Thursday, 23rd February 2012
All the latest Ashburton News, Sports, Community and Business Information
| Queue of cash buyers for dairy farms |
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By Sue Newman January 28, 2012
 Over the past 12 months the rural market had risen by about 15 per cent he said, and there was considerable confidence among potential buyers going into the new year. While there was a positive mood in the industry, that confidence didn't indicate a boom in the market, rather it was a sign the market was recovering from a low patch. The market was now in a common-sense state, that one where buyers borrowed heavily and chased quick profits, Mr Cunneen said. "The value being paid, even though this has crept up, is now based on a productivity and payout basis not on speculation; the banks are ensuring it's this way, that the business case is more compelling." Buyers outnumbered sellers in the market, particularly for dairy farms. Most were looking in the mid-range, $10million properties, and that meant those properties that did come to the market attracted solid interest. Buyers ranged from existing dairy farmers either working on succession plans or wanting to expand, to a small number of foreign buyers. Mr Cunneen said that while there were foreign buyers looking for properties in the Ashburton District, he believes their numbers were often exaggerated, because they listed with several agents over several parts of the country. Last year, however, an ex-Pat Kiwi had made a significant investment in the district, buying three dairy farms. Foreign buyers had a different approach to buying a dairy farm because they based their return on investment on what they'd receive in their own country and were usually happy to accept that lesser return on investment than New Zealanders would, he said. Equity investors were now quite common buyers of dairy farms because of the high input values, particularly for larger farms with more than 1000 cows. While there was strong demand for operating dairy farms, there continued to be an equally strong demand for properties that could be converted to dairying, Mr Cuneen said. "It's getting late enough in the season to convert this year, but if it's a good property with water consents, they'll buy now, take possession and convert over the next 12 months. A new twist had come into the rural market with arable farmers looking to acquire a dairy farm to complement their own business that could be used to supply winter grazing, he said. Mr Cuneen believes demand for dairy farms across New Zealand, is strongest in the Ashburton District because of the good availability of water. "That guarantees production year in and year out, that's our real advantage." While there were still a number of sheep and cattle farms and a good number of arable farms around the district, Mr Cuneen said many of those now had some involvement in dairying, usually with winter grazing for cows. He anticipates the rural market will remain strong this year, with banks, buyers and sellers adopting a realistic approach. At the end of the last milking season, the Ashburton District was home to 260,801 cows in 308 herds. Only Southland had more cows and more herds.
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