The rural property market finished summer on a downbeat note, with both the volume of farms sold and the prices achieved being down compared to a year ago.
The Real Estate Institute of NZ recorded 281 farm sales in the three months to the end of March, down 15.1% compared to the same period of last year.
The dairy sector was the hardest hit, with dairy farm sales down by 32.6%, followed by finishing farms -26.1%, grazing farms -14.3% and arable farms -14.1%.
Farm prices were also softer, with the REINZ All Farms Price Index, which adjusts for differences in the mix of farms sold by type, size and location, down 12.8% in the three months to March compared to the same period of last year.
The REINZ Dairy Farm Price Index, which also adjusts for differences in the mix of farms sold by size and location, was down 13.0% in the three months to March compared to the same period of last year.
REINZ rural spokesperson Brian Peacocke said the rural sector remained in good heart in spite of the challenges it faced.
"Whilst being heavily impacted and abiding by the same rules applying to the broader population, rural NZ, by virtue of being declared an essential industry, has had the necessary benefit of freedom of movement within their specific properties and general workplaces, more so than has been the case for their urban cousins," Peacocke said.
"Widespread drought conditions of recent months aside, morale within the rural community in general terms appears to be good," he said.
"This mood will be significantly enhanced if the banking sector, aided by a relaxation of Reserve Bank criteria for the building of capital reserves, adopts a more pragmatic and empathetic approach towards their rural clientele.
"One of the unfortunate consequences of the rules governing those sectors deemed essential industries, particularly the meat industry, is that it would appear processing costs will increase significantly, possibly by 25% for lamb and at this stage, by an undisclosed percentage increase in the killing charges for cattle.
"At a time when border restrictions are placing world market access for NZ exports under pressure, such increases will have a detrimental impact on incomes within the wider primary industry, to an extent which is yet to be determined," Peacocke said.
A more detailed, month-by-month breakdown of farm sales is available here.
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Farm sales
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Lifestyle blocks sold - REINZ
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17 Comments
Ms Market having her wicked way with Mr Price Discovery.......
Coming to a residential property market near you!
Dairy farm in North Otago calling for offers at 25% below RV.
Got an address?
With the Otago Water plan being called in and the EPA and Environment Court now in charge of decision making, not the regional council, I would be very diligent about buying any farm in Otago at the moment. If its the farm I think it is, while kgs/ha look ok for an irrigated farm, kgs/cow is not something to crow about. Nothing said about effluent system - which is interesting. RVs are likely meaningless now on farms. It's cashflow that banks want to see.
The same here CO, i would be very cautious about buying farms while we go through this consent to farm process. In many ways it's a theft of nutrients from low uses, being gifted to intensive high leaching properties. Go regional councils, the flow on effects will be felt for years and there are a lot of very unhappy people out there.
I never trust RE agents numbers, I went round a sheep farm once with in theory 4000 ewes, i asked where the rest of the ewes were, only to get a blank look.
The landscape for farming and all rural land uses is changing fast. Regional councils are the places where attention is needed as these plans take many years to be put in and are very hard to change once in. When you look at some of the RC plans they make the proposed National water standards look like a walk in the park.The grandparenting of nutrients is a critical point which low intensity farmers really need to be working on. Its easy for councils but very unfair as it rewards the high polluters and punishes the low polluters. The high polluters need to be the ones pushed back but as they have higher debt and capital value they are to scared to touch them.
I met a couple of farmers over the last few days in the Wiakato.
First, an, autumn calver running the family farm. Didn't lock maize in on contract now is /has been trying to buy on the spot market. Unsure whether he can't get any or whether he can't borrow to buy any. Either way I asked what he plans to do for winter feed, he looked defeated and simply shrugged his shoulders.
Second was a first year CM couple, maize was coming in from the run off but that was going to be fed straight to the cows. The farm owner misjudged the weather and tried to regrass a significant portion of the farm north of 50% months ago which failed. They've just regrassed this week. Last year the farm dried off early May, this year mid March with very little paddocks in rotation. Their cashflow is shot. Their overdraft is climbing, bank isn't particularly happy. FO have relaxed their contract to allow one of them to work off farm to try and supplement income but that has become near impossible because of COVID-19. Again there was shrugging of shoulders when talking through how winter was going to pan out.
Farmings not a game for the faint hearted...................
Always wanted to be farmer and own a farm, got one, and now it's my prison.
Hummy - I am sorry about that.
I grew up on a small marginal dairy farm where home kill putting meat on our table was one of the few positives. My father wouldn't let me follow in his footsteps, sent me to boarding school, arranged my first job (hard to believe nowadays) in town. 20 years later to his disgust and damnation I went farming. Had a few low points (usually involving a bank) but loved pretty much every minute since.
It's got to be a big advantage being bought up on a farm. I always loved the seasons, feeding out hay. cutting hay, docking etc, it was hard work and often frustrated by weather and markets. I didn't have to worry about money at that age, it was all fun.
Hi Hummy, If you want to talk to someone whose not friends or family you can text or call 1737 24/7.
I meet a lot of youngish Waikato farmers down the Coromandel where the in laws have a 60 year old dunga that gets flogged all thru the year. This decrepit building is surrounded by new mansions that wouldn't look out of place in Kohi but the only time I see them being used by these Waikato owners is the summer break. Talking to them they seem to believe they are financially bullet proof.
A lot of Jafa tradies are there as well.
Both have brand new toys out to the ying yang always parked in the yard.
It won't end well.
LIC offer a product called "Space" which is uses satellite mapping technology to measure the amount of grass on your farm. https://www.lic.co.nz/products-and-services/space/ They offer a 6 week free trial. I would suggest that any farmers needing to know what their current feed levels are to make the most of this service. We used it last year exiting the drought in Nelson. It was most helpful. Unfortunately you have to purchase a 12month subscription after the trial. I would be happy to pay per week or month.
LIC offer a product called "Space" which is uses satellite mapping technology to measure the amount of grass on your farm. https://www.lic.co.nz/products-and-services/space/ They offer a 6 week free trial. I would suggest that any farmers needing to know what their current feed levels are to make the most of this service. We used it last year exiting the drought in Nelson. It was most helpful. Unfortunately you have to purchase a 12month subscription after the trial. I would be happy to pay per week or month.
As Warren Buffet says when the tide goes out you see who has clothes on. I cant see the banks getting easier in fact just tougher as they have problems across all fronts. We are a commodity based economy subject to large rises and falls. That with climate change - yes its real unfortunately, high leverage (encouraged by banks, industry groups - Im sick of hearing "the medium to long term outlook is very positive" - we need profit today not in a few years - no one can define medium term to me and operating costs with high input systems - fert, Sup feed, water schemes etc - guess who makes the money here! Take care and don't keep doing things just because its the way its always been done. To get a different result you need a different recipe.
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