The REINZ Dairy Farm Price Index has dropped 21% in 12 months

Dairy farm prices have declined by 21% from where they were a year ago, according to the latest figures from the Real Estate Institute of New Zealand.

The REINZ Dairy Farm Price Index, which adjusts for differences in farm size and location, was down 20.9% in the three months to February compared with the three months to February 2015.

Most of the decline appears to have occurred in February itself, with the Index down 14.3% in the three months to February compared with the three months to January.

The median selling price per hectare of all dairy farms sold in the three months to February was $36,687 compared with $45,105 in the three months to February 2015.

The number of dairy farm sales has also dropped steadily over the last two years, falling from 123 in the three months to February 2014 to 97 in the three months to February 2015, to 76 in the three months to February this year.

REINZ rural spokesman Brian Peacocke said favourable climatic conditions over much of the country had seen a continuation of good returns for beef and horticultural properties, but the outlook was being dominated by a "gathering of clouds and difficult conditions" for dairying.

The more robust outlook for non-dairy farms was reflected in the REINZ All Farms Price Index, which rose 0.6% in the three months to February compared with the three months to January and was up 6.2% compared with the three months to February 2015.

There was a steady level of sales for grazing and horticultural properties but an easing in activity for dairy and finishing properties, Peacocke said.

There were also indications that some dairy farmers in strong financial positions were holding back from making purchases in anticipation of lower prices.

Grazing properties accounted for 45.6% of all farm sales in the three months to February, followed by dairy farms 16%, finishing properties 15.6% and horticultural properties 11.4%.