Some farmers may have started taking their tractors for a Sunday drive down Queen Street to convince everyone they're doing it tough, but the latest rural property figures from the Real Estate Institute of New Zealand suggest times can't be too bad down on the farm.
Prices for farms and lifestyle blocks are both well up on where they were 12 months ago, with the REINZ reporting that the rural economy "is in good heart."
According to the REINZ All Farm Price Index, which adjusts for differences in the mix of farms sold by size, type and location, overall prices for farms sold in the three months to the end of October were up 18.2% compared to the same period of last year.
The REINZ Dairy Farm Price Index, which adjusts for differences in the mix of sales by size and location, was up 9.9% in the three months to the end of October compared to a year earlier.
Lifestyle block prices are also up strongly compared to a year ago.
The median price of all lifestyle blocks sold over the three months to the end of October was $951,902, up by $178,552 (+23%) compared to the same period of last year.
The biggest price increase was for farmlet lifestyle blocks, with their median price hitting $1,215,000 over the three months to October this year, up by $280,000 (+29.9%) compared to a year earlier.
The median price for bare land lifestyle blocks sold in the three months to October was $470,000, up $69,5000 (+17.4%) compared to the same period of last year.
So while some farmers would have us believe the rural sector is on its knees, that's certainly not showing up in the prices people are prepared to pay for rural property.
"The overall rural sector, which has been grappling with issues related to the environment, water, labour, and like other sectors, the impact of Covid-19, received some welcome news recently with much improved access negotiated for the UK market," REINZ rural spokesman Brian Peacocke said.
"The impact of this is likely to have tremendous potential for our rural producers and may start to ease our dependence upon other markets, which currently claim dominance on the world stage.
"October has ushered in a great spring for much of rural New Zealand, and as the battering winds ease, increasing sunshine hours are allowing grass to respond to the beneficial rain which much of the country has been receiving.
"Product prices are currently continuing an upward trend, with increasing returns benefitting the dairy, sheep, beef and horticultural sectors alike.
"Spring of 2021 is notable also for the emerging trend of tangible support for the rural sector from trading banks, much to the relief of many, although a careful eye is being kept on the upward trend in interest rates.
"In summary, the rural economy is in very good heart," Peacocke said.
More detailed data on farm sales is available here.
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10 Comments
Lifestyle block values have no link to farmer returns.
Farmers aren't driving around Queens Street because "they're doing it tough" they're doing it because they feel that they are being treated unfairly.
Increasingly corporate farmers are divesting away from agriculture due to increasingly complex regulation and requirements (mostly in the dairy sector at this stage)
Polluters such as air new zealand are buying up farms to use as carbon sinks (planting in forestry) so that they can....well....keep polluting.
As our food production areas continue to shrink due to urban sprawl, and forestry, consumers will be paying more $$$ for less as food price inflation increase due to tightening supply issues.
If corporate farmers are divesting away from agriculture , what are they investing in that is not also facing increased regulations ???
Increased regulation favours large corporate growers and farmers as they have the resources required to keep up with all of the paperwork and compliance activities. It is more likely that the smaller family farms will pack up and sell out to the big guys. Supermarkets prefer to deal with a small number of suppliers as the auditing is easier. We will see a rapid consolidation over the next few years. Either get big or get niche, don't be caught in the middle. Still, those leaving the land should do so with plenty of cash in their pocket from the rising land values.
French farmers (small scale, subsidized) can't compete with NZ farms (large, free market). You see historically the small American farms got swallowed up by the big ones. The result? More food for everyone. On a macro scale it's good for everyone if the small, inefficient farms are swallowed up by the big ones.
Hey are you interested in buying a bridge ?
In a century where security of food supply is going to become an important issue, it is not good for New Zealand.
We've been undermining small farmers for decades now, especially as it's become more about selling to foreign ownership and capital gains on land. Younger farmers cannot get land of their own like they once could.
I don't think farmers are saying they are doing it tough right now, with excellent prices for most products.
But they are saying that there are lots of storm clouds and implications from government policies.
The high price for sheep and beef land is all about carbon farming with forests.
The prices paid for kiwifruit land only make sense if current markets hold up.
Capitalisation rates for dairy are probably higher than they have ever been, at least for the last 20 years, which reflects the perception of government policy risks.
KeithW
Keith,
"implications from government policies." In your view, how justified are farmers in their concern over government policies? Are we looking at most farmers or just a vociferous minority?
Like the photo of the tractor - all farmers should get one.
Not sure about a rolls, but there were a few jags registered as farm vehicles, back in the 70's. To claim back the high tax on imported cars.
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