbury were the best month-on-month for about a year, REINZ rural spokesman Brian Peacocke said.

Highlight of the latest three-month trading period to the end of May was in the confidence and strength in good quality finishing and grazing farms, especially in the lower half of the South Island. The Otago figures for May were the best in years for finishing properties, reflecting the prospects in beef farming. Northland also showed good beef farm activity.

Across all sectors except dairy, the number of sales was stronger than during April and also a year earlier, though there was still a slight easing in values, REINZ data showed.

This included horticulture blocks, but in Bay of Plenty there have been very high prices for top-quality kiwifruit blocks, Peacocke said. Gold blocks sold at $700,000 a canopy hectare where not too long ago the rate was $500,000 to $550,000, and for green fruit blocks sales were at $400,000 a canopy hectare where earlier the average was in the $200,000-$250,000 range.

Most of the buying was by people already in the kiwifruit industry.

For dairy farms the national median price was $33,507 a hectare during the three months to May 31, similar to the April three-month period, but down from $35,281 in May last year.

The median price has fallen 5% over the last 12 months. This is a lower fall than in the rate per kg of milk solids and also on the REINZ dairy farm price index, which adjusts for farm size and location, not taken into account for the median price.

Per kg of milksolids, the median price was $28.96 for the May period, down from $32.46 in April, and $36.51 in May last year. The 12-month fall was 20%.

On the index, the fall for the year was 14.8%, but the May figure was actually up 7.3% on the latest April figure.

The indications were that buyers were prepared to pay-up for the good dairy farms, back by caution and due diligence, Peacocke said. There wouldn’t be real evidence on the state of the dairy farm market till bigger volumes started to kick-in in the September-October period.

Nationally, there was a total of 489 farm sales in the three months ended May 31, up from 407 in the  April period.

For the year to May 31, there were 1766 sales, 1.1% more than at May 2015, despite a 25% fall in the number of dairy farm sales.

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