Thursday, March 28, 2024

Farm sales see land reverting to beef

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An early trend towards dairy farmland in parts of Northland and the fringes of Waikato reverting to beef and dairy support activities is continuing, Real Estate Institute rural spokesman Brian Peacocke says.
NZ production has continued to decline with weather the major contributor.
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These areas were not ideally suited to dairying but were converted during the peak dairy price period just a few years ago.

The land was bought at lower values than core dairy land and is now changing hands at about the same value, though the trend is still very early, Peacocke said.

Overall, there has been a slight easing in dairy farm values  with the institute’s Dairy Farm Index 5.4% lower over the 2017 year. Because there was not much inquiry for second and third tier units, the full effect of the easing was not being seen at this stage.

The dairy median for the December quarter was $40,484ha, compared to $44,154ha in November and $46,397ha in December 2016.

Overall, the number of farm sales nationally for the year fell by just over 10% to 1565 sales. 

Most of that was a 28.3% fall in the number of grazing units because there are more of these farms than for other categories and grazing farms still make up the highest sales tally.

Arable farm sales were also down, by nearly 37% year-on-year and they more than offset a rise in dairy farm sales, up 45.5%, and finishing farm sales, up 19.4%.

For the three months to the end of December there were 105 fewer sales than for the same period in 2016, a 21% fall. The median price was higher, $29,266ha up from $27,774ha, and quite a bit higher than the November 2017 three-month period.

The institute’s All Farm Index rose 3.3% in the December period compared to November and was up 8.1% year-on-year. The index adjusts for differences in farm size, location and type, which the median price measure does not do.

Peacocke described the rural market over the three-month period as inconsistent and volatile . . .  affected by the two biggest industry influences, the weather and prices.

“Extraordinary cold, wet early spring pitched straight into extremely dry conditions, which pushed some regions close to declarations of drought pre-Christmas.”

Several regions experienced what seemed to be record numbers of farms on the market, raising concerns about values and supply outstripping demand. Good properties continued to sell well but lesser categories struggled to attract interest or sale unless vendors were strongly motivated and met the market.

Finishing farms sales for the December three months rose from the November level to 97 from 82 but were down on the 134 sales to December 2016. Year-on-year the median price per hectare rose 10% to $32,000ha.

Peacocke reported a reasonable increase in turnover of finishing farms and some strong prices in Auckland, Waikato and Bay of Plenty, light volumes on the east coast of the North Island; strong activity in Canterbury and solid trading in Otago and Southland, though there was some impact from dry conditions.

For dairying there was low activity north of Auckland, reduced activity in Waikato after a solid November, steady activity in Bay of Plenty/Rotorua, good increases in Taranaki and Manawatu and lighter activity through Canterbury and Southland.

Waikato, Gisborne, Taranaki and Otago had solid grazing property sales activity but other regions had reduced turnover. The median sales price for the December period was $11,937ha, marginally higher than November and nearly 6% up on a year earlier.

For horticulture, Peacocke reported an easing of activity in thestellar kiwifruit area of Bay of Plenty but a surge of viticulture interest in Marlborough. The December median price was $242,988ha, down from $321,582ha in November, but well up on the $187,185ha figure for December 2016.

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