Dairy farm sales slump and median farm price drops

Sales of dairy farms have fallen 40.3 percent.
Sales of dairy farms have fallen 40.3 percent. Photo credit: Getty


Dairy farm sales have slumped, new figures from the Real Estate Institute of New Zealand reveal.

The data shows 1277 farm sales took place in the year to January 2020, 14.7 percent fewer than in the year to January 2019.

Dairy farm sales dropped the most, with numbers falling 40.3 percent.

Real Estate Institute rural spokesperson Brian Peacocke said increasing compliance costs, labour shortages and tightening credit in the banking sector contributed to the fall in dairy farm sales.

"There are less purchases in the [dairy] marketplace, driven by the fact that the banks are tightening up on lending, and there's been an edict from the Australian-owned banks to reduce dramatically the exposure to the dairy sector within New Zealand."

The median price per hectare for all farms sold in the three months to January 2020 was $21,221 down from $27,087 in the same period a year ago.

Another measurement, the REINZ All Farm Price Index, fell 3.2 percent over a year. The index adjusts headline prices to account for differences in the size, location and type of farm.

Despite the poor overall result, Brian Peacocke said finishing, grazing and horticulture farms were holding up in terms of both volume and price.

"It's interesting that the best of the finishing properties now for example are, in many cases, running parallel in pricing with the dairy industry so that would suggest that profitability is just as strong in that sector and they don't have the same constraints, such as labour in particular."

Peacocke said on a month-by-month basis, farm prices overall generally were inching upwards, but are still way below last year and the year before.