20 May 2014

Dairy demand lifts farm prices

1:57 pm on 20 May 2014

Demand for dairy farms and farms for dairy conversion is helping to underpin the continuing rise farm sales and prices.

Latest figures from the Real Estate Institute show 1849 farms were sold in the year to April - a 27.2 percent increase in a year.

The median price per hectare for all farms sold in the three months to April 2014 was $24,574 - a rise of 21.4 percent on last year.

The institute's rural spokesman Brian Peacocke said morale in the rural sector had rebounded following drought-breaking rainfall in northern regions.

"What we're seeing is a reflection of the underlying confidence that's been in the industry for a while now and that confidence is gaining a little bit of momentum.

''I guess that's driven very much by the income levels that are coming from the dairy side of things and that flows on through to the other classes of land, in the first instance, whether dairy support or those properties that are grazing replacement animals for the industry".

"So, ultimately a large part of it is driven by dairy but not everything, because certain parts of the country are very strong still with sheep and beef and there is unsatisfied demand for that type of property," he said.

While farm prices are climbing, Brian Peacocke points out that in historic terms, they still haven't recovered to the 2007-8 levels, before the rural property downturn.

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He said natural caution will keep a lid on things.

"There are plenty of signals out there that interest rates are going to rise, plenty of signals on the dairy front that the payout is likely to peg back a little bit next season."

Meanwhile, as the kiwifruit industry climbs back on its feet after the Psa vine disease outbreak, prices for top quality kiwifruit orchards in the Bay of Plenty are on the rise again.

He said on a per canopy hectare basis prices had risen from $160,000 to $180,000 per canopy and to around the $300,000 for green kiwifruit.

Gold kiwifruit orchards he said were now reaching $400,000 a canopy hectare the demand being driven by local buyers.