Pastoral Market Update

Many of our pastoral producers remained hampered by dry conditions during the past 12 months, however, favourable winter conditions repositioned the outlook and resulted in outstanding lamb scanning percentages and docking tallies this spring.

Positive productivity on-farm has also been supported by buoyant market dynamics, with what could be deemed a golden run in commodity prices.

The lamb schedule was well over $9.00/kg and steer and bull over $6.00/kg as we exited spring so, coupled with a strong burst of growth, the stars appear to be aligning for the pastoral sector.

With the opportunity to financially flourish, we are seeing astute farmers considering all options to strengthen and grow their balance sheets.

As a result, many pastoral operators are currently on the acquisition path, diversifying or reweighting debt.

We note the acquisition of sheep and beef land to reduce climatic risk or provide different contour options, investment into other rural land sectors (such as dairy or horticulture), exploration of commercial property investment or a reduction in the level of debt carried.

The pastoral sector has continued to experience value growth over the last 12 months, both in terms of returns being achieved on-farm and in property sales values.

According to the Real Estate Institute of New Zealand, the number of farms marketed and sold for the 12 months to 30 September 2021 increased by 24 percent with around 23,000 more hectares being sold compared to the previous period.

Buoyant market dynamics are being driven by a combination of the performance of the pastoral sector and competing investors.

There is no doubt that the government’s climate objectives are having an impact on the pastoral market, with demand for conversion of pastoral land to forestry underpinning values.

Equally, demand for the more productive fattening land has continued, with some prices achieved almost on par with dairy values in the same regions.

Overall, the average value per hectare nationally for pastoral land has increased by just over $2,600 in the last 12 months.

There has been an increase in the number of pastoral farms coming to the market through spring, and we expect the demand for all classes of pastoral land will not slow down anytime soon.

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