Tulips have been a part of the Southland economy for many years but the sector has really stepped up in the last few years as more expert Dutch growers have set up business and then expanded, Southern Wide Real Estate managing director Dallas Lucas said.
This was providing good diversity for the province while the dairy farm market takes time to come back to life after the milk price downturn.
However, PGG Wrightson’s Southland sales manager David Henderson said the excellent winter and spring growing conditions had also helped confidence in the sheep and beef sector, with more listings than this time last year and several marketing campaigns due to complete over the next month to six weeks.
Lucas said the silt loam soils in parts of Southland – notably in the Edendale area and in the Waikiwi loams of Woodlands – were ideal for tulips and bare land sales have been made in the $40,000 a hectare to $49,000/ha range.
“Where you’ve got tulips popping up on parts of farms, it’s usually lease activity by the larger growers.”
Dallas Lucas
Southern Wide Real Estate
There had also been significant lease activity for tulips at up to $3200/ha.
“Where you’ve got tulips popping up on parts of farms, it’s usually lease activity by the larger growers.” This was happening on dairy farms as well as sheep and beef farms.
Potatoes, carrots, parsnips and yams were also grown on a significant scale, with land being leased at prices starting round $1200/ha.
There was plenty of activity because tulips were typically grown on rotation, for lengthy periods of eight to 10 years, before crops or vegetables were brought on to refresh the soils.
Lucas reported more inquiries for dairy farms, but the number of sales remained low as confidence slowly returned. In a still-challenging environment, he knew of four sales over the last three months – three made by his firm – when in a typical year in a buoyant market there would be 10 to 12 sales during this time.
Quality, above-average dairy units in good locations have sold for $37,000/ha to $39,000/ha, excluding dairy company shares. This was about 10% to 12% lower than what these properties would have fetched in the latest peak market.
Negotiating prices was still proving reasonably difficult, with vendors still seeing a value 5% to 10% higher than buyers were prepared to pay.
“With some negotiating and some give and take, compromises are being reached and sales are eventuating. Some of them you get in a reasonable time and with some it never happens.’’
There were more inquiries for dairy farms than earlier in the year “and it would be fair to say there’s a good choice of listings”, Lucas said. Though dairy commodity prices had improved, buyers remained cautious. There had been a “flutter’’ of activity for a brief time before the sector went quiet again during calving.
Lucas expected the dairy farm market to settle for a period around current levels for quality, well-located properties; with lesser properties and those further from processing sites settling a shade lower.
There have also been a number of sales of support land in recent months, some of it adjoining dairy farms and a couple of sales to the neighbouring farmer. These bare land properties were typically selling in a range between $26,000/ha and $30,000/ha where the quality was good.
Overall, Wrightson’s Henderson expected the number of sheep and beef sales for the year to be fairly similar to last year’s tally of 63 properties above 40ha in area.
“There’s a bit more optimism about, interest rates are low, and the good spring we’ve had is critical for Southland, so confidence is up.”
Most buying interest was from neighbouring farmers or from elsewhere in Southland, but there was growing interest from further afield.
After a rush of conversions in recent years, sheep farms weren’t being sold for dairy development at the moment, he said. “It’s sheep farm being sold as sheep farm.”
