Accelerating out of the corner

Property volumes and values are holding strong, which highlights the importance of the primary sector in New Zealand’s story on a global stage.

With the shortest day of the year almost here, but the real bite of winter still to come, our rural sector is gearing up for the seasonal shifts they know are ahead.

In some parts of the country, farmers and producers are dealing with the tail end of unseasonal climatic events that have caused havoc – it’s been wet when it’s usually dry, or dry when it’s usually wet.

Flooding on the East Coast is a reminder that nature has its own agenda.

However, farming tends to be a long-term investment decision for many, and cyclical fluctuations in the seasons and the market come with the territory.

Inflationary pressures are looming over all of us – whether urban or rural – but with interest rate hikes and on-farm costs escalating, focus remains firmly on maximising margin.

There is now the opportunity for New Zealand producers to capitalise on the world’s demand for food as global markets and food service operations open back up.

This is a welcome sign for all export sectors, particularly venison producers who have been hamstrung for much of the last two years, but now have markets including the Pacific Northwest and Alaska opening up to them.

Although decarbonisation is now a clearly defined target, the government’s recent commitment to establishing a new Centre for Climate Action on Agricultural Emissions shows a willingness to engage and find solutions to support the rural sector.

He Waka Eke Noa, the primary sector climate action partnership that’s consulted with farmers to find an alternative to the Emissions Trading Scheme for pricing emissions, has indicated to the government that farmers prefer a fairer farm-level pricing structure – one that reflects and rewards their on-farm actions.

Meanwhile, with rural land transactions, we’re still seeing competition among different sectors in the market, and this is pushing up prices in many cases.

We have sheep and beef fattening operators competing with dairy. We have pastoral operators looking for ways to structure deals to outbid forestry.

Recent proposed changes to Overseas Investment Office requirements around forestry conversion, which require rigorous thresholds under the special forestry test to be met, could influence this particular dynamic.

How rural New Zealand accelerates out of the corner and responds to changing market fundamentals, the inflationary environment and evolving industry thresholds remains to be seen.

As the backbone of this country, farmers and other primary producers will be putting pedal to the metal to reposition themselves at the front of the line.

In this edition of Rural Insight, we give an overview of the different rural sectors from our network on the ground and provide to the marketplace the most informative sector insights available on request for the first time.

As always, Bayleys’ Country team is booted up and ready to talk property when you are – we look forward to connecting.

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