17 Sep 2012

Real Estate Institute to compile dairy farm price index

10:44 am on 17 September 2012

The Real Estate Institute has increased the range of information it provides for potential investors in dairy farms.

It has added a dairy farm price index to the statistics it compiles every three months on the sales of all types of farms in New Zealand.

Rural market spokesperson Brian Peacocke says the new index complements an all farm price index which the institute introduced in July.

He says many of the investment inquiries for farming are about the dairy industry, so financiers are requiring tools to allow them to do better modelling.

Mr Peacocke says the initial model was developed by the Reserve Bank and the Real Estate Institute after QV stopped producing a similar index.

"They needed some degree of measure that had a greater degree of consistency about it and catered for some of the variable factors, whether they be commodity prices, exchange rate fluctuations, interest rate variabilities, location and farm size and all those sorts of things".

Mr Peacocke says the index will be of use to those who assess the industry and financiers doing cash flows and models of likely farm sales.