Rural Insights

The storm events of summer 2023 along almost the entire length of the North Island’s east coast have highlighted to many Kiwis the vulnerability and the value of the country’s productive horticultural land.

Cyclone Gabrielle provided a sharp wake-up call for the country and particularly the primary sector, with the national conversation now including the need to consider adaption at least as much as mitigation when assessing climate change responses.

Many dairy farmers will be offering a quiet prayer of thanks this summer, despite possibly having been washed out of their tent or having to leave the family boat on the trailer as rain and winds washed across much of the country.

When we consider the spring market in the broader property sector for 2022, there are three subtle influences at play.

Low interest rates, sound commodity prices and a strong carbon market have been the drivers of transactional activity and recent value growth. With increases to interest rates and cost inflation impacting margins on farm, investment decisions are more considered.

Consistency in payout and strong outlook for 2022/2023 has maintained confidence amongst buyer groups.

Maturing production and sound Orchard Gate Returns (OGR) have built confidence in the market, with strong performance of G3 SunGold Kiwifruit over the 2018-2021 seasons. Fruit quality and pack-out yields have impacted returns this past season.

The market remains primarily focused on securing supply of sauvignon blanc grapes. Given consumer demand has continued to outstrip supply, yield volume without a compromise to quality remains important for commercial production.

Prices have calmed after two years of year-on-year gains. Sale processes are generally taking longer with more conditional buyers present in the market.

When the concept of regenerative agriculture first burst into New Zealand farmers’ consciousness less than a decade ago, it sparked a flurry of debate around what exactly it was, and how it may fit into New Zealand’s largely pastoral sector.

China and New Zealand have been successful free trade partners since the agreement was signed back in 2008 and China is now cemented as our leading export trade partner, with New Zealand selling almost $23 billion of exports to the nation in 2021.

Just as consumers face surging costs at the checkout, so too are farmers grappling with double digit inflation within the farm gate, which is threatening farm profitability despite some near record commodity returns.

The traditional land use patterns that have defined New Zealand’s rural landscape for the past 100 years are likely to shift significantly in the coming decade, making those boundaries between pastoral, cropping and horticultural production less easily defined.

The rural market has experienced significant growth over the last 12 months to 31 March 2022 – with total deal value up 32 percent across the broader sector according to the Real Estate Institute of New Zealand (REINZ).

Property in the dairy sector has continued to experience significant growth off the back of a very strong 2021 spring market.

Given continuing strong commodity markets, farmers in the pastoral sector should have been achieving some of the best financial returns on record, however, increased costs due to escalating inflation, and pandemic-related staffing and supply chain challenges have eroded real returns in the past six months.

Kiwifruit has continued to lead the way in the horticultural property sector when it comes to return on investment and prices paid per hectare.

With continued huge global demand for New Zealand wines, the fundamentals underpinning viticulture property values remain positive.

Over the past six months, most regions in New Zealand have seen a year-on-year increase in the median sale price for lifestyle properties, along with relatively shorter selling periods.

New Zealand’s high-speed broadband infrastructure can be held up as a national project that has linked up a country where communities, businesses and individuals are distanced by geography and journey times.

Farmers are used to mitigating risk, whether it is by making the most of a feed surplus and harvesting grass for tighter times, paying off a bit extra of the mortgage in a good year, or keeping some extra spare parts for the inevitable late night break down.

This year marks a landing point for the primary sector in its pathway to delivering how best to measure and cost its greenhouse gas emissions as it plays its part in helping meet New Zealand’s climate change objectives.

In deciding whether to create your perfect lifestyle block from scratch or by taking on an existing property, be honest about your desires and resources, writes Chris Jones of Bayleys Canterbury.

In this sector market update, we focus on the dairy sector with insight on market conditions from Bayleys Canterbury Director and country salesperson, Ben Turner.

In this sector market update, we focus on the horticulture sector with insight on market conditions from Bayleys Bay of Plenty Country Manager, Matt Clutterbuck.

In this sector market update, we focus on the lifestyle sector with insight on market conditions from Bayleys Auckland General Manager Lifestyle, Raymond Mountfort.

In this sector market update, we focus on the pastoral sector with insight on market conditions from Bayleys Gisborne Director and country salesperson, Simon Bousfield.

In this sector market update, we focus on the viticulture sector with insight on market conditions from Bayleys Marlborough Director, Glenn Dick.

Fifteen percent fewer cows, all electric vehicles and a decarbonised energy sector were all on the Climate Change Commission’s recommended actions at the start of this year to help New Zealand achieve its zero carbon goals by 2050.

The ties that bind New Zealand and the United Kingdom became a lot stronger late last month with the announcement of the New Zealand-United Kingdom free trade agreement (NZ-UK FTA).

New Zealand’s ability to provide high quality protein, fibre and produce to consumers prepared to pay a premium for it is starting to resonate more strongly throughout the primary sector.

As entries open for the Ballance Farm Environment Awards, Bayleys is proud to continue as sponsor of the Bayleys People in Primary Sector award, one of several offered in the prestigious farming competition.

For landowners considering their options and deliberating whether to exit their land ownership, the temptation to ride the wave of strong commodity prices can often make the decision on when to exit harder, not easier.

Commercial property provides rural landowners with other real estate investment opportunities.

In this sector market update, we focus on the viticulture sector with insight on market conditions from Bayleys Marlborough Director, Glenn Dick.

In this sector market update, we focus on the pastoral sector with insight on market conditions from Bayleys Gisborne Director and country salesperson, Simon Bousfield.

In this sector market update, we focus on the lifestyle sector with insight on market conditions from Bayleys Auckland General Manager Lifestyle, Raymond Mountfort.

In this sector market update, we focus on the dairy sector with insight on market conditions from Bayleys Waikato Regional General Manager Mark Dawe.

In this sector market update, we focus on the horticulture sector with insight on market conditions from Bayleys Bay of Plenty Country Manager Matt Clutterbuck.

The business of cattle breeding in New Zealand is one rich with history and talent, and while remaining highly competitive, the stud breeding sector is also playing a vital role in helping New Zealand beef also remain competitive and sustainable on a world stage.

Leasing the farm out rather than selling it is proving a new approach to the old challenges of succession, income generation, and farm business growth, providing a level of flexibility for parties on both sides of the leasing fence.

New Zealand’s primary sector has continued to thrive in the past year, surfing off a wave of global demand for quality, safe healthy food products.

The release of the Climate Change Commission’s first set of recommendations has been met with relatively widespread acceptance across the entire community, with a recognition that all sectors need to play a part.

New Zealand growers and farmers have kicked off the year with strong commodity prices, relatively robust supply lines and continuing strong consumer demand for quality food putting farmers in a positive frame of mind as the new year starts.

As the global pandemic swept through countries, shuttering food businesses regardless of whether they were white tablecloth high-end restaurants or roadside diners, New Zealand’s wine industry nervously started revising industry budgets.

The primary sector has reason to celebrate as the calendar year draws to a close, after a challenging year that has pushed farmers, growers, processors’ and exporters’ abilities with pandemic challenges and climatic demands.

As the rest of the world wrestles with surging COVID-19 cases and plummeting economic growth data, China appears to be functioning in a different universe, at least over the second half of 2020.

The election result has delivered a historic and resounding result, for the first time under New Zealand’s MMP system a government has a mandate to rule outright without having to seek a coalition partner.

Despite the level of uncertainty Covid-19 has injected into everyday life globally, the New Zealand property market continues to remain strong and no more so than for rural lifestyle blocks.

Regenerative agriculture has become something of a buzzword in farming and food circles over the past year, and the subject of well populated field days, chat groups and media coverage.

Kiwifruit has long deserved its poll position as New Zealand’s premier earning horticultural crop, generating almost 50 percent of the six billion dollars earned by the fruit and produce sector last year.

The New Zealand primary sector faces a dilemma over funding for future expansion which has prompted Bayleys rural real estate to take the initiative on helping to solve it.

The latest wool working group report brings some hope for reform, innovation and, most importantly, boosted returns for a sector that has languished for almost a generation of farmers as the smallest part of their income stream.