Farm sales volumes down 3.6% and median price per hectare down 18.4% year-on-year, REINZ's figures for the 3 months to February show

Farm sales volumes and median prices were both lower in the three months to February compared to the same period a year earlier, the Real Estate Institute of New Zealand (REINZ) says.

There were 370 farms sold in the three months to February this year, down 14 or 3.6% from 384 in the three months to February 2018. The median price per hectare for farms sold was $22,462 in the three months to February, down $5,061, or 18.4%, from $27,523.

The REINZ says 1,472 farms were sold in the year to February this year, 3.6% fewer than were sold in the year to February 2018, with 24.1% less dairy farms, 11.6% more grazing farms, 5.8% less finishing farms and 4.2% fewer arable farms.

Meanwhile, the REINZ All Farm Price Index, which adjusts for differences in farm size, location and farming type, unlike the median price per hectare, rose 1.2% in the three months to February versus the three months to January 2019. Compared to February 2018 the REINZ All Farm Price Index rose 12.9%.

“The easing in total sales volumes for the three month period ending February 2019 is the main point contained in the sales data just released, particularly so for the dairy sector," says REINZ rural spokesman Brian Peacocke.

“Weather conditions have again been a major influence with a booming later spring followed quickly by an extremely dry summer period leading into semi-drought and fire hazard conditions in many parts of the country. Healthy product returns continue to reward diligent producers with real strength being shown in the beef, lamb, grain, timber and horticultural categories and partly in response to a weather-induced reduction in dairy output, pleasing improvements in the Global Dairy Trade auction prices for the dairy sector," Peacocke says.

“For some farmers, however, those returns have not been sufficient to change their decision to exit the rural industry, as evidenced by the high number of farms on the market in recent months, these decisions in turn being based on frustrations relating to issues including, but not limited to, labour, compliance and margin-squeezing cost increases."

Eight of 14 regions recorded increases in the number of farm sales year-on-year, led by Taranaki up eight, Hawke’s Bay up seven and Gisborne up six. Heading in the other direction were Bay of Plenty, down 16, and Otago down 11.

The median sales price per hectare for dairy farms was $35,807 across 55 properties in the three months to February, up 4.6% from $34,238 across 89 properties for the three months ended February last year. 

"On a price per kilo of milk solids basis the median sales price was $37.87 per kg of milk solids for the three months ended February 2019, compared to $40.28 per kg of milk solids for the three months ended January 2019, down 6.0%, and $37.45 per kg of milk solids for the three months ended February 2018, up 1.1%," REINZ says.

"The REINZ Dairy Farm Price Index decreased 8.6% in the three months to February 2019 compared to the three months to January 2019.  Compared to February 2018, the REINZ Dairy Farm Price Index rose 8.4%. The REINZ Dairy Farm Price Index adjusts for differences in farm size and location compared to the median price per hectare, which does not adjust for these factors."

Points of Interest around the country REINZ highlgihts include:

• Northland - strong activity surrounding greenfield sites for kiwifruit developments and where water consents are able to be obtained, for avocado plantings; good enquiry for forestry blocks and quality beef properties; light activity in the dairy sector with continuing evidence of second tier dairy farms changing to beef
• Waikato - a distinct easing of sales in the dairy sector compared to equivalent periods in 2017 and 2018; of the large number of dairy farms for sale during the spring throughout the wider Waikato Region, approximately 1/3 have sold; simmering activity for good finishing and grazing properties with indications emerging of the likelihood of increased plantings of gold kiwifruit where licenses can be obtained
• Bay of Plenty/Rotorua - steady sales at good prices for quality kiwifruit orchards; strong prices for finishing properties Rotorua and one strong dairy sale in the Reporoa district
• Taranaki - probably the steadiest of the dairy areas with consistent sales at solid prices; good sales results for finishing and grazing units
• Manawatu/Wanganui - steady activity in the finishing and grazing categories and a light registration of arable sales
• Hawke’s Bay - a good level of grazing property sales; lesser activity on finishing units and one particularly strong sale in the horticultural sector
• Wairarapa/Wellington - harder work with limited listings in the drystock sector; very quiet on the dairy front
• Nelson/Marlborough - solid activity and strong prices for quality finishing units; fewer sales of grazing properties and quiet in the horticultural sector
• Canterbury - difficult conditions with only two dairy farm sales registered in the last 7 months within the province; reasonable activity in the finishing and grazing categories in both North and South Canterbury albeit some vendors have unrealistic expectations; reports of bank constraints causing difficulties with some transactions;  restrictions on irrigation schemes are having a negative impact in North Canterbury, mid and South Canterbury supplies not impacted at this stage
• Otago - restrained activity in the drystock sector where prices have eased 10% to 15% - reports of capital constraints from banks making finance difficult to obtain and therefore harder to get transactions together
• Southland - a good selection of dairy farms available, limited sales results compared with previous years albeit two sales of larger dairy units are significant in terms of total price involved; a good level of activity on finishing properties, lesser so in the grazing sector with reports of prices across the board being under pressure.