Southerners snapping up North farms

Lower land prices make the north an attractive option for some farmers from the south.

Droughts, a lower payout, and lack of succession plans see farmers exit dairying.

Farmers from southern provinces are moving to Northland to take advantage of the comparatively cheap dairy farms on offer there, according to real estate agency Bayleys.

In the past 18 months, $20 million of Northland dairy farms had been sold to Waikato, King Country, Taranaki, Canterbury, and Westland farmers moving into the province, and the trend was accelerating, Bayleys' Northland rural manager Tony Grindle said.

Grindle said dairy farming in Northland was undergoing the biggest shake-up in more than 50 years thanks to interest shown from outside the province by both corporates and families.

Generally speaking, young Northland farmers wanting to get into the dairying sector did not have the comparable "financial muscle" being brought to the region by out-of-town buyers who were selling up their high-value units in New Zealand's most productive pastoral zones, he said.

Latest figures from the Real Estate Institute of New Zealand (REINZ) show the average cost per hectareof dairy farms in Northland was $15,555.

By comparison, the REINZ figures show the average cost per hectare of dairy farms in the Waikato was $49,000, while in Taranaki it was as high as $55,000.

Grindle said there were a number of reasons why Northland farmers had chosen now as a good time to exit the market - ranging from the drop in Fonterra's forecast milk solids payout for the 2024/15 financial year, and a lack of succession planning for some older farmers looking to retire, through to the second consecutive dry season for those in the western coastal region.

Among recent sales was a 292ha Pouto dairy farm, milking almost 600 cows, which sold to Taranaki buyers for $3.7 million.

A 370ha Ruawai dairy farm producing 220,000kg of milk solids was bought by a Canterbury farmer for $7.3 million.

Federated Farmers Northland president Roger Ludbrook said it appeared some farmers from the south were coming into the region in search of less expensive property, but he said land was cheaper for a good reason.

"There is a reason why farms in Northland cost less and that is that Northland is probably one of the hardest places to farm," Ludbrook said. "If we had high production, our farmland would be worth a lot more."

Northland farms typically had lower per hectare production characteristics and the province had experienced drought conditions in four of the last five years. Parts of the region were also prone to flooding.

Bayley's Grindle said the underlying factor was the "base cost" of land.

"The reality is that some of our very good land is less than 50 per cent of the cost of the top Waikato or Taranaki stuff, and correspondingly it is not half the production, so there are gains to be made in that respect."

Heading north

• $20m of Northland dairy farms have been sold to Waikato, King Country, Taranaki, Canterbury, and Westland farmers in the past 18 months.
• Average cost per hectare of dairy farms in Northland is $15,555, compared with $49,000 in Waikato, and as high as $55,000 in Taranaki.
• Northland is seen as a different farming prospect because of variable soil quality, as opposed to more consistent types in Waikato and Taranaki.

Recent Northland dairy farm sales

• 292ha Pouto farm, milking almost 600 cows, sold to Taranaki buyers for $3.7m.
• 370ha Ruawai farm sold to Canterbury farmer for $7.3m.
• 80ha Ruawai dairying unit sold to a Canterbury farmer for $2.8m.
• 425ha Aranga farm sold to a King Country buyer for $2.7m.
• 285ha Dargaville dairying unit sold to West Coast buyer for $1.33m.