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Farm sales numbers and prices edge down in July, says REINZ

Rural News
Farm sales numbers and prices edge down in July, says REINZ
<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

(Updated with dairy land $/ha graphs for selected provinces.)

Farm sale prices took a hit in July, according to the REINZ All Farm Price Index.

The Index adjusts for differences in farm size, location and type, compared with other measures such as median price per hectare, which make no such allowances.

For sales over the three months to July, the Index was 3212.9, compared with 3405.7 for sales in the three months to June.

However the Index was still up 8.8% for the three months to July compared to the same period last year.

The REINZ Dairy Farm Price Index declined by 1.2% for the three months to July, compared to the three months to June, but was up 8.7% compared to the same period last year.

"While annual statistics confirm a solid increase in volumes and prices over the past 12 months, three monthly figures to the end of July indicate an easing in both volumes and prices," REINZ rural spokesman Brian Peacocke said.

REINZ Farm Sales by Type
  Three months to
July 2014
Three months to
June 2014
Three months to
July 2013
Arable 47 33 20
Dairy 47 69 47
Finishing 105 115 109
Forestry 8 12 11
Grazing 225 236 193
Horticulture 56 57 39
Special 24 22 19
All Farm Types 512 544 438

Farm sales

Select chart tabs

Source: REINZ
Source: REINZ
Source: REINZ
Source: REINZ
Source: REINZ
Source: REINZ
Source: REINZ

July sales

The market recorded 132 farm sales in the month of July, which is 9% more than the same month last year and 60% above the average July over the past four years.

The median price per hectare rose to $26,680 in July 2014, and was 29% higher than July 2013.

Higher average prices applied across the board, except for forestry units. The six dairy farm sales during July was the lowest monthly number of sales since just two dairy farms were sold in September 2012.

July sales included: 
  22 arable farms,
    6 dairy farms,
  23 finishing units,
  61 grazing properties,
  12 horticultural,
    8 farms of other types

The number of sales is presented here, without the average price, because average prices bounce around dramatically depending on the size and type of business unit being sold. However, the following table sets out the median prices per hectare over the past three months, as reported by REINZ.

$/ha - July 2014   Arable Dairy Finishing Forestry Grazing Hort Special
                 
New Zealand   53,000 36,673 27,907 4,130 15,500 134,640 49,249
                 
Northland     15,824 17,000   9,820 86,925 36,902
Auckland   133,453 24,398 52,500 7,376 17,536 220,229 92,547
Waikato   251,152 51,570 50,847   17,416 262,500 69,402
Bay of Plenty   19,101 43,237 33,636   17,787 195,000 13,519
Gisborne   99,585   8,840   26,875 95,646  
Hawkes Bay       11,786   5,320 109,375  
Taranaki     38,108     30,998 233,083 177,496
Manawatu/Wanganui   48,009 33,543 27,027 7,813 15,570 82,500  
Wellington   21,095   27,957   19,077    
Nelson   15,022 14,691 34,864 2,720 7,475 87,922 45,221
West Coast     23,514     9,949    
Canterbury   45,250 48,455 36,250 3,959 19,591 49,231 38,093
Otago   16,103 36,806 19,772   14,031   189,200
Southland   32,366 36,673 26,491   21,000 83,893  

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3 Comments

Interestingly, the price/ha for Dairy bears out my feeling that the top of the S-curve is already well reached in Waikato and Canterbury, and given Horizons One, Rangitikei/Manawatu too.

 

Nelson and West Coast are below the average by a lot, but then they haven't much actual land area left that's suitable for dairy.....so sales will be much sparser.

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ah the juxtaposition

The bottom line is that our dairying couple could come out of the 2014-2015 season on a hypothetical $6.50/kg payout with 37c/kg possibly for debt reduction, farm development, capital spending and/or improved working capital.

The scenario for the 2015-16 season would be less palatable as they might face a loss of 8c/kg after farm expenses, interest and rent, depreciation, drawings and income tax are removed. This might come after pruning farm expenses harder than the year before.

Over many years it's interesting to note that I have found that farming couples tend to focus on increasing production when product prices are high and also when they are low.

http://www.stuff.co.nz/business/farming/opinion/10387411/Possible-scenario-for-dairying-bottom-line

and

Because of the farm's proximity to the lake, it has a high water table and is prone to wet conditions in winter, prompting the Garretts to build a 900-cow free stall barn to winter their herd. Completed in winter 2012, the barn was well worth the expensive price tag, said Phil Garrett.

http://www.stuff.co.nz/business/farming/dairy/10387396/Boggy-Creek-is-boggy-no-longer

 

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Riffing on a cost of $50K/ha: presented without comment.

Cows/ha    2

KgMS/Cow  400

KgMS/ha     800

Price per KgMS   $6.90

Revenue Totals $5,520

Cost/ha $ 50,000

WACC     5%

Interest/ha/year $ 2,500

FWE/KgMS    $4.50

FWE Totals $3,600

Int plus FWE added $ 6,100

Surplus (Deficit)/ha  $(580)

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