23 Jan 2015

Demand for dairy farms still running high

2:50 pm on 23 January 2015

The demand for dairy farms is still running strong, despite this season's milk price slump.

dairy cow

Photo: 123rf

The latest rural property sales figures from the Real Estate Institute showed 95 dairy farms were sold during the three months to December.

That was down on the same time last year, but well up on the November period.

The median price for those farms, of more than $41,000 a hectare, was also higher.

The institute's rural spokesman Brian Peacocke said the demand had been strongest in the dairy heartland, Waikato, where some record prices had been paid.

"We've seen some extraordinarily strong sales, given that they very much centre on the Hamilton, Morrinsville, Matamata regions where you've got, particularly in Morrinsville, an influence from the Tatua dairy company [which normally pays the highest milk price].

"Where there's been farms supplying Tatua in the catchment there's been some record prices paid there, either by neighbouring dairy farmers or Tatua suppliers looking to expand.

"But there's also been a spin off for some Fonterra supply farms within that general region which have been selling very strongly as well."

Mr Peacocke said there was also an active market for dairy farms and support units in the Rotorua-Taupo district.

There had also been some big dairy farm sales in Canterbury, where long-term investors were not being put off by the drop in the milk price, nor worries about the dry weather.

Peter Crean of PGG Wrightson Real Estate said an example of that was a 600 hectare dairy farm in the Culverden area of North Canterbury which was sold to a New Zealand farming syndicate just before Christmas.

"There is strong interest for dairy farms in Canterbury, particularly those that are well set up and modern farms with good irrigation water supply and good general farm infrastructure and up to date with all the nutrient requirements, as far as nitrogen leaching and all that sort of thing is concerned.

"If a farm ticks all of those boxes, its very appealing to buyers still, yeah."

Mr Crean said dairy farms which met all those conditions, in the right parts of Canterbury, were fetching prices upwards of $50,000 a hectare.

Mr Peaccoke said dairying had also played a part in a surprisingly strong demand for sheep and beef grazing properties in Canterbury, which were sought after for dairy support roles.

But he said sheep and beef properties in some other parts of the country were not attracting that level of interest.

"The income levels for the beef and sheep sector have been pretty solid this year, but the values haven't lifted in farms, and in fact some areas, particularly the western strip of country from Auckland south out on the west side of it, it's quite hard to move properties in that locality.

"In other areas that are more traditional such as Hawke's Bay, sales figures per hectare have been very steady - no surge in pricing like there has been in the dairy side of things."

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