This piece was brought to you in partnership with Bayleys Country.

New Zealand’s dairy market has moved through more transactions in the past 12 months than ever before, with strong farm-gate returns, available capital and active buyers opening a window for vendors. Duncan Ross, Chief Operating Officer & National Director Rural at Bayleys Real Estate, says it is a rare combination.

“The wider economy is thankful for rural production, so there’s a bit of confidence in the market,” he says.

“There’s liquidity there, and those things don’t often align to that degree.”

Farm-gate returns have held up through a solid autumn and winter, and last year’s Fonterra capital return pushed money back into the rural economy.

“The banks are probably sitting on a large pot of gold, waiting to be redirected out there.”

That capital is now looking for a home. Dairy transaction value has climbed from about $1.3 billion two years ago to $2.4 billion last year, with the first half of this year mirroring last year.

He says tier one land under good irrigation in mid-Canterbury has leapt ahead and held there.

“We had an auction last week at Pole Road there with six bidders, and that went to $13.8 million.

“It closed out at $89,000 a hectare.”

He says supply is the constraint, with farmers holding strong payouts and weighing another season of returns.

“Timing is absolutely everything – if you’ve got a three to five-year horizon, the cycle will change at a point in time.”

He says in light of this, vendors should stay in control of their exit.

“You want to be in the market where there are willing buyers, rather than in a market where there are no buyers, and you’re having to carry on and milk those cows.”

Corporations have drawn attention, but the depth of demand lies with the farmer network. Buyers are active right around the country, with many yet to deploy capital held on deposit with the banks.

“By and large, the farmer network is operating mid-scale dairy farms throughout the country.”

He says these changes mean the traditional spring selling season no longer holds, with properties now being marketed and settled throughout the year.

“Whether it’s dairying or whether it’s a crop on, crop off, we’ve really worked out how to transact mid-season.”

This is brought to you in partnership with Bayleys Country. To learn more about rural and lifestyle property opportunities, or to connect with a local expert, visit bayleys.co.nz/country 

CountryWide CONNECT with Andy Thompson & Sarah Perriam-Lampp is our daily rural show livestreamed from 11am-1pm. Visit country-wide.co.nz on how to watch/listen or download the CountryWide CONNECT mobile app, available on Apple iOS and Android.