Primary Industries

Farm sales slump in the dairy sector

New figures from the Real Estate Institute show farms sales in the year to November are down nearly 13 percent on the year prior, largely driven by a sale slump in the dairy sector.

In total 1295 farms were sold in the year to November 2019.

REINZ rural spokesperson Brian Peacocke said in volume terms, dairy farm sales were down 44 percent over that period.

Peacocke said increasing compliance costs, labour shortages and the tightening of credit in the banking sector was creating caution in the sector.

"In the internal allocation battle to secure funds for lending to clients, it is reported that in comparison to the capital-demanding, lower-yielding agriculture sector, greater returns for the banks can be generated from increased investment in the residential and commercial sectors,

"Hence the downward pressure on the availability of funds for the agriculture sector, exacerbated by the Reserve Bank requirement to increase capital reserves," Peacocke said.

Meanwhile, thanks to high commodity prices in the beef, sheep meat, venison and horticulture sectors' demand for such properties remained strong, he said.

In the three months ended November grazing farms accounted for the largest number of farm sales - taking a 33 share percent share, followed by finishing farms (28 percent) and horticultural properties (12 percent).

This article was originally published on RNZ and re-published with permission.

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