22 Jul 2014

Demand for grazing from dairy growth

2:09 pm on 22 July 2014

The number of dairy farms selling has fallen in the past three months but demand remains high for grazing properties, mostly driven by dairy expansion, the Real Estate Institute says.

The latest figures from the Real Estate Institute show overall farm sales are still running ahead of a year ago but have eased off in the past three months.

Institute rural spokesman Brian Peacocke said dairy farm sales had shown the biggest drop. That was due mainly to seasonal buying patterns, and they would not pick up again until spring.

More than 40 percent of farm sales in the past three months were for grazing properties, and Mr Peacocke said there had been a consistent demand for those.

"And it's very strong, particularly in the bottom half of the South Island. I think in some respects that's also a reflection of the strength of the dairy industry down there," he said.

"So, as farmers have consolidated their dairy farm operations they require support blocks, and those are being purchased from owners of finishing and grazing-type properties.

"So there's a general transition for a lot of that country into the dairy industry in the wider sense of the word. Not necessarily being milked on but might be used for growing crops or running replacement cattle and that sort of thing."

The other strong trend had been in the horticulture sector, where there had been a resurgence of interest in Bay of Plenty kiwifruit orchards.

"As people are generally aware, the industry was decimated by the PSA (virus) which knocked the plants severely several years ago," Mr Peacocke said.

"Since that time, a lot of work has gone into breeding varieties of kiwifruit that are resistant to a degree to PSA, so that work is coming to fruition and I guess a restrengthening of the ability of plants to cope."

The industry had responded as that had occurred, and inquires for existing, well-located kiwifruit blocks had increased dramatically, he said.

"And it appears that a lot of that inquiry is coming from some of the bigger operators already within the industry but, nevertheless, it's backed up by inquiry from outside the industry as well, so that's a sign of things getting better for the kiwifruit sector."

That demand was reflected in the prices Bay of Plenty kiwifruit blocks were fetching, which was in the high $200,000s per hectare, Mr Peacocke said.