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Drop in sales amid gloomy outlook

Rural News
Drop in sales amid gloomy outlook

Farmers appear to have hunkered down to ride out the recession with farm sales tumbling as a confidence survey shows low expectations of economic improvement reports Stuff.  Just 285 farms changed hands in the three months to June, according to the latest Real Estate Institute statistics, compared with 711 farms for the same period last year.This lack of confidence is reflected in a Rabobank survey showing 49% of farmers expect the rural economy to worsen in the next 12 months. Only 12% expect conditions to improve. The survey was conducted across NZ a month ago and is the third in a row to record a fall in confidence. Rabobank rural manager Ben Russell said the survey also showed farmers were aiming to consolidate or lower debt levels to ride out the tough economic times and position themselves for better times ahead. The rising currency had been taking its toll on farmer sentiment, with the dollar now sitting at around US63 cents compared with US55c at the time of the previous survey. This challenge is compounding ongoing concerns already being felt about declining commodity prices in some key sectors, along with worries about global economic conditions," he said. While farmers were rightly concerned about the impact of tough financial conditions upon their businesses, Rabobank remained confident that the food and agribusiness sector would be one of the first to benefit from recovery in the global economy, and that farmers were effectively adapting their businesses to the conditions. Real Estate Institute rural spokesman Peter McDonald said the Fonterra payout was a good barometer for the rural market. It was no coincidence the median sale price of farms in June 2007 was $1.25m and the Fonterra payout was around $4.46 and in June 2009 the median farm sale price was $1.15m with a Fonterra payout of $4.50. In the past, farmers from traditional farming districts such as Waikato and Taranaki would head down south where the price of farms would be cheaper, and there was a significant number of conversions from dry stock to dairy in the southern districts. "But now those conversions have taken place and the payout has dropped back, the trend to moving south has slowed considerably as seen in this month's statistics." Not all districts were badly affected. In Hawke's Bay, turnover of farms had remained consistent over the past three years and two $3 million-plus sheep and beef farm sales have recently been made in Wairarapa. The national average dairy farm sale price of $41 a kilogram of milksolids recorded in the three months to June 2009 was holding firm and the dairy market had been reasonably active in a seasonally slow period with 55 dairy farms being sold.

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