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Prices hold despite dairy woes

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Dairy land prices are holding firm despite falling milk prices and farmgate returns. The latest data from the Real Estate Institute showed for the three months to January the median sales price a hectare for dairy farms was $39,367 for 90 properties sold compared to $39,690 for the three months ended December 31 when 86 properties were sold.
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The price was $40,742 for 101 properties for the three months ended January 31, 2015.

The institute’s Dairy Farm Price Index fell 1.2% in the three months to January compared to the three months to December.

Compared to January 2015, the index fell by 3.6%.

The index adjusted for differences in farm size and location compared to the median price a hectare, which did not adjust for those factors.

Finishing farms also held their value, with the median price $23,172 a hectare in the three months to January, compared to $23,489 for the three months to December.

They fetched a median $23,506 for the three months to January 2015.

The median dairy farm size for the three months to January was 114 hectares.

Overall there were 77 more farm sales (+16.9%) for the three months ended January 2016 than for the three months to January 2015.

There were 532 farm sales in the three months ended January 2016, compared to 547 farm sales for the three months ended December 2015 (-2.7%), and 455 farm sales for the three months ended January 2015.

“Sales data from the last three months confirms the strong period of sales leading into Christmas and the subsequent easing of activity during January 2016, due mainly to the annual holiday break,” institute rural spokesman Brian Peacocke said.

“Beneficial climatic conditions have resulted in good rainfall in some of the traditional sheep, beef and cropping areas which had been very dry, giving farmers in those areas a much-needed boost in confidence.

“The flip side is that a number of farmers who had de-stocked in response to warnings of an El Nino event now have insufficient stock to take advantage of the additional feed on hand.

“Conversely, other areas such as the central Waikato have missed out on the rain and the resulting dry has caused some dairy herds to revert to once-a-day milking.”

For the three months to January 2016, the median sales price a hectare for grazing farms was $15,890 (224 properties) compared to $16,656 for the three months to December 2015 and $15,640 for the three months to January 2015. The median grazing farm size for the three months ended January 2016 was 63 hectares.

For the three months to January this year the median sales price a hectare for horticulture farms was $216,000 compared to $222,607 for the three months to December and $205,634 for the three months ended January 2015.

The median horticulture farm size for the three months ended January 2016 was six hectares.

Grazing properties accounted for the largest number of sales with a 42.1% share of all sales over the three months to January 2016.

Finishing properties accounted for 17.5%, dairy properties accounted for 16.9% and horticulture properties accounted for 11.5% of all sales.

The four property types accounted for 88% of all sales during the three months ended January 2016.

Quick notes

• Quieter activity on dairy and finishing properties in Northland but steady results for grazing units

• Similar conditions in Auckland and Waikato, albeit a marked reduction in dairy farm sales for January

• Reduced activity throughout central North Island regions offset by steady horticultural sales in Bay of Plenty

• A sprinkling of dairy sales in Taranaki but a healthy level of finishing and grazing sales in Manawatu/Wanganui

• Very quiet north of Wellington and relatively passive in the Nelson-Marlborough region;

• Reduced dairy sales in Canterbury but steady sales of finishing, grazing and arable properties

• Slower conditions in Otago, and

• A trickle of activity in Southland apart from consent from the Overseas Investment Office for the sale of a significant grouping of dairy farms to combined NZ-offshore interests.

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