With retirement beckoning, many farmers are looking to sell. Anne Hardie reports.
An ageing farmer population is now one of the main reasons farm land is put on the market – at least in the Waikato, Bayleys country manager for the region Mark Dawe says.
He says it is becoming more prevalent as the average owner of both drystock and dairy farms gets older and has to work through their succession plans or face the reality of making a plan. Many want to get away from the farm and take it easier, but still want a decent block to farm on a smaller scale.
If Mum and Dad build a home on their retirement block, Dawe says there is often an emotional rationale on the price of that land rather than straight economic rationale, just as the neighbour who gets the once or maybe twice-in-a-lifetime chance to buy the next-door farm will pay a premium for it.
That premium doesn’t mean every farm in the area is going to be worth that figure though, he points out, because the emotional rationale, whether it’s for retirement, a neighbour or a dairy farmer who wants the convenience of a support block nearby, will be more than the economic reasoning for other properties.
“In Central Waikato some grazing land sells for more than dairy land – there’s been $60,000/ha whereas for dairy it would be $55,000/ha – but there’s extenuating circumstances and it might be mum and dad retiring and they’re building their home there, so there’s an emotional aspect with that.
“Or when a dairy farmer is buying it as a runoff to use for cropping, we’ve seen a few examples in excess of dairy farm prices in the area, or at the same price.”
It’s the premium they pay to have a “runoff” nearby that works well with the dairy platform rather than a “runabout” which is a long drive away that takes time and effort, he says.
Waikato was one of the stronger sales regions through spring and summer, with 31 grazing and finishing properties larger than 50 hectares sold between October and January. Dawe says coastal hill country with reasonable contour has been selling for about $10,000/ha, while better finishing country in general has been about $15,000/ha and the top finishing country which is often bought by dairy farmers has been pushing $40,000/ha.
Succession and dairy support are not the only drivers of the strong sales and Dawe says the buoyant sheep and beef markets have also increased sales.
“Over the past two to three years the sheep and beef sector has had consistent incomes and on the back of that, there’s a bit more confidence and cash. From a buying perspective, sheep and beef farmers are buying additional land and those who usually produce store stock are looking to add a finishing block to their portfolio so they can take their stock all the way through.”
It’s a similar trend in Otago which also had strong sales of grazing and finishing properties through the same period, recording 26 sales greater than 50ha. Dave Heffernan from PGG Wrightson Real Estate in Oamaru says the high meat schedules for sheep, beef and deer are underpinning property sales and prices have moved from about $850 per stock unit (su) to comfortably $1000/su.
Most sales are locally driven by farmers selling smaller properties to upscale to larger properties, or like Waikato farmers, adding either finishing or breeding properties to their portfolio so they can maximise returns by breeding their own stock and taking them through to finishing.
Forestry interests are in the market for larger-scale mid-altitude properties where Heffernan says they are prepared to pay between $4000/ha and $4500/ha, but livestock values have enabled farmers to compete.
In South Otago, buyers for forestry land have been prepared to pay up to $7000 for land to plant trees and Stewart Rutter from PGG Wrightson Real Estate says some companies have bought land and then sold the more productive grazing land while retaining the steeper country for planting.
On top finishing country, a 353ha property near Balclutha sold for $7.3 million just before Christmas which he says was a premium price.
