(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.
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
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 |
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.
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
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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