REINZ farm sales data 'farming in the real world'

16 December 2010

REINZ farm sales data 'farming in the real world'

While there has been a 15 percent increase in the number of farms sold in the three months to November 2010, over October 2010, the trade exposed nature of farming is writ large in the latest Real Estate Institute of New Zealand (REINZ) figures.

"170 farms changed hands in the three-months to November 2010 and there seems to be some definite confidence creeping back into dairy, but from a very low base of just 14 dairy farms sold," says Philip York, Federated Farmers economic and commerce spokesperson.

"The number of farms sold, while up on October, is still sharply down on the 223 farms sold over the same period last year. It's also just a half of the farms sold in November 2008.

"With a further 18 farms sold the bounce back in Manawatu/Wanganui farm sales, first seen in October, has carried into November. With 39 sales over the past two months, its become the number three area behind the Bay of Plenty and Canterbury.

"This confidence may have a lot to do with the estimated $60 million in savings Federated Farmers, Fonterra and Horticulture NZ secured on Horizons Regional Council's 'One Plan'.

"Our work seems to have given farmers the confidence to make long term investment decisions.

"The latest REINZ data also rams home that farmers farm for nobler reasons than capital gain. While the overall median price is up on the same period in 2009, it's still off some 38 percent from the same period in 2008.

"Yet looking at the types of farms being sold tells a larger picture.

"In the three-months to November 2010 grazing farms dominated with 90 sales This was followed by horticulture with 34 sales and dairy claiming the third spot, with 14 sales.

"That's still just a third of the dairy farms sold back in November 2008. Finishing meanwhile saw 13 sales, forestry with 7 and 6 apiece for special and arable farm types.

"Importantly, it highlights that the rural market is trade exposed unlike the residential sector, which is being underpinned by Government spending and welfare programmes.

"Simply put, the rural sector has adjusted to some fundamental economic realities reflected in the price and number of farms being sold. It's a reality the domestic sector is being shielded from but the cost of this is evident in the Government's $15.6 billion cash deficit.

"What the REINZ data also tells me is that we are still in a period of market-driven adjustment," Mr York concluded.

ends

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