Taranaki farmers bullish about dairy prospects

Most dairy farmers in Taranaki are bullish about the continuing prospects for dairying in the area, raising expectations of record prices to come, says First National.

Allied Farmers First National principal Owen Mills said dairy farm sales usually dropped to nil during winter, with the majority of sales occurring between October and March. However this season had been unusual in that dairy farms and support block sales had still been transacted in the market over the past few months.

“We are usually short of land to sell at this time of year, but this winter there’s been a few farms sold to dairy farmers. That’s not been the norm in the past in the Taranaki market.”

While the sales were few in number they were indicative of continuing strong confidence in the dairy market, Mr Mills said.

“Any land that is even linked to dairy is selling particularly well.

“Most dairy farmers we speak to are waiting for Fonterra’s next payout prediction announcement later in September and because the dollar has been right back down in the low 70s, the expectation generally is pretty optimistic.”

Quality, well located Taranaki dairy farms were still commanding premier prices compared with some other districts, Mr Mills said.

Top end dairy farms to date have sold for between $27,000 – $30,000 per acre ($66,000 - $74,000 per hectare), with farms in Taranaki continuing to command higher prices than Mid Canterbury or Southland with smaller size a factor.

“For example, we sold a dairy farm milking 660 cows with a 40 bale rotary and 240,000kg milk solid shares last season in Taranaki for $13.4million. Right now you can purchase a farm in Southland with the same milk solids, shares and good facilities for $11m.”

Mr Mills believes the coming season could set new records in prices paid for dairying land.

“What is going to be interesting with the current optimism prevailing is to see what our upcoming auctions of farms over the next few months will achieve. For anyone planning on selling and exiting the industry this season it has to be an opportune time to do so.

Lifestyle block sales had ticked along steadily over the past 12 months, with most selling between $400,000 and $500,000 in the greater central Taranaki area.

Mr Mills said the number of residential sales in Central Taranaki over the past four months had been the lowest he had seen in close to 30 years in the industry. However, downward trending interest rates predicted and brisker sales in August could be indications of a better Spring, he added.