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FOUR FARM sales earlier this month suggest that recent falls in dairy payout forecasts have not diminished appetite for investment in the industry, says a leading national rural property salesperson.
Camron Meade, national sales manager for PGG Wrightson Real Estate, says the auctions, in Manawatu, Central Canterbury and North Canterbury, along with a sale in the Waikato, suggest farmers are not unduly concerned about the short-term prospects for dairying.
"Within a week, we have had four benchmark sales, with the strongest influence, in each case, being from the dairy industry. Despite recent news around the dairy payout forecast, interest in acquiring rural property remains high," he says.
On 2 October, a 207ha grazing property at Waituna West in Manawatu sold by auction for $3.9 million, equating to $18,800 per hectare and exceeding the farm's 2011 rateable value by 15%. Its new owners intend to use the property for dairy support.
On 3 October, a 79ha dryland bare block at Hororata, Central Canterbury, sold at $2.63 million, or over $33,000 per hectare. This property has shares in Central Plains Water, which will provide irrigation to the area within the next few months. Its successful bidder also intends to use it for dairy support.
Also on 3 October, a 99ha dairy property close to Hamilton, with well-developed farm infrastructure and milking 320 cows, sold at $6 million, or approximately $60,000 per hectare, without dairy company shares.
On 7 October, a 60ha property at Oxford, North Canterbury, was sold under the hammer at $1.67 million, or in excess of $27,000 per hectare.
Meade says all these sales demonstrate the strong demand for rural property, particularly for dairy-suitable land with good soils and location.
"For some time, we have had a supply-demand imbalance, with plenty of purchasers eager to acquire rural property and few farmers willing to sell. This is particularly apparent in Waikato and Canterbury, although also noted throughout the rest of the country.
"These recent sales show that, although dairy farmers are facing some challenges with the payout forecast, for those with a longer-term outlook, demand to invest in or consolidate farm ownership has not abated and, if anything, is stronger than ever. Despite the present blip, with medium to long-term milk price projections largely unchanged, dairy's prognosis remains positive and will continue," he said.
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