Wednesday, 18 February 2015 14:44

Farm values will hold

Written by 
Simon Anderson, Bayleys. Simon Anderson, Bayleys.

A drop in the primary produce commodity price index will scarcely affect land prices, says the real estate industry.

 Bayleys national manager Simon Anderson says farming’s lower revenues will little influence how farmers estimate future revenues.  Farmers use revenue data, costs of production and debt servicing to figure what they should spend to buy a new property.

“Farmers, and more importantly their banks, are taking a long-term view of commodity prices. Long-term the outlook is strong for sheep, beef, and diary prices,” Anderson says.

“So while Fonterra is budgeting for a farmgate milk price of $4.70/kgMS for the next season, the banks take a longer term view – more around $6.30.

“There’s nothing new about the cycles of the rural market, but banks and farmers take a more flat-line approach to their revenue forecasts, working instead on long-term rolling averages rather than historical high and low positions which can fluctuate markedly in the short term.”

Bayleys notes more corporate buying rural property: high-equity farmers are looking to develop economies of scale by buying extra properties close to those they now own.

“Bigger… farmers can take advantage of fertiliser input, pasture management, seed or crop planting, feed production and staff management over nearby properties. 

“While commodity prices are the same for all… economies of scale benefits vary depending on a farmer’s experience, equity, location and business plan.” 

» Connect with Rural News

More like this

Plan to protect land

Farmer groups are backing Government proposals to prevent productive land from falling to housing development.

Orchard prices strengthen

Demand will rise for existing kiwifruit orchards as a result of Zespri granting its annual quota of new licences for the gold kiwifruit variety, claims a rural property salesman.

Sharemilkers seizing the day

Taranaki seems to be bucking the trend in sales of dairy farms nationwide, and it may be due to sharemilkers.

Mixed signals — despite high prices

The rural property market is lacking ‘zing’ despite high primary product prices and low interest rates, says BNZ’s agribusiness report Rural Wrap.

» The RNG Weather Report



New farm debt mediation law

Proactive and well-prepared farmers and lenders stand to gain from the introduction of the Farm Debt Mediation scheme, according to Scott Abel and Bridie McKinnon from law firm Buddle Findlay.

» Connect with Rural News

» Connect with Rural News

» The RNG Weather Report

» Latest Print Issues Online

The Hound


The Hound notes that one of the country’s poorest financially performing state-owned enterprises – the Government farming entity Landcorp (or…

Rural revolt

Your old mate hears that the antics of the Government – especially the NZ First component – are fuelling motivation…

» Connect with Rural News