Friday, March 29, 2024

Dairy farm prices, sales down

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Dairy farm prices are well down from their latest peaks and just lower than the level five years ago.
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Rural real estate had gone into its typical quiet mid-winter period with sales in the three months to the end of June down about 23% on the three months to the end of May, Real Estate Institute rural spokesman Brian Peacocke said.

Its Dairy Farm Price Index showed a fall of 18% over the 12 months to the end of June and a 2.2% fall over the last five years.

In contrast, the All Farms Price Index showed an 11% gain over five years.

Sales volumes in the finishing and grazing sectors in the three months to June 30 reflected a reasonably stable rural market but they also slowed in June, leaving just horticulture – mainly kiwifruit and wine – providing the industry bright spot, Peacocke said.

Dairy farm sales were down by 28% over the June year, compared to a year earlier. Grazing farm sales were down by 7% over the same period.

Grazing sales still provided the biggest number, making up 36% of the 472 farms sold in the June quarter. Finishing farms made up 23%, horticulture 16% and dairy farms 10%.

For dairy farms the median sale price per hectare in the three months to June was $32,615 compared to $33,507 for the May period and $35,531 for the three months to June last year.

The median price per hectare fell 8.21% over the last year. Overall indications were of a fall in value of between 8% and 18% in most regions from the recent peaks.

Of the two measures, the farm price index adjusted for differences in farm size, location and farm type whereas the median price per hectare didn’t.

Features of the dairy farm market, apart from the usual winter slowdown, included reasonable inquiry for the limited listings of good properties, Peacocke said.

In areas with irrigation, the cost of water was now being consistently factored in to decision-making.

Brian Peacocke

Real Estate Institute

There were emerging inquiries regarding values for the 2016-17 season and increasing inquiry for 1000 to 3000-cow units in the South Island.

In areas with irrigation, the cost of water was now being consistently factored in to decision-making.

There were solid sales of finishing properties in the Auckland and Canterbury regions with lower levels of activity in Marlborough, the top of the South Island and Otago/Southland. Throughout the country there was good inquiry for good beef properties, which were in short supply, he said.

The median price for finishing farms in the June quarter was $25,941/ha, ahead of the $24,026 in the May three month period but down on the $28,542 in the June period last year.

A shortage of good beef land also applied for grazing farms, where there was reasonable demand in Waikato and King Country for breeding properties.

“There’s very few available through there, with very good fattening country converting to dairy over the last 20 years. It’s possible that some of those third-tier dairy farms might go back to beef or dairy support.”

Banks were underpinning dairy farmers if they were performing well in the low milk-price environment but the change could take place in the next 12 months if prices remained low and banks reassessed their position.

For grazing land, the median price in the June period was $16,604/ha, similar to the $16,334 in the May period but down on the $17,294 in last year’s June quarter. The median price has fallen 4% over the year.

Though there had been good activity in the horticulture sector, prices were down overall.

The median price for the 77 properties sold in the June quarter was $223,165/ha, down from $243,942 for 81 properties in the May three-month period and from $243,515 for 76 sales in the June quarter last year. The one-year fall was 8.4%.

Strong prices were paid for good quality arable farms, with good activity in Auckland, Manawatu and Canterbury, Peacocke said.

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