18 Mar 2016

Dairy farm values set to keep falling

1:05 pm on 18 March 2016

A rural property valuer says the drop in farm prices and slow sales of farms are likely to continue.

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Photo: 123rf.com

Real Estate Institute's dairy farm price index is down nearly 21 percent from a year ago.

A spokesperson said the figures were still only an early indication that the slump in milk prices was starting to bite.

Figures from Rural Value, a division of Quotable Value, showed a similar trend, with the number of dairy farm sales dropping 50 percent from between 2013 and 2015.

Rural Value's national manager, David Paterson, told Nine to Noon there were plenty of farms for sale, but no one was buying them.

"Unless there's some bright light on the horizon I think there'll be a continuation of slow sales and we'll continue to see a reduction of farm values particularly on the dairy farm sector," Mr Paterson said.

He said that would depend on the banks and how they reacted to things over the next year or so, but was hopeful they would try to keep farmers afloat.

"I think they'll be trying very hard to hang on to their clients because any move by the banks to sell up indebted farmers will invariably have a impact on the overall market and affect a lot of other people as well so I think they'll be trying very hard to get through this period without having to sell.

He said a drop in sales from 295 last year to 163 this year was a compelling statistic that grew from the downturn in dairy prices being longer and more sustained than everyone thought.

There was also some anecdotal evidence that some intending to buy in the market last year changed their minds, he said, with actually plenty of farms on the market but fewer buyers.

Likely buyers in a situation with heavily reduced farm values would include overseas buyers and local corporate bodies.