Dairy market update

Throughout the country, we have seen a greater volume of large-scale operations come to the market, notably in Southland, and a resurgence in the Canterbury region.

Larger properties with scale have been transacting well, with value increases being recorded in Canterbury and Southland.

The list of qualified buyers looking to invest in dairy – from individuals to corporates – continues to grow, with existing operators looking to maintain their investments and add to portfolios.

While spring proved to be more subdued transaction-wise for less desirable second and third tier properties, we have seen activity lift through the autumn months.

There have continued to be a number of buyers new to the dairy property market, generally with an existing investment in agriculture, but also non-farming buyers.

All are enthused by the future of the dairy sector and what it can add to their existing businesses – farming or otherwise – by way of cashflow.

Existing operators are also competing in these buyer pools, seeking to expand their dairy platform or support landholdings to future-proof their operations across a larger footprint as environmental considerations start influencing carrying capacities.

We continue to see a trend for smaller farms with older infrastructure in regions like the Waikato, and to a certain extent Taranaki, being purchased and amalgamated into an existing dairy platform – often decommissioning the tired dairy shed in the process.

Alternatively, these smaller properties are targeted acquisitions to support grazing of younger stock and/or growing supplement crops.

There has been a noticeable value change driven by the demand for dairy support property, with sale prices hovering in the same value range as dairy farms themselves.

With conversions in the foreseeable future now off the table in many parts of the country, we would expect to see values continue to stabilise in the dairy space, driven by longer term platform scarcity, demand outweighing supply, and a continuing sound payout – albeit tempered by inflation and increased operating costs.

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