Buyers wary of lower dairy payout and firm NZ dollar

The number of farms sold in the year to February was 1802, down 2.2 per cent on the previous year. Photo / NZME.

The reduced dairy payout and the high Kiwi dollar are being carefully assessed by potential farm buyers, says the Real Estate Institute of New Zealand.

Dairy farmers this season are faced with a farmgate milk price forecast of $4.70 a kg of milksolids, down from last year's record price of $8.40. At the same time, the New Zealand dollar has remained firm, trading yesterday at US76c.

"The reduced dairy payout and the high New Zealand dollar are being carefully assessed by prudent purchasers, with the drought conditions in particular having had a negative impact on some regions in the South Island," said REINZ rural spokesman Brian Peacocke.

In its latest farm sales report, REINZ said there were 47, or 10 per cent, fewer farm sales for the three months ended March than in the same period last year.

Overall, there were 425 farm sales in the three months to the end of March compared with 464 sales for the three months ended February - an 8.4 per cent reduction..

The number of farms sold in the year to February was 1802, down 2.2 per cent on the previous year.

The median price per hectare for all farms sold in the three months to March was $27,957 compared with $22,342 recorded in the same period last year - a rise of 25.1 per cent.

Compared with March last year the REINZ All Farm Price Index rose by 5.3 per cent. The index adjusts for differences in farm size, location and farming type.

Three regions recorded increases in sales volume for the three months ended March 2015 compared with the three months ended March 2014.

"The general tone of the market for the three months ended March has been very solid, with demand ensuring quality properties have sold extremely well," Peacocke said.

"The impact from the subsequent shortage of supply has resulted in increased focus on a number of properties which for a variety of reasons, including contour and location, have been harder to sell," he said.

There was a continuing level of healthy sales activity in Northland, where buyers had been able to buy larger properties at values lower than in regions to the south. There were steady prices in the Waikato but a general easing from the strong levels of volumes and price prevailing in previous months.

In Taranaki, there were strong dairy farm prices but low volumes.

There was steady activity on dairy farms and very solid volumes of dry stock properties throughout Canterbury, Otago and Southland.

Grazing properties accounted for the largest number of sales with a 42 per cent share of all sales over the three months to March. Dairy properties accounted for 20.3 per cent, finishing properties 15.1 per cent and horticulture properties 13.2 per cent.

For the three months ended March the median sales price per hectare for dairy farms was $37,761 (86 properties), compared with $45,105 for the three months ended February (97 properties), and $34,474 (102 properties) for the three months ended March last year. The median dairy farm size for the three months ended March was 112ha.

The REINZ Dairy Farm Price Index fell by 2 per cent in the three months to March compared with the three months to February, from 2060.2 to 2020.

Farm sales
Three months to the end of March
• 425 farm sales overall.
• $27,957 median price per hectare.
• 42% of sales were grazing properties.
• 20.3% dairy properties.
• 15.1% finishing properties.
• 13.2% horticulture properties.