Peter Newbold, General Manager Livestock & Real Estate for PGG Wrightson.
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Fonterra has cut its farmgate milk price forecast for the current season, so what does that mean for the price of dairy farms?
That’s the question host Jamie Mackay put to Peter Newbold, General Manager Livestock & Real Estate for PGG Wrightson, on The Country today.
Fonterra has narrowed its forecast range from $9.00-$11.00 per kg of milksolids to $9.00-$10.00 per kgMS, with the midpoint falling from $10.00/kg to $9.50/kg.
Newbold believed farmers already thought this was a possibility, so he reckoned it wouldn’t shake up rural property values too much.
“I think probably people were aware that it was coming, and from where I sit, I don’t think it’ll change things,” he said.
“The future still looks strong.”
Newbold said this was backed up by the interest PGG Wrightson had seen in properties over the last few months.
“That for me would indicate there’ll be no change in that space.”
Newbold said a month ago that PGG Wrightson expected to have no dairy farms left on its books by the season’s end.
He said this was still the case.
“There’s probably a shortage, which is a good thing.”
He said there was a lot of interest in properties below $10 million, and there were also many buyers looking for more expensive options.
“What we may see in the New Year is that some of those larger entities may look at revisiting their structure as far as what properties they’ve got.
“But other than that, no, I think it’s going to be a strong season.
“I don’t think there’ll be much left.”
Mackay asked if buoyant dairy farm sales also led to increased interest in support blocks.
Newbold said it did, and that he expected this trend to strengthen in autumn.
Listen below:
“Dairy farmers, as a rule, are often big purchasers of support blocks,” he said.
“We see the New Year is where support blocks will come into their own.
“I think the other piece is when those monies come through from Fonterra, that’ll make a difference.
“So...as we move into autumn, I think we’ll see solid sales there.”
Meanwhile, record beef and lamb prices are also starting to influence the sheep and beef market.
“It’s just starting to come through now,” Newbold said.
“If we go back a couple of months ago, it was fairly quiet, but now we’re just starting to see momentum there, which is good.”
Newbold said this was evidenced by PGG Wrightson putting properties that hadn’t sold a year ago back on the market - and they’d been snapped up.
He said neighbour interest also played a big role in both dairy and sheep and beef sales, sometimes leading to properties being divided up.
“In sheep and beef, what we’re finding sometimes is that some properties are being split up, a neighbour taking a portion, another neighbour taking another piece.
“So, there are different ways that these properties are being cut up and sold.”
As for kiwifruit properties, Newbold said they also showed signs of movement, though not as quickly as anticipated.
“We’ve just started to see a few sales take place,” he said.
“Probably, to be honest, I haven’t seen as much activity as I thought when I spoke to you two or three months ago about it.
“But again, that’ll slowly build, and it’s probably a good thing, you know, the last thing you want is those highs and lows.”
Taken together, these signals point to a rural market that is steady, competitive, and well supported by genuine buyer demand.
For readers wanting to follow these trends or browse what is available, more information is updated regularly on pggwre.co.nz