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Autumn 2018 Property Pull-Out March 26, 2018
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Dairy support inquiry up Alan Williams a.dubu@xtra.co.nz
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AIRY farmers in both islands are starting to talk about buying dairy support blocks of their own to guard against the Mycoplasma bovis disease, Real Estate Institute rural spokesman Brian Peacocke says. Increasing inquiry levels are yet to be turned into transactions but they’re indicating they want to have more options for being selfcontained for replacement heifer grazing rather than have them exposed by grazing elsewhere with the risk of cross-infection that can occur on specialist grazing farms catering for animals from a range of sources. At this stage, the talk is more in the South Island, though inquiry is evident in the ManawatuWanganui region, as many replacement heifers are grazed in Hawke’s Bay where M bovis has been reported. Other trends have emerged as well during the three-month period to the end of February but a key feature is the unsatisfied demand for finishing farms because of lack of supply. Despite that, there were more finishing sales than for any other farm type during the threemonths, which is unusual because grazing properties usually top the count as there are so many more of them. There were 46 finishing sales, 29% of the total, against 34 for grazing farms. High sheep meat and beef prices are leading to very good demand nationally, Peacocke said. Strong activity was reported in Manawatu-Wanganui and Canterbury-Marlborough. That has also led to an early trend in Southland towards dairy support blocks returning to sheep farming. Otago is a base for finishing farms and while there was more interest reported, a price gap between vendors and buyers is making transactions more difficult to conclude. The finishing farm median sale price rose 11.1% year-on-year to the end of February. The median for the threemonths to February was $30,656/ ha, compared to $27,595/ha at the same time last year.
The threat of Mycoplasma bovis is lifting inquiries from dairy farmers thinking of buying dairy support blocks to avoid sending stock to grazing with other cattle. Better farming conditions helped by widespread rain in February helped sentiment. Another trend emerging is most notable in Northland, with inquiry for lower quality sheep and beef farms for planned conversion to forestry, encouraged by planned Government incentive schemes to boost tree-planting. Also in Northland, there is an increased focus on quality land for kiwifruit and avocado, though water is a constraint in avocado development, Peacocke said. Forestry interests in Southland are making more inquiry for land of lesser quality and remote location areas. Dairy farm sale activity was mostly light through the country, though there was a strong upturn in eastern parts of Waikato.
The institute’s Dairy Farm Index fell 6.9% in the three months to the end of February and was down 9.9% year-on-year.
The banks are having a say in that as well. Brian Peacocke Real Estate Institute The index adjusts for differences in farm size and location, which the median price doesn’t do. The median for the latest threemonth period was $34,238/ha, down from $37,235/ha for the
January period and $39,642 for the February period last year. The year-on-year median price fell 13.6%, more than the index fall, which is considered the best guide to sector value. The Dairy index is now on a par with five years ago and is down 3.3% on 10 years ago, Peacocke said. Prices have reached levels where buyers are making decisions but compliance issues mean there is broader due diligence and they are more entrenched in the price views, requiring the vendor to meet the buyer view on value. “The banks are having a say in that as well.” Grazing farm values went the same way as dairy farms and the opposite to finishing farms. The median price for the three
months to the end of February was $10,827/ha, down from $11,828/ha for January and $12,183/ha for February last year. The year-on-year fall was 11.1%. The median price for horticulture property was also down year-on-year to $254,722/ha from $269,034/ha but was higher than the $205,807 for the latest January period. Year-on-year the total number of farms sold fell 13.5% to 1524 sales, with finishing and dairy sales higher but significant falls in sales of grazing and arable farms. The institute’s All Farms Index fell 4.7% in the February threemonth period but was virtually unchanged year-on-year. This index adjusts for differences in farm size, location and farming type.