Compared to July 2014, the REINZ Dairy Farm Price Index fell by 12.1%. The REINZ Dairy Farm Price Index adjusts for differences in farm size and location compared to the median price per hectare, which does not adjust for these factors.
“The recent Fonterra dairy payout announcement confirmed widespread expectations within a market place anticipating a downturn in the current season”, REINZ Rural Spokesman Brian Peacocke said.
“The key issue for many is the time prices are likely to remain at current levels, with particular concerns being expressed for lower order and 50/50 sharemilkers,” he said. “Banks generally appear to be supportive, but conversations are taking place given circumstances being appropriate. Across the board, culling of lower performing animals is evident, and the retention of surplus assets is under review.”
“By contrast, the news is brighter for other sectors with record prices being paid for beef, good prospects for lamb, improving prices for wool and a buoyant market in the kiwifruit and pip-fruit sectors. Speculation regarding land values can only be answered by sales evidence, which to date, shows prices holding steadily,” Peacocke said.
The institute said in a release that there are early indications of some farmers in Northland initiating a change in land use from dairy to beef, purely in response to the economic situation.
For the three months ended July 2015 the median sales price per hectare for dairy farms was $35,304 (41 properties), compared to $35,531 for the three months ended June 2015 (64 properties), and $36,673 (47 properties) for the three months ended July 2014. The median dairy farm size for the three months ended July 2015 was 173ha.
Included in sales for the month of July were three dairy farms at a median sale value of $18,636/ha. The median farm size was 173ha with a range of 163ha in Waikato to 236ha, also in Waikato. The median production per hectare across all dairy farms sold in July 2015 was 728kg of milksolids.
