Good prices for high quality dairy farms in New Zealand, despite very low milk prices, reflect long term optimism in the sector, the Real Estate Institute of New Zealand (Reinz) said.
Overall dairy farm prices in New Zealand have strengthened, a little, in the last month, the institute said.
And prices for horticultural farms continue to buck a bearish trend in New Zealand agriculture, with high quality kiwi fruit orchards in short supply.
Milk price pressure
The Reinz dairy farm price index, which is based on sales prices adjusted for farm size and location, rose by 4.3% in the three months to March 2016, compared with the three months to February 2016.
But year on year prices are still down 15.9%.
New Zealand diary prices have been under pressure from very low milk prices, with prices at the most recent Global Dairy Trade auction, held by New Zealand’s main milk co-operative Fonterra, down 18% year on year, and less than half their 2013 peak.
Demand for quality units
Reinz’s rural spokesman Brian Peacocke said that “whilst in general terms the dairy sector is subdued, isolated sales of good quality farms at very good prices, often to neighbouring interests, do reflect optimism in the longer term future of the industry”.
“Quality dairy units in the Waikato, albeit limited in number, have sold well, particularly where there is neighbour interest,” Reinz said.
“Northland continues to receive buyer enquiry from areas to the south for dairy farms but limited supply and sales make pricing difficult,” the institute added.
General farm prices fall
Overall, farm prices remain weak in New Zealand.
“The Reinz All Farm Price Index fell 1.7% in the three months to March compared to the three months to February,” the institute said.
The all-farm index rose 1.7% compared to March last year.
Compared to March 2015 the REINZ All Farm Price Index rose 1.7%. The REINZ All Farm Price Index
Horticulture sector in good heart
“Figures for the three month period ending March 2016 indicate an easing in sales volumes for most categories of rural property, with the exception of horticulture, sales for which confirm the sector is in very good heart”, Reinz said.
Prices for beef grazing and finishing farms declined over the period.
The median price for horticultural farms in the three months to March rose by 2.8% against the three months to February, and was up 8.8% year on year.
Reinz noted “an exceptionally strong horticultural market in the Bay of Plenty, with prices for quality gold kiwifruit orchards exceeding previous records”.
The institute said that the high prices for fruit orchards was “an indication of the strength of the industry”.
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