Farm sales at record low in October

Rural News

Farm sales hit a record low 46 in October; only 4 dairy farms sold and no sales at all in Southland

16th Nov 10, 9:35am by Bernard Hickey

<p> A 170 hectare dairy farm near Hawarden in North Canterbury is on the market to be sold via syndication/Bayleys</p>

Real Estate Institute of New Zealand (REINZ) figures for farm sales in October show sales hit a record low 46 nationally in October, equal to the previous record low of 46 hit in January this year and down 42% from the 79 farms sold a year ago.

There were just 4 dairy farms sold in New Zealand in October and no farms were sold in Southland.

Farm sales had fallen to fewer than half the numbers achieved in recent years, but the median sale price is up on the same time last year, the REINZ said in its release titled "Rural Property Market Remains Quiet."

“Turnover in the rural property market is mirroring what is happening with residential sales and is continuing the trend over the last three months,” said REINZ spokesman Bryan Thomson.

“While the whole rural market is very quiet, with the positive outlook internationally for milk products we are starting to a see a new lift in interest in dairy farms,” Thomson said.

“But buyers are being very price sensitive so vendors still expecting to realize the values of two and three years ago will continue to be disappointed,” he said.

In the three months to October 147 farms were sold, down 28.3% on the 205 sold in the same three months last year and down on the 164 sold in the three months to September. There were 390 farms sold in the three months to October 2008 582 sales in the three months to October 2007.

The median farm price in the three months to October was NZ$950,000, down from the NZ$1,012,500 in the three months to September 2010 but up from NZ$875,000 in the three months to October a year ago.

Only 8 dairy farms were sold in the three months to October and the median price fell from NZ$3,163,121 at the end of September to NZ$1,700,000 for the three months to the end of October.

"However one of the four dairy farm transactions in October was a leasehold property so the selling price was considerably lower than if it had been freehold," REINZ said.

"Despite the impact of the leasehold transaction on the REINZ rural property market statistics the average price per kilogramme of milk solids recovered from NZ$30 in September 2010 to NZ$33 in October 2010, the same as in August.

See a full breakdown in these Rural Market Statistics here.

Regional detail from REINZ.

"On a regional basis the most farm sales were in Manawatu/Wanganui with 21 during the three months to October. Canterbury was second with 19 farms sold and the Bay of Plenty the next highest with 16.

"As well as the decline in the number of sales, median prices for farms fell in 9 out of the 14 districts in the three months to October 2010 compared to the three months to September 2010.

While across the country the median price for the three months ending October 2010 is up $75,000 on the same three months in 2009, during the past year median prices for farms have declined in 7 out of the 14 districts.

For the three months to October 2010 compared to the corresponding period in 2009, farm sale prices were down in Auckland from $903,000 to $613,000, Waikato from $1,462,500 to $1,400,000, Bay of Plenty from $1,000,000 to $962,500, Hawkes Bay from $1,200,000 to $856,000, Taranaki $1,000,000 to $390,000, Manawatu/Wanganui from $1,190,000 to $1,145,000, and Wellington from $1,810,000 to $1,000,000.

However when compared to the same three months to October 2009 there have been increases in median prices this year in Northland (from $490,000 to $741,250), Gisborne (from $850,000 to $1,240,000) and all the South Island regions (Nelson from $700,000 to $$1,565,000, West Coast from $103,634 to $677,500, Canterbury from $995,000 to $1,000,000, Otago from $527,500 to $670,000 and Southland from $641,500 to $1,125,000) .

Sales of lifestyle properties increased slightly from 1039 for the three months to September 2010, to 1053 for the three months to October 2010. But at $425,000, the median selling price has continued to slip back from $427,500 at the end of September and $436,750 for the three months to the end of August and $445,000 for the three months to the end of October 2009.

Farm sales

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Source: REINZ

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63 Comments

by Andrewj | 16th Nov 10, 9:46am 1289853998

With capital gains/land tax hanging over buyers its hardly surprising. Then the fact that the banks are lending %15 including livestock, pretty much takes the dreamers out. Lack of income take out the realists. Who is left? Obviously no one

by andyh | 16th Nov 10, 9:54am 1289854465

I think I recall the REINZ commentary in the autumn of this year on the abysmal sales at that point being along the lines that 'the poor weather was not conducive to buyers getting out and about' (presumably because they would get their gumboots muddy).

No doubt this commentary will not be changed to something along the line of 'buyers are off enjoying the sunshine'.

Amazing how, despite the change in the seasons, buyers still cant be persuaded to buy overpriced assets.

by Les Rudd | 16th Nov 10, 12:17pm 1289863037

Neat humour Andy, like it.

by Nicholas Arrand | 16th Nov 10, 9:58am 1289854717

Time is taking its toll, now. With 160% of household income being spent on living, once the savings are gone, and the debt can't be increased, there is only... 100% of income available to be spent. That's a 60% drop in expenditure, that will be taken up by lower debt servicing costs. Whatever the expenditure/income ratio is in the rural sector, it must be taking a toll on prices ( debt servicing capacity) as well.

by Sheep Shagger | 16th Nov 10, 10:28am 1289856482

NA, Not sure exactly how household income levels are relevant to farm prices, seems an irrelevant comparison to me.

Facts are that the earning capacity of farm land is increasing, interest rates are reasonably low and alternative asset classes seem to me to be far from compelling. I would hazard a guess that this would lend support to farm prices at around current levels.

Whilst statistics gleaned from such a small sample are hardly worth noteing it is interesting to see that the dairy farms traded at a 10% higher level per kg/ms. Perhaps a bottom has been reached?

by Nicholas Arrand | 16th Nov 10, 11:18am 1289859511

Don't households buy what farms produce? So lower purchasing power must lead to lower demand from the source?

by Property Man | 17th Nov 10, 11:35am 1289946936

The majority of NZ's farm produce is consumed off shore. It is not a good indicator for farm prices.

by Nicholas Arrand | 17th Nov 10, 11:39am 1289947160

So by the households in the UK, Ireland, Spain, the USA and China ( who have a much lower household spend than most, although it's rising) etc. It doesn't matter where it is; it's a household. And their purchasing power, everywhere, is shrinking.

by Sheep Shagger | 17th Nov 10, 12:07pm 1289948869

NA,We are not trying to supply every household nor could we even get close. There is currently estimated to be a 300,000kg shortfall of the supply of lamb in the world market. A newsletter from the Alliance meat company I recieved in today mail talks of "ongoing shortages and strong demand". NZ has 75% of the world cross border trade and Aussie most of the rest,and as you will know NZs supply is shrinking and demand out of Asia is still growing rapidly albiet off a low base.

by Sheep Shagger | 17th Nov 10, 1:23pm 1289953397

opps 300,000 tonnes that should have been.

by ploughboy | 16th Nov 10, 10:47am 1289857645

but myfarm told us that the price of dairy farms in southland had risen 5%

by realist | 16th Nov 10, 10:49am 1289857740

Sheep shagger I would like to agree with you that the earning capacity is increasing, but to do so the product has to earn more and at present the world economy is struggling to pay for what we produce now. One sale of note in the Waikato was at $20 milk solid, that is frightening, I think we have a long way to go yet before prices improve.

by Gareth Vaughan | 16th Nov 10, 10:51am 1289857919

And in contrast the Reserve Bank reckons farm prices may need to continue falling to see “substantial” buying interest reemerge and this could leave some dairy farmers in negative equity.

http://www.interest.co.nz/rural-news/reserve-bank-sees-further-farm-pri…

by Kunst | 16th Nov 10, 11:07am 1289858869

Great to see the NZfarming community standing strong and proud - not interested in selling – hmm !??

by Bernard Hickey | 16th Nov 10, 11:29am 1289860145

It seems the only way to sell these farms is to slice and dice them via MyFarm and Bayleys.

Here's a lot more on that in Gareth's story from a few days ago

http://www.interest.co.nz/rural-news/bayleys-targets-minimum-nz250000-25-investors-canterbury-dairy-farm-syndicate

cheers

Bernard

by Andrewj | 16th Nov 10, 7:16pm 1289888211

If you want to get sliced and diced buy into this BS.

by Alex Tarrant | 16th Nov 10, 11:38am 1289860680

And then there's Bill English saying new Overseas Investment rules could drive down farm prices further

http://www.interest.co.nz/news/ministers-given-more-flexibility-reject-sales-foreigners-sensitive-farmland-using-new-economic-inter

Bill English told a news conference the new rules could potentially make it harder for farmers to sell their farms.

“The advice form the rural real estate industry is that farm volumes are very low, and in some places foreign owners have been the marginal buyer," he said.

“That doesn’t appear to have occurred on a large scale.

“I think quite a lot of the farming community would be happy enough to see an end to the speculative bubble that had developed around farm land, and a focus on farm values that are more related to the cash flows.

“We can’t have it both ways.

“If we really wanted to maximise the capital value of the farms then you just throw the doors wide open and let anyone come in and buy whatever they like.

“But the farming community has had a strong a view as any part of the New Zealand community that they want to see the rules tightened a bit here.”

English said he thought the farming community was ready for a shift in focus around farm values.

“They realise there was a speculative bubble that’s left parts of the farming sector with far too much debt that they’re going to have to pay down, and in the future it would probably be better if the values were a bit more aligned with the profits that can be generated by that land.”

However, English later said he would not like to prejudge this sentiment too far.

“All I’m saying is there’s a bit of a shift in attitude where people realise there’s been some real excesses in the market, where prices got way out of line with productive capacity.

“There will be a group of current farm owners who have got high levels of debt, and their banks, who will be concerned about any radical shift in the policy.

by Les Rudd | 16th Nov 10, 12:19pm 1289863184

Hmmm,

“All I’m saying is there’s a bit of a shift in attitude where people realise there’s been some real excesses in the market, where prices got way out of line with productive capacity."

Surely he meant:

“All I’m saying is there’s a bit of a shift in attitude where people realise there’s been some real excesses in the market, where LENDING got way out of line with productive capacity."

Who's fault is that?

Is there a government agency dedicated to monitoring this activity with a view to avoiding the instability "some real excesses in the market" of this ilk might cause, sorry, has caused?

If there is, what stopped them acting to avoid this problem?

Who's fault is that?

Cheers, Les.

www.mea.org.nz

by I Am The Man | 16th Nov 10, 1:23pm 1289866984

Prices went crazy because lending went crazy. You can't have high prices when there is no money to pay those prices. The banks loaned too much money to buyers who were willing to pay prices which were too high.

by ADRIAN N | 16th Nov 10, 7:09pm 1289887783

You can't blame the brewer for alcoholics

Too many people didn't think about the danger of blindly following the herd

by Les Rudd | 16th Nov 10, 7:27pm 1289888857

Sure, lets try this comparison, suppose we remove all speed limits on all roads, do you think human nature will lead to more or less deaths? Will roads be safer, for all users, or would they be a liability for most and therefore lose utility because many would feel less safe using them? In other words, just thinking a little further than individual interests and toward the interests of liberty for the majority.

Cheers, Les.

PS - we should blame the brewer and the brewing regulator if the brew is made more addictive than need be the case. The damage done to individuals and the many, impacts too negatively on the whole - it's why certain addictive and destructive substances are controlled. Debt seems so similar.

by I Am The Man | 16th Nov 10, 8:05pm 1289891125

The banks responded to 'the will of the people'. The will of the people was shaped by the desires of the real estate industry and their media cronies. Was it cynical and incompetent of the banks to loan too much to gullible people who weren't good for it, just so those idiots could buy their 'dream houses' at ridiculously high prices? Of course it was.

But were the banks any worse than anyone else involved? How about the governments that encouraged the property Ponzi scheme? Or the TV producers who received sweetheart property deals in return for churning out crappy house auction show after cruddy house renovation show? Greedy BB PIs who believed (and still believe) that 'everything is all about us'?

Nobody who partook in any way is blameless.

by steven | 16th Nov 10, 8:07pm 1289891224

In terms of a speculative bubble he has a point we had cheap credit easily available to stupid ppl, peddled by those making a tidy profit that they all thought could not go wrong...

Not exactly sane....

regards

by ADRIAN N | 16th Nov 10, 8:50pm 1289893800

Debt ($) is a drug - I agree.

I also agree with regulation to police the human nature of consumers and providers. Without police or policy I would not feel safe

I am encouraged by recent noise of more regulation for brewers and investment providers

by Kunst | 16th Nov 10, 11:53am 1289861609

Correct Bernhard - It seems the only way to sell these farms is to slice and dice them via MyFarm and Bayleys.

- but make sure Bayleys international - all over the world - especially Ireland, Greece, Spain and USA - on places with plenty of money.

I heard China bought Fiji and Vietnam Samoa - warriorsome !

by Andrewj | 16th Nov 10, 11:57am 1289861820

Foreign buyers have already been scared off. The new rules require that you move to get NZ citizenship and invest here for the future,pay tax etc , or so a local real estate agent told me.

Im still sticking with the collapse senario, I dont see anyway these debts are going to be paid back from income and Sheep shagger is not convincing me otherwise. Incomes are down costs are up(look at fuel) profitability is terrible, its going to melt down just like thew housing market. We simple have borrowed more than we can pay back, maybe not all of us but the ones who have the debt have enough for you and me.

by Sheep Shagger | 16th Nov 10, 12:53pm 1289865180

Im not buying the collapse senario AJ. I will qualify that by saying that I wouldnt want to be selling tiger country out the back of beyond in this market. I do think good,well located farms will hold their value reasonably well. I has to be remembered that unlike the much debated residential property prices farm prices have already had a major correction. what is the catylist for more?

As you have recently discovered with your first draft and the quotes on your old ewes returns will be signifcantly up this year and the high dollar should keep costs in check for the major inputs.

The oversees buyer thing is abit of a red herring as they are such a tiny part of the market anyway.

by Kunst | 16th Nov 10, 12:48pm 1289864889

NZfarmers away of quantity into - quality, diversity and branding. Bring back NZfarming community - family businesses standing strong and proud. There are many great examples.

PM Key - we - the people of New Zealand demand to get rid of all the cowboys in any sector of our industries and introduce a comprehensive Branding of NZ’s economy (the only in the world) today : 100% Pure

green and clean – a multi billion $ business !

In case this steps aren’t executed before the next election, the government will be replaced by Bernhard’s new party “ NZ100% PURE "

Bernhard, I can make some proposals for the minister jobs and your green lemonusine driver - when you like.

by Alex Tarrant | 16th Nov 10, 12:53pm 1289865188

Hi Walter, did a story (with another journo Stacey Kirk) on 100% Pure and the branding issue earlier this year you might be interested in.

http://www.in-business.co.nz/branded-as/

Cheers

Alex

by Kunst | 16th Nov 10, 1:02pm 1289865761

Very interesting link Alex - thanks ! Tonight I have more time to explain why I think branding our economy with "NZ!00% PURE" does work for New Zealand.

by Kunst | 17th Nov 10, 12:04am 1289905441

Alex - first the Brand “New Zealand 100% Pure” is regarded rather as an ideology (my favourite) in contrary to “100% Pure New Zealand” which is regarded rather in connection to the environment. In my personal view to clarify this point is of importance.

Maintaining and building quality standards in all situations of life and business are in most countries a major issue. Unfortunately of reasons we all know a goal, which cannot always be achieved. If health, environment, ethics, etc. etc. internationally the consequences for humans increasingly worsens. Most of affected countries New Zealand is dealing with have serious problems of some sort – life is not and cannot be pure, clean & green anymore. This is recognised within the population, especially among good educated, good earners/ spenders and businesses demanding quality.

As a rather remote and small nation we could be different and make “New Zealand 100% Pure” work attracting our products and services coming from all sectors of our industries to the world. With some improvement we have enormous resources. e.g. water, food, ethics – values not only with the potential of earnings in the billions, but to make us proud too.

Therefore a national NZ economy branding “ New Zealand 100% Pure ” should be launched immediately

by Kunst | 17th Nov 10, 8:00am 1289934028

….and internally, of course make life for all cowboys not practising along those important “NZ100% Pure” constitutional guidelines harder - urgently.

by Sheep Shagger | 16th Nov 10, 1:09pm 1289866181

Walter thats correct and exactly what we are doing. As an example im sending away my cheque to join up to the wool co op that is all about supporting the new Laneve brand and repositioning strong wool as the luxury eco fibre that it is, targeting affluent consumers. The deal struck with starbucks being an example of the progress we are making. Merino NZ and Zespri gold are other good examples. Meat companies 20 years ago used to sell 95% of sheep meat as frozen carcase form now the vast majority is in futher processed chilled cuts and commands the 2nd highest price of any red meat protien after NZ chilled venison. Your behind the curve Walter!

by stevel | 16th Nov 10, 12:54pm 1289865240

I have done cash forecast and cashflows for a potential purchaser, he took it to one of the big four banks, the local guys said "thats great, lets do it, we should be able to get the $" then they did the paper-work, sent it to head oriface in Wellington for approval, Wellington said NOWAY.

I wonder how long we can accept "market value" when there is no market for these properties, the alternative method is the NPV (nett present value) of future income streams, which will lead to the collapse of farm prices.

Banks were talking lending at 6.5% (at least thats what the locals said, Wellington may have a different number)

by steven | 16th Nov 10, 1:04pm 1289865881

So Wgtn might already be doing a NPV....?

How about doing the sums back and see what the farm is worth....

Just whether the seller would be willing to sell at that price.....

For me waiting right now seems to be the way to make you money....ie you buy it later at NPV....it will come....maybe a year yet.....a lot lower....you cant buy it now anyway.

regards

by Casual Observer | 16th Nov 10, 7:04pm 1289887444

Did your purchaser have the 60% deposit most bank insist on for a farm loan these days? Unless you have 60% deposit it is almost a waste of time applying for a bank loan to buy a farm these days. Most of the ones I talk to want 60% deposit PLUS strong cashflows - for dairy farms anyway. I note Rabobank require you to do all budgets/cashflows at 10% interest regardless of what you can borrow at.

by Andrewj | 16th Nov 10, 7:13pm 1289888034

Hi Casual Observer,

Im with Rabo too and several friends who could, have changed to Rabo recently. With sheep and beef all the banks have almost impossible lending criteria 9%15 including livestock) and the farms are coming on the market daily around here. We are only a few weeks off another drought senario hopefully we will get some rain but spring pretty much missed us.

I see interest rates are tracking up in the States, that would be a disaster for sheep farms around here.

Im enjoying my Kindle it doesn't replace a book which Im happy with, its easy to download and easy to read except the screen is a bit small but I can see the potential of the technology.

I downloaded this book and knocked it off his afternoon so it has good points and is relatively cheap.

http://www.amazon.com/gp/product/1450529305?ie=UTF8&tag=charleshughsm-2…

by Casual Observer | 17th Nov 10, 3:06am 1289916395

I too know of farmers who are changing to Rabo, where they can. Quite honestly I don't know why anyone wouldn't change. We have been with them since their inception and were with their predecessor PIBA.

MOTH back home says the Eastern BoP is drying out also. We did a trip between Rotorua and Cambridge last week and were surprised to see that in parts they were drier than we were back in the Bay. Yet up highway 27, Ngatea etc seemed to be in a much better position. We did notice a lot of cockies seemed to have planted a paddock or two in maize this year, which wasn't noticeable last year. So looks like they are trying to be proactive in case of drought. Down on the farm in Southland though, things are going well - so far.

by Andrewj | 17th Nov 10, 9:10am 1289938236

CO, to see Rabo in action go to the central valley in California. Every town has a branch it feels. From Los Banos to Redding we saw new Rabo offices. They are expanding in a big way using the Australia/NZ model. I came to Rabo via Wrightsons, way back like you.

My old ewes went this morning sorry to see them go, they had a tough winter and still did %140. No teeth unfortunately. I getting very dry, the ridges are browning and Im a little concerned. The lambs are not growing and its a general problem so its going to be a late season. The works must be really concerned I see CMP are now killing ewes to get some through put, the beginning of soem tough years for the processors.

by I Am The Man | 16th Nov 10, 1:19pm 1289866761

ALL property is way overpriced, not just residential stuff. When prices are too high and finance is hard to get the prices fall. This is what we've been seeing in residential property for a while now so why should agricultural property be any different?

by Christov | 16th Nov 10, 1:40pm 1289868010

Oh give me a home where the............roam

and the ......... and the...............play

where seldom is heard a discouraging word

and the .........are not ..........all day

Please fill in blanks where applicable according to your current level of negative equity.

by powerdownkiwi | 16th Nov 10, 1:46pm 1289868383

chorus:

home - home loans arranged

by Christov | 16th Nov 10, 1:50pm 1289868627

By a bank who would now be De-ranged.....?

by Christov | 16th Nov 10, 1:56pm 1289868973

Where despite what you've heard

It's not all cream of curd.......

by Christov | 16th Nov 10, 2:00pm 1289869200

....and the Banks cannot assure your stay.

Al together now...6/8

by Christov | 16th Nov 10, 2:00pm 1289869259

aw gees PDK ....I waited for ya.

by powerdownkiwi | 16th Nov 10, 2:22pm 1289870544

sorry, I misplaced my instrument.

Was waxing grumpily at the Connor English bluewash nonsense. Fed Farmers remind me of Straterra - all spin. No wonder they're decimated.

I'm away out to plant some more fruit trees, assisted by a somewhat erratic border collie.

You did well solo - but it's a ballad- not my thing really.

We lifestyleblockers are into big arias. Please pronounce carefully......:)

by Andrewj | 16th Nov 10, 7:04pm 1289887481

I've been going to farmer meeting for years and used to always being the youngest in the room, now Im grey and middle aged Im often still the youngest in the room and its a pleasant change to be called the young man at meetings. In a few years time demograpics are going to change NZ ag.

by Casual Observer | 16th Nov 10, 7:56pm 1289890602

Agree AJ demographics will have an impact in the future. A few years ago I was at a health conference when a chart of demographics was put up. It resembled an X with the top slightly narrower than the bottom. The interesting thing was that the narrowest (least population) was for what would now be 25/26year olds. Yet it will be this age group (and those around it) that will be the potential farm buyers in 10-15years.

Interesting times ahead

by Sheep Shagger | 16th Nov 10, 7:55pm 1289890507

Yes AJ, going to farmers meetings is a good way to feel young. At 40 im still amoungst the younger age group. However there are a number of younger guys farming around here and its a fairly dynamic enviroment. Lots of competition and striving to match or better the others.How these demographics change ownership structures will be quite interesting. I cant see syndicates really taking off but can see more leaseing/sharefarming type arrangements. The trend to bigger farms will also continue with the strong getting stronger.

by NeilD | 16th Nov 10, 8:06pm 1289891175

i was out and about in the Waikato today collecting a little over due income from a handful of '90days' ( stockfeed company) , the thing that struck me the most was the type of farmer having difficulties, 3 out of 3 were stud breeders and clearly their bankers had had enough and wanted out. Quite clearly their bankers no longer had confidence in their 'business model' these blokes couldn't see it... they hadn't changed the way they do things, not their fault...I would have liked to have said we're at this turning point that history will judge as the most significant period of a generation, but i doubt their would of understood!!!

by Sheep Shagger | 16th Nov 10, 8:19pm 1289891945

I can believe that Neil. Ive been a stud breeder in the past and it is a tough gig. The costs are enormous and the returns completely reliant on others coming in the gate and buying your product. It may work out for abit and then the trend of the day changes and you're high and dry. There s a hell of a lot of BS involved and a big pretence to uphold regardless of how things are really tracking.

by NeilD | 16th Nov 10, 8:32pm 1289892745

My point is things change, sometimes faster that others, i see alot of very good operaters also, time for a cleanout.. then we can move on with confidence!!

by Omnologo | 16th Nov 10, 9:25pm 1289895941

Greetings Sheep Shagger, could you explain/justify how the trend to the big getting bigger, strong stronger, grow or go will continue? I hazard a guess you have been spending time at bank functions, because of course they need us to grow bigger so they can too right?

by Sheep Shagger | 17th Nov 10, 11:31am 1289946717

Hi Omnologo, I can assure you I havent been brainwashed by any banking seminars theyre just my observations.

Simply put I just think we will see a continuation of the long term trend. There is a huge difference in the profitability of the top quartile operators and the bottom ones. The top guys are actually very profitable in comparison the the estimated averages put out by the economic service and they will be the ones who will continue to grow their businesses. The ones im thinking of are family set ups expanding with the next generation coming through. I have never said "grow or go" there are many profitable smaller operations im sure however I think most farmers look over the fence at the nieghbours at one time or other and think, what if?

by Andrewj | 16th Nov 10, 10:08pm 1289898519

I went and checked meat prices in the UK. Couldn't get into Tesco but got a look at Sainsburys.

I dont see how the prices here can keep being paid Im getting 3 quid a kg in the paddock. Getting sold in UK for as low as 6 quid a kg for shoulders. I dont think these prices are sustainable even in this crazy manipulated world we live in.

These are the prices for fresh UK Lamb,

http://www.sainsburys.co.uk/groceries/index.jsp?bmUID=1289896289370

Click on all Lamb. Remember that these prices in the UK have VAT included at some crazy rate, is it still %20? Margins Look slim to me. I suspect NZ sheep farmers and the meat industry are in for a shakeup.

by Casual Observer | 17th Nov 10, 2:26am 1289913982

I'm currently in the UK and was asking family how much their grocery bill has gone up since I was here last October. Interesting answer was the family with two young children are still able to budget for the same now as back then. Overall they feel their average weekly spend is lower, however they used an allotment over summer and now bake their own bread.

VAT is 17.5% - goes up to 20% on 1 Jan and 'basic' food items are VAT - free. I am told biscuits are 'basic', cakes are 'luxury' therefore no VAT on biscuits but it is on cakes!

Thanks for the comments re Kindle too, Andrew.

by TrueValue | 16th Nov 10, 11:38pm 1289903882

If you are a potential farm purchaser/investor, would you invest in NZ where you are faced with challenges such as overpriced land value, unwelcome environment (especially if you are Chinese), outdated labour law, high taxes, monopoly from a key dairy player, relatively weak infrastructure etc. Sooner or later we are going to lose out bigtime to countries like Brazil, Uruguay, Argentina and Chile. China is also developing its dairy industry at a very fast pace. Many in this country think we have the best in dairy technology, we tend to forget that dairy technology is not rocket science, China is investing heavily in R&D in all disciplines of science and technoloy, judging from what they have achieved from a zero base in many technology areas, it will be not take long for the them to catch up and better our performance. They have vast human, land and financial resources. Brazil is comparable to China. Another real risk is looming for NZ due to the formation of BRIC alliance, which includes Brazil, Russia, India and China, soon to be joined by South Africa. These are countries with large tracks of good farm land and they are working very closely together.

by Casual Observer | 17th Nov 10, 2:51am 1289915516

TrueValue you have little or no understanding of the dairy industry - as a farmer the sort of investors you are alluding to, I am more than happy to see stay out of farming. I'm a 2nd generation NZer and the MOTH is a 1st generation kiwi. When our previous generations immigrated here and chose to become farmers, they had to meet a key criteria to be able to buy land. They had to be naturalised NZers.

we tend to forget that dairy technology is not rocket science -

Dairy technology is not rocket science in the literal sense. However are you referring to the actual harvesting of milk technology, the processing technology or the manufacture/development of dairy ingredients? It is in the latter where we are world leaders.

New Zealand will never be able to meet the increasing demand for dairy products, so the development of dairy industries in the BRIC alliance is not only inevitable, but preferable. Fonterra has a presence in each one of these countries and is involved in JVs in most of them. We will not be losing out big time to these countries. We will be there beside them - as we are now.

by Sheep Shagger | 17th Nov 10, 11:48am 1289947680

Nice to have you back CO, ive missed your balanced contributions.

AJ, Interesting link. I have been keeping an eye on farm gate prices in the UK and Europe this year on meattrader.com. Off the top of my head lamb prices in Ireland have been in the Euro 4.20-4.50 kg. The UK price has been directly comparible.There have been severe shortages of product on sharply lower supply(sound familiar?). I understand that supermarkets often use lamb as a loss leader as they have worked out that the consumers of lamb tend to be more affluent and buy lots of high margin accompanyments with their lamb purchases.

by Property Man | 17th Nov 10, 11:52am 1289947934

With the lack of money in 'Joe Blog' NZers pockets and the slowing of farm sales, I think there is definetly some room for a bit of foreign investment injected into the industry. Allow a bit of movement in the market. By in large those who sell farms generally buy farms, so lets get the economy regenerated. Very one dimensional view I know but a fully rounded view could take for ever to communicate!

by Andrewj | 17th Nov 10, 12:18pm 1289949500

By Foreign investment you mean like this.

A Chinese Admiral and five other ranking officers of the Chinese Ministry of defense recently visited Vanuatu and signed a memorandum of understanding under which China will provide Military assistance to Vanuatu for the next 5 years. The high level visit was preceded by the visit to port Vila by two Chinese Naval vessels as a ' goodwill Gesture'

During a sponsored visit to China, Vanuatu asked for Financial and technical support to build a new wharf in Port Villa for the exclusive use of fishing vessels. A new wharf is needed to service the long line fishing vessels (mainly Chinese) which wish to land their Tuna catch here, to be processed at the new factory built and owned by the ' China National Fisheries Corporation.

The Aussies must be loving that.

by Property Man | 17th Nov 10, 12:22pm 1289949773

Ha ha ha - hope not!