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Farm sales volume drop as winter bites while prices gain on upbeat mood

Wednesday 16th August 2017

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Fewer farms were sold in the three months through July as difficult winter conditions dented activity, although prices lifted due to improved farmer confidence, the Real Estate Institute said.

Across the country, 392 farms were sold in the three months ended July, down from 459 farm sales in the three months to June, and 468 farm sales for the same period a year earlier, REINZ said. The median price per hectare increased to $27,158 in the latest period, up 4.5 percent from the three months to June, and up 2.5 percent from the same period a year earlier.

New Zealand farmer confidence has jumped to record levels this year, buoyed by improved commodity prices, according to the latest Rabobank quarterly survey. Farmers across all agricultural sectors were more positive about the outlook for the agricultural economy, with 71 percent citing improved commodity prices as a key reason for increased optimism. This was particularly the case for dairy farmers, 77 percent of whom cited improved commodity prices, and sheep and beef producers, at 66 percent. However, land sales activity appears to have been hampered by particularly dismal winter weather.

"The reduction in sales volumes for the three month period ending July 2017 reflects the dormant winter period with farmers focusing on the seasonal issues of lambing and calving, activities which dependent upon location, will continue into August and September," said REINZ rural spokesman Brian Peacocke.

"Of interest and clearly stimulated by the recently announced increase in the milk payout and the current strong beef prices, an air of confidence, or perhaps relief, is quietly growing within the rural sector.  However, in a number of areas throughout the country, that optimism has been tempered by recent persistent, heavy rainfall and extensive flooding, generating extremely difficult conditions for the wintering of cattle and calving of dairy cows in particular," he said.

The REINZ All Farm Price Index, which adjusts for differences in farm size, location and farming type, increased 5.6 percent in the three months to July compared with the three months to June. 

Seven regions recorded increases in sales volume for the three months ended July from the year-earlier period. Canterbury recorded the largest increase in sales, with an extra four sales, followed by the West Coast, which recorded an additional three sales. However, compared to the three months ended June, only one region recorded an increase in sales. 

For dairy farms, the median price per hectare lifted to $36,332 over 36 properties, from $34,789 over 59 properties in the three months through June, and $35,614 over 32 properties in the year earlier period. The median price per hectare for dairy farms has risen 2 percent over the past 12 months. On a price per kilo of milk solids basis, the median sales price was $35.97/kgMS in the three months ended July, from $33.45/kgMS in the three months ended June, and $33.62/kgMS a year earlier.

The REINZ Dairy Farm Price Index, which adjusts for differences in farm size and location, increased 4.3 percent in the three months to July compared with the three months to June.

For finishing farms, the median price per hectare lifted to $30,882 over 152 properties, from $27,613 over 173 properties in the three months through June, and $26,249 over 95 properties in the year earlier period. The median price for finishing farms has jumped 18 percent over the past 12 months.

For grazing farms, the median price per hectare increased to $11,274 over 105 properties, from $10,093 over 121 properties in the three months through June. It has declined from the year ago level of $15,326 per hectare over 182 properties. The median price for grazing farms has dropped 26 percent over the past 12 months.

For horticulture farms, the median price per hectare slipped to $149,251 over 52 properties, from $159,161 over 62 properties in the three months through June, and $205,020 over 83 properties in the year earlier period. The median price for horticulture farms has dropped 27 percent over the past 12 months.

(BusinessDesk)

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