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.” 

More like this

Bonkers!

The Hound reckons news that an Austrian billionaire has been granted consent to purchase an $8m Hill Country farm, is living proof that the NZ First’s billion tree policy is a disaster for farming in this country.

Fewer farms changing hands

Just two dairy farms have changed hands in Canterbury/North Otago in the current season, according to the just-released Colliers Dairy Property Market Review for 2020.

Farm sales start to look up

Farm sales were down 21.6% for the three months ended December 2019 versus the year prior ­— but sales look to be lifting.

Plan to protect land

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

Featured

Feds call for pause on regulations

The Government has been warned that it needs to back off some of its signalled regulations if it wants farming to help the NZ economy recover from the COVID-19 hit.

 

Tough time on farm for many

Under pressure from drought and COVID-19, Woodville dairy farmer Ben Allomes says: ‘we can’t shut our doors and just walk away’.

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Deafening silence

Your old mate reckons it’s incredible how people’s attitudes have changed since the COVID-19 crisis hit us.

Celibate times

A mate of the Hound’s reckons the COVID lockdown must be getting serious when we are being told not to…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter

Popular Reads

Rules driving farmers out

New farming rules around sustainability are driving elderly farmers out of the dairy industry, says agri-economist Phil Journeaux.