Daly said turnover of dairy farms is quite high. At about $1.50 each, shares in the local processor Westland Milk are affordable and an attractive option for sharemilkers looking to own their first farm.
“In 10 years they might get a lot further than if they’d been elsewhere,” Daly said.
“Some might progress to own two to three dairy farms.”
Reliable rainfall and lifestyle also attract buyers: “Westland is always a curiosity factor with investors.”
Daly said some small farms sell four times in 15 years, as a progression to larger farm ownership.
“There’s nothing wrong with them – they do well out of them and move on to something bigger.”
Greg Daly Real Estate recently sold a 500-cow farm in South Westland to a Taranaki buyer for $25kg/milksolids (MS) or $18,000/effective hectare.
This was the third time Daly has sold this farm in 12 years. The first two occasions it was bought by owners from Waikato.
Outside investors often come from Canterbury and parts of the North Island, looking to buy a second farm as absentee owners.
With reliable rainfall and the current beef schedule good grazing blocks are well sought-after on the West Coast, but seldom come on the market.
Land with the best potential has already been converted to dairy and the region has only a handful of historical sheep and beef farms.
Daly said the West Coast is a huge area of land but with Department of Conservation, Ngai Tahu and Landcorp ownership only 6% is farmable, private land.
Daly said bare drystock land with reasonable soils and in a good area would sell for about $12,000-15,000/ha.
“Historically the West Coast has been great for beef and we’ve got our own freezing works.”
Times are tough for dairy farmers and while there are a couple of farms up for mortgagee sale, Daly said values on the West Coast traditionally don’t experience the same highs and lows as other areas.
Farm values don’t usually fluctuate by more than a couple of thousand dollars a hectare during good or bad times.
West Coast dairy farm values range from $17,000, up to $25,000/ha in areas from Karamea to Franz Josef. Daly said good opportunities to lift production still exist in other parts of the coast.
A mid-season sale by a retiring vendor in February of a 130ha effective dairy farm in Moana fetched $20,500/ha.
The farm was milking about 200 cows, with a wintering barn large enough to winter all cows and young stock.
The dairy slowdown
Farmlands rural real estate agent for the West Coast, Shari McLaughlin, said that while sales in the district were predominantly dairy, low milk prices have caused a slowdown in sales activity.
This makes it hard to say whether or not prices have been affected but it does not yet appear so. Neither is McLaughlin yet to see any real pressure from financiers on properties.
“Of the buyers that were looking, a lot have been sitting on the fence,” she said.
“There are opportunities on the Coast for people willing to step out of their comfort zone and have a look.”
Farmlands is currently marketing a 450-cow dairy farm in Grey Valley for $5.2 million plus GST. The 180ha milking platform, with a 15ha runoff, has been producing about 180,000kg MS.
