Beef graziers are finding good pickings among cheaper dairy farms. Anne Hardie reports.

Beef farmers are paying between $10,000 and $12,000 a hectare for cheaper dairy farms in Northland as strong beef returns combine with a softening dairy property market to enable them to compete for properties.

Catherine Stewart from Bayleys says those properties would have been selling at between $15,000/ha and $16,000/ha a couple of years ago to dairy farmers, but in the past year she has sold a number of properties to beef farmers who can now buy dairy-quality land with lanes, good fertiliser history and a mix of flat-to-rolling contour.

Dairy farms being sold to beef farmers tend to be 80ha to 120ha producing maybe 40,000kg milksolids, with older infrastructure that would need investment to continue as dairy farms, she says.

It’s a similar trend in other parts of the country, such as Tararua, where marginal dairy farms are now within the grasp of beef farmers.

At the same time beef farmers are expanding into cheaper dairy country. Stewart says there are younger buyers with rural backgrounds who have been living in the city and have sold their high-value house to buy a decent block of farmland in Northland with a good house.

Location is a factor for the young families who still want to be reasonably close to Auckland and continue to have off-farm income. For the right property, they are prepared to pay a bit more than beef farmers will pay, she says.

“You have people selling in Tauranga or Hamilton for $1.2 million and buying a 119ha grazing block up here for the same price. It’s a trend – people in their 30s who are going to farm it themselves. They may have a rural background, but this is their first farm.”

ANZ agriculture economist Susan Kilsby says the home property market in bigger cities has definitely produced greater gains than farmland in the past five years, so there are opportunities for people to sell up in town and invest in farmland.

“The fact prices did get so high, instead of buying a house in town, they’re looking at an alternative investment in the property market and can put it into farmland.”

She says the closing gap in comparative returns between dairy and beef has made those cheaper dairy farms a viable option for beef farmers, particularly where the dairy farm owner is getting older and infrastructure due for replacement.

“It might still be good land and suitable for dairying, but the current owner doesn’t have the appetite to do it. So we’re probably seeing that a bit more than normal because of those relative returns. Especially with rising input costs on dairy farms like labour and environmental pressures and the thought that it is going to get tougher.”

While the outlook for beef is quite strong and making it competitive in the property market, she says the long-term outlook for beef depends on how well New Zealand markets its products and addresses consumers’ emotions.

“We’re very much disconnected from the end users and the long-term success will depend on how we can connect with those end users. How the product is being produced, rather than just the product itself. At the moment there’s a real disconnect.”

Horticulture has a good connection with its consumers and a big part of that is horticulture products are in the same format they were produced – such as apples and kiwifruit – unlike animal products. It hasn’t helped that historically most beef has ended up as ground beef or processed products in the United States where consumers haven’t asked about the origin of the product. But Kilsby says Asian consumers demand greater requirements for safe food and seek a connection with the producer of that food.

While beef farmers are converting some of the cheaper dairy farms to beef, she says there’s not a lot of sales for changing land use around the country.

In the Bay of Plenty some property sales have seen a land use change to kiwifruit and in Nelson there’s been grazing land bought for hops, while in Canterbury arable and horticulture growers are considering potential crops they can grow with climate change.

“I’ve heard of people in Canterbury going up to Hawke’s Bay and seeing what they are growing there and thinking of growing similar things in Canterbury – what might we be able to do in the future?”