The rural property market has a split personality, with dairy farm prices continuing to fall and other farm prices on the rise, according to the latest Real Estate Institute of New Zealand figures
The REINZ All Farm Price Index, which compares the prices of all farm types and adjusts for differences in farm size and location, was up 1.6% in the three months to January compared to the three months to December, and up 4.8% compared to January 2015.
However the number of farm sales was down, with 532 farming properties selling in the three months to January compared to 547 in the three months to December. Numbers were, however, up compared to a year earlier when 455 farms were sold in the three months ended January 2015.
Nine regions recorded increases in sales volumes compared to a year ago.
Recent rainfall had been beneficial for many farmers but had arrived too late for others, according to REINZ spokesman Brian Peacocke.
"Beneficial climatic conditions have resulted in good rainfall in some of the traditional sheep, beef and cropping areas which had been very dry, giving farmers in those areas a much need boost in confidence," he said.
"The flip side is that a number of farmers who had de-stocked in response to warnings of an El Nino event, now have insufficient stock to take advantage of the additional feed on hand."
Dairy farm prices fall
However while prices for most farm types were up, the REINZ Dairy Farm Price Index dropped another 1.2% in the three months to January compared to the three months to December and is now down 3.6% compared to a year ago.
There were 90 dairy farms sold in the three months ended January at a median price per hectare of $39,367, compared with 101 sales at a median price of $40,742 a year earlier.
The lifestyle block market remained buoyant, with 2109 lifestyle properties selling in the three months to January, slightly down on the 2277 that sold in the three months to December 2015 but up 30% on the 1623 sold in the three months to January last year.
There were 8285 lifestyle properties sold in the year to January which was up 29.1% on the previous 12 months.
The median price of lifestyle properties sold in the three months to January was $550,000, up 4% compared to a year earlier.
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25 Comments
There are 224 dairy farms on trade me that are over 100 hectares.
http://www.trademe.co.nz/Browse/CategoryAttributeSearchResults.aspx?sea…
Farmer profits fall
The weak milk price threatens the New Zealand dairy sector, on which the whole country's economy is heavily reliant.
Fonterra last month slashed its farm-gate Milk Price for the 2015-16 season from NZ$4.60 per kilo of milk solids to NZ$4.15, a 9-year low.
But BNZ said that pay-outs could fall even faster, below the NZ$4.00 a kilo mark.
On Tuesday New Zealand's finance minister warned off the effect that lower Fonterra pay-outs could have on farmers, and the risk for the banking sector which has leant to them.
http://www.agrimoney.com/news/dairy-prices-fall-again-as-rains-improve-…
Mr English " probably the banks are having another look at those small number of farmers who will be under real pressure"
Heard a survey this morning that puts that "small number" at 11% . That's 1100 farmers and add on another 400 sharemilkers. I'd say that was big numbers. Having seen a respected consulted running his ass of trying to help some of them some are really struggling to stay with us.
With average Farm Working Expense (before interest payments) at $4.10-4.40 per kg MS and an average payout over last 6yrs at $6 per kg, one would assume that for a cashed up buyer to get a reasonable return on their investment the price would need to be around $25 per kg MS (incl shares and stock and plant) for a typical grass based farm. At the moment farms are advertised at $35-40 per kg MS, absolutely dreaming........
Twenty years ago the payout was $4.05 (BayMilk products, I think NZDC was $4.10), cow prices were around $1200 each at least that's what my Sister and brother in law got, and if I remember correctly farms were around $15/kgs and of course that was generally an actual what the farm can produce figure i.e. not a brought in supplemented figure. Due to interest rates the expenses including interest were probably not as different as you may think.
Talked to a mate who is a manager on a dairy farm, he is on a decent wack, but the owners have asked him to take a cut, back to 60 k a year. He turned them down, the owners came back and orghanised a meeting with the consultant, his view was why should he take a cut when last year the owners went to the world cup, purchased a new car and spent 3 week of the winter in the islands, then walked out.
So true CO.....NZ dairy have to realize we now compete with $10 an hour Mexicans in US and robots in Europe to milk cows...both doing it cheaper and more efficiently - and expensive vehicles, accommodation and extras not needed for either....welcome to the new world order where we have indebted, and costed ourselves off the market...plenty more pay cuts to come.
I believe the industry does understand it, it's NZ Inc that doesn't. Farmers around us are now charging full market rents for accommodation and some farm staff choose to live off farm. I can't see it becoming the norm but I do believe it will become more common for farms closer to urban areas.
The good ones meet in phone booths I hear. Funny how farmers get rid of staff when farmers incomes are dropping and generally do not share the spoils when times are good. No overseas staff in our retail. Don't need them as employees earning more than owners currently.
Err...you have previously commented that you are supporting your business with injections of cash, gordon. So you will be in a cashflow negative (loss) position to do that - no different than any of those farmers currently making a loss. ;-)
As to getting rid of staff - some of that is being done at bank instruction. Four out of 5 applicants for our sharemilking position were having their job disestablished and the postions were going from contract or sharemilking to farm managers. While you may prefer to keep throwing money at your business to keep your staff on, others make a business decision to take on more responsibility themselves and replace their current staff with those who are less skilled. Some existing staff may decide to 'move backwards on the career ladder' and remain employed, and others will leave the industry altogether. No different to the late 80's really. Not the first time this has happened and won't be the last.
Did this guy go West or was it South..and buy a Dairy Farm at the top of the market??.
Kanye believe this guy. In the red....and cannot balance his books...on his wife's ????.
Maybe he should just sing for his supper. Busking I think it is called.
Has the nerve to ask Facebook's owner for a mere billion dollars, up front...at the drop of a hat.
Now I know the world is mad...but...WTF...is wrong with some people.
http://www.tmz.com/2016/02/14/kanye-west-debt?adid=sidebarwidget-most-c…
I do not mean to compare him to hard working Dairy Farmers..with no debt...but the conglomerates and others, who think debt is due them, ad infinitum...and they will one day turn a profit....after spending up super large.
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