Over the past 18 months life in rural Tararua has seen changes to the traditional model of sheep and cattle on hill country and dairy on the flatter easier country closer to our main centres.
Dairy farms traditionally saw buyers coming from within their own industry with some limited interest from investor groups investing in an industry with relatively high returns.
This has changed, in that while some properties remained milking cows, 10 out of the 14 dairy farms we sold in the past three years went out of operation as a dairy platform, three converted to dairy support with balance beef finishing.
This 'de-conversion' has been more prolific in the Tararua district compared to the higher-valued Waikato, Taranaki and Canterbury due to our relatively low dairy land value coupled with current good beef returns and modest interest rates. Average values have crept back about 4 per cent over this time from $25,500/ha to $24,000/ha.
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While these statistics won't excite everyone, compared to dairy platforms in the Taranaki, Waikato and Canterbury, our check in value has been minimal, with reports of value drops of up to 25 per cent in a tight market in these higher value regions
More controversial is the land use change evident with our hill country to the east.
The current government's One Billion Trees initiative and corresponding incentives has seen a number of sheep and cattle properties been snapped up by forestry and 'carbon' investors, these investors both NZ and overseas.
The Overseas Investment Office has restricted foreign ownership of farmland for farming but has made it easier for overseas forestry investors to have a slice of the forestry opportunity.
The carbon component of these forests has made our farmland more attractive than before. Previously our distance from port making the value of these forests' marginal on a timber value basis alone but with the additional carbon income this has tipped the balance. This has led to forestry/carbon operators competing with sheep and cattle purchasers. This increased competition has been positive for exiting farmers but creating significant unease in our farming communities.
The average farm price per ha of the 56 farms sold in the past three years in the Tararua has increased from $5800/ha to approx. $6800/ha, an increase of around 17 per cent, probably as a result of a combination of the forestry interest as well as strong meat returns.
The next six to 12 months will be interesting to see if central government will bow to pressure from farming groups and local government interested in keeping our local rural communities not only surviving but thriving despite these significant land use changes