Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

No farm ‘fire-sale’ scenario from lower milk payouts

No farm ‘fire-sale’ scenario from lower milk payouts says real estate industry leader

Lower dairying payouts will lead to a tightening of the proverbial belt around many Canterbury farm budgets - but not a rush to the mass selling of productive units, according to the head of a leading real estate agency in the region.

Bayleys Canterbury director Bill Whalan said the full impact of the latest lowered Fonterra payout forecast would depend on how long prices remained depressed - but any talk of ‘fire sale pricing’ was wide of the mark.

“A vast majority of Canterbury dairy farmers are in a position to deal with this season’s low payout - and therefore a rush of distressed farm sales is not anticipated,” Mr Whalan said.

“Looking ahead, a majority of banking and rural sector forecasters believe that dairy prices will begin to recover in the later part of 2015, and therefore payouts for the 2015/16 season will lift from current levels.

“It is likely however that those farmers carrying higher levels of debt in the short term may look to reposition their business by selling off surplus land or parts of farms.

Many dairy farmers will have to continue to exercise caution with on-farm budgets.”

“While the $4.50 per kilogram of milk solids payout is not a scenario Canterbury’s dairying sector would like to see for any sustained period, the anecdotal commentary coming through to our sales teams out in the region is that farmers are in a far stronger operating position in 2015 than they were in the last down period of the cycle some five years ago.”

Mr Whalan said the disposal of surplus land holdings could provide an asset buffer to enable heavily-mortgaged farmers to navigate through the next year or so.

“Land values have held firm despite the downturn in commodity prices. This suggests that low interest rates and a reasonable longer-term outlook for dairying are supporting demand for farmland - despite the difficulties of the current season,” he said.

Rural land prices in the Canterbury region have surpassed their pre Global Financial Crisis highs according to latest results reported by the Real Estate Institute of New Zealand (REINZ).

The REINZ sales data for the three months ending March 2015 shows the median sales price of rural land had reached $31,826 per hectare - surpassing the previous high of $31,126 per hectare registered in the opening quarter of 2009.

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Toxicology Tests Planned: Dead Rats Washed Up On Beaches

As many as 600 rats washed up on Westport's North Beach over the weekend to the horror of locals. DOC said they may have been killed by a recent 1080 poison drop 140km away and washed down the Buller River after heavy rain battered the coast. More>>

ALSO:

Transition To Low Carbon: Mineral And Petroleum Resource Strategy

Responsibly Delivering Value – A Minerals and Petroleum Strategy for Aotearoa New Zealand: 2019-2029 has been developed to provide the direction for the sector in the transition to a low carbon and productive, sustainable and inclusive economy. More>>

ALSO:

MethaneSAT: Methane Satellite Mission Control In New Zealand

Mission Control for an international space mission to help tackle climate change will be based in New Zealand, with the Government putting $26 million towards the state-of-the-art satellite...More>>

ALSO:

Real Estate: Late Spring Surge

The continued shortage of quality real estate listings, coupled with record low mortgage interest rates have combined to add some zing to the property market over October. More>>

Wellbeing Stats: Finances Less Terrible And Less Great

According to results from the General Social Survey, the proportion of people who felt they had enough or more than enough money to meet everyday needs increased from 51 percent in 2008 to 63 percent in 2018, Stats NZ said today. More>>

ALSO: