The median dairy farm sale price climbed 11% to $38,267/ha in the three months ended December 31 over the corresponding period a year earlier, Real Estate Institute figures showed. That compared to a median price of $24,163/ha for all farms.
The volume of dairy farm sales almost doubled in the three month period to 121 from 63 properties a year earlier, bolstered by 62 farms changing hands in December alone.
“Land prices associated with dairy have lifted hugely,” Federated Farmers chief executive Conor English said.
“Internationally, our dairy farm values are getting right up there. It’s great if you’re selling but not if you’re trying to buy.”
New Zealand’s dairy sector is seen as a lynchpin in the economy’s momentum this year as surging international prices for milk products on strong demand from Asia has helped push up the nation’s terms of trade to a four-decade high.
Last November the Reserve Bank warned of the risks associated with increased agricultural debt, which is largely concentrated in the dairy sector. The report cautioned farmers not to take on more debt on the assumption of consistently high commodity prices.
“Debt levels in the rural sector have ticked up,” English said.
“If people are increasing debt to increase production then that’s okay but debt that’s from people trying to buy more land, that’s a concern.”
English said farms were continuing to expand with stock units growing while the number of actual farmers declined.
“Often it’s neighbours buying up neighbours’ land. That will often be the first port of call for any real estate agent. So farm size has gotten bigger over the last 20 years,” English said. – BusinessDesk
