Dairy farm sales slow in lower North Island

Dairy farms on the market are struggling to to find buyers.

The reasons for, may also be the reasons against, in a rare dairy industry conundrum.
Unofficial figures suggest larger numbers than normal of dairy units are up for sale between Taranaki and Tararua, but interest appears far from strong.

The reasons behind the desire to sell, however, may also be the very reasons interest is waning.

Industry players, including rural real estate consultants, are reluctant to comment either way in fear of talking the market down.

But it certainly doesn't take a rocket scientist to understand some of the factors at play.

As the milksolid payout improved, dairy farm owners may well have thought it was an opportune time to quit and cash up, especially given the increasing number of threats to the industry following the last general election.

Many of the platforms the Labour Party and the Greens lobbied on, combined with Winston Peters' obsession with immigration numbers, was enough to put the fear of God into any investor in the rural sector.

The trend today suggests people who buy large scale dairy farms are straight out investors and not necessarily hands-on men and women of the land. The smaller units continue to be bought by the rank and file hands-on farming families, who face the same perceived threats.

And with talk of water taxes, fart taxes, water quality and other environmental issues, capital gains tax, overseas investment issues, and capping immigration numbers, it is hardly surprising potential investors are hesitant to fork out their hard-earned on a dairy farm.

Investors buying into large scale dairy operations require skilled people to run these farms and immigrants, in particular Filipino workers, are often called upon to fill the need.

On their own, probably none of these perceived impediments would be a deal breaker, but collectively they are seen by many as insurmountable hurdles.

Those same threats, and a fluctuating dairy payout, are enough to also encourage farm owners to cash up and sell. The dairy payout, though, is arguably affected more by outside influences rather than internal New Zealand issues.

However, anecdotal evidence suggests there are some dairy units on the market, particularly in Taranaki, that have yet to even receive expressions of interest let alone an offer.

Conversely, there remains a solid level of enthusiasm for one of the country's largest earners of export dollars.

Cows, after all, are still producing milk, the world still needs dairy products and at increasing levels, the payout will continue, and the sun continues to rise in the east.