M bovis might never have been contemplated, even in contracts that contain livestock condition clauses, but it might now be an issue in deals due to settle around June 1, Duncan Cotterill associate Emma Tomblin said.
“We are not aware of unconditional contracts which haven’t settled on the due date but we are concerned this could be coming through.”
If buyers are in that position they should see their lawyer as soon as possible rather than leave it as a last-minute issue, she said.
The disease spread had stopped some conditional sales, where buyers had not confirmed due diligence and had cancelled contracts.
The testing and clearance process takes a lot of time and has been an issue for conditional contracts, Tomblin said.
There has been pressure on timeframes, affecting buyers’ ability to commit.
Property Brokers Real Estate in Ashburton has had a couple of sales, one including a herd transfer, subject to clauses relating to M bovis, which had taken time to receive animal health clearances but they had eventually been obtained, rural manager Mark Lemon said.
The May/June period is important for dairy farm sales because it covers the changeover of dairy seasons and existing transactions will be in their later stages.
Farms going on to the market from now on will probably have settlement dates out into the next year so the M bovis issue can be covered, he said.
Tomblin, whose work includes the agri-sector, said farmers intending to sell their farms need to take early action to minimise possible impacts.
That involves complying with Ministry for Primary Industries guidelines, avoiding herd contact with other livestock and ensuring equipment is thoroughly cleaned and animal health and stock movement records are up to date.
Prospective buyers will want to be more vigilant in their due diligence, getting all the information they can on milk test results, all other animal health issues and herd movements on and off the property.
There is also a major issue for sharemilkers changing farms between seasons and the same issues apply.
Milk testing is being done in a national surveillance programme but testing laboratories are under pressure and it takes time to get results.
Tomblin said M bovis might change the way livestock are included as part of farm sales, from the situation now when contracts typically allow for animal health requirements to be considered during stock valuation just before settlement.
The animal health issue comes at a time when there is little activity in dairy farm sales in the region, for a number of reasons.
PGG Wrightson general manager of real estate Peter Newbold said M bovis will be influencing farmers’ decisions whether to list a farm for sale and on other people’s appetite to buy.
Issues around bank lending, weather, the rules on overseas investment and environmental regulation are also contributing to the lighter sales activity.
Banks are still prepared to lend but are placing stronger criteria on a buyer’s balance sheet strength and cashflows.
The industry is also waiting on Overseas Investment Office decisions on a lot of applications involving overseas buyers and for any legislative changes and that is slowing down that part of the market.
There is good demand for sheep and beef farms, at good values, but not a lot of activity because there are not a lot of farms for sale.
