Several Northland farms have already been bought for conversion to avocado orchards and market gardens while in Canterbury cropping farmers were competing to buy dairy farms on top class soils, paying $57,000 to $61,000 a hectare.
Real estate agents and farm consultants said that having recovered from low dairy prices, better returns this season had provided an opportunity for farmers to exit, evident by an increase in the number of farms for sale in regions like Waikato.
Northland farm consultant Aaron Baker of Total Ag described it as a buyer’s market.
He was intrigued to see the impact of the Labour-led coalition Government tightening the rules on foreign ownership of farmland.
Real Estate Institute rural spokesman Brian Peacocke said it was still early days for listings in the South Island but he believed a noticeable increase in Waikato listings could be repeated elsewhere in the country.
Improved product prices allowed older farmers to sell and retire along with those frustrated at the growing compliance standards many had to meet in Waikato, Canterbury and Southland, he said.
Some farmers were disheartened by difficulties finding staff, which would become even more challenging with the Government vowing to cut immigration.
In parts of the North Island the extended wet spring had tested farmer resolve.
Should there be an influx of dairy farms for sale and given issues with the labour shortage second and third tier properties in less desirable locations with poor soils or difficult contour could be hard to shift or the land use could change, Peacocke said.
“We would not be surprised if the odd such property reverted back to dairy support, heifer grazing or beef finishing.”
Nationally, the best quality dairy farms were making $50,000 to $60,000 a hectare and down to $30,000 to $40,000 for lesser quality properties.
Sharemilkers had resumed buying farms in recent months and others were looking to buy, an encouraging sign of confidence in the industry but also reflecting steady cow prices and an improved milk payout.
Southern Wide Real Estate managing director Dallas Lucas said Southland listings were about normal for spring but there had been fewer sales in recent months.
“I would have expected a few more completed transactions. We have only done about half what we would normally do. It will be a big test in the next few months.”
In contrast, the number of listed sheep and beef farms was high in parts of the south while there was renewed interest in forestry blocks or land suitable for forestry.
The coalition Government had plans to resurrect the Forest Service and a policy of planting 100 million trees a year for a decade.
Southern South Island land prices had settled about 10% to 15% below the level of four to five years ago and Lucas said that reflected the tougher compliance and consenting environment.
Baker said some dairy farmers were leaving the industry having endured the low payout years and found themselves financially in the same position they were in five years ago.
While the law change could prevent foreign buyers there had been an influx of Aucklanders looking for a better lifestyle moving north and buying farms and lifestyle blocks.
Baker also noted banks were taking a more pragmatic approach towards clients who needed help and guidance in the past four to five years, seeking cashflow projections and refined budgets, which had made them more financially disciplined.
Associate Professor David Tripe, from Massey University’s School of Economics and Finance said that heightened financial scrutiny from banks could encourage farmers to consider their future but it was also likely other factors were in play.
“Banks may have an influence but what often happens is people get to the end of a difficult period and say ‘it might be time to get out with some money’.”
