Market Update Winter 2021
And just like that, Fieldays is done and dusted for another year, the shortest day has been and gone, and we’re on the slide into winter!
In the last few years, I’ve noticed a trend where summer seems to roll on into autumn and then we slowly slip into winter. There haven’t been that many frosts here in the Waikato yet, but lots of fairly warm sunny days. That’s driving some interesting changes in the dairying year, where there’s starting to be a bit of a shift to autumn calving and winter milking, rather than the traditional spring/summer cycle.
There are obviously incentives to supply milk over the winter, as rates are increased, and as long as grass is growing over the winter that’s better than trying to maintain milk production through a drought. It seems that it’s just one of the ways that farmers are adapting to climate change.
Dairy market getting back on track
As far as the markets go, there are definite signs of the dairy market functioning again. In the year ending in May about 240 sales were transacted, up from 110 this time last year. Historically national dairy sales ranged 400-500 annually and the Waikato always featured strongly in these sales given the high number of owner operators moving up or into farms. I suspect we see more of this activity again next season.
The rest of the market has remained stable. It’s clear that land with multiple use options has firmed in value, and I believe it will continue to do so. There’s been a jump in carbon purchasing, with large corporations looking to buy assets for tree planting to offset their carbon emissions. Often those are sheep and cattle properties, which is pushing hill country prices up. It must be distressing for those in the industry to lose so much land to carbon offsetting, but it’s an unfortunate reality of the current situation.
Good news for payouts and primary producers
It’s looking like the industry payout is going to remain pretty strong for the foreseeable future, which is going to be comforting news to farmers. In fact, all primary producers seem to be having pretty good runs at the moment – throughout Covid, New Zealand’s been in a strong position from an international perspective.
If farm returns remain firm, and I think they will, then in the coming years we should start seeing banks and regulators gain more comfort to see farm businesses grow again, given farm debt continues to be paid back at record rate. The only question is whether inflation, and therefore interest rates, will rise. That one remains to be seen!
The interest in Horticulture remains strong with good quality green and gold orchards in hot demand.
The value of these orchards on the back of increased gold licence cost seems to have taken a lift with premium and consistent production orchards reaching new premiums in the market.
The horticulture team have a number of buyers looking to invest so if you are considering the time is right for divestment of the industry we will be able to help you through the process.
Thinking of selling?
Now that we’re heading into winter, if you’re thinking of selling it’s an ideal time to get preparation underway for a spring listing. Make sure your compliance documentation is in order, get fertiliser on the ground, mend those fences, paint those buildings!
The Property Brokers National Rural Outlook magazine is coming out in early November, so if you’d like to discuss a listing in that, get in touch – there are some good incentives around advertising, and bookings close on 15 October.
Till next time (and in the meantime, stay warm!)
Ian Morgan A.R.E.I.N.Z
E [email protected]