Values
significantly higher than those last year at around
$55/kg milk solids (land without buildings)
The dairying industry is in a holding pattern after coming off the record $7.90 per kg ms payout for the 2007/2008 season to level of around $5.20 per kg ms for 2008/2009 and forecast for 2009/2010 of around $4.55 per kg ms.
The impact is flowing through to farm values with prices falling from around $60-$65 kg ms (inclusive of dairy company shares) or $55,000-$60,000 per hectare to nearer $50 per kg ms or $45,000-$50,000 per hectare.
The strength of the New Zealand dollar, and international prices for dairy products continue to create a somewhat volatile market in the current recessionary environment.
Location and soil types are key factors in determining saleability and value. The subdivisional potential and house site allowances are particularly relevant to coastal properties as factors impacting beyond the productive dairying value.
Kiwifruit Market
Zespri Green Orchard values have seen a further downward correction over the last 12 months, leading up to the harvest in May/June of this year of around 20% on the previous years, with levels predominantly in the $130,000 - $210,000 per canopy hectare (land, vines, structures, irrigation, shelter and crop) or around $20- $23per tray (Zespri Green). It has been critical for underlying profitability of Green orchards to either be producing at high levels per canopy hectare (up to 10,00 trays plus per canopy hectare) and/or receiving Early Start premiums. Those orchards at average or less than average production per canopy hectare without the Early Start premiums have in many cases been running at a loss.
There has been an unseasonably low sales of green orchards as the underlying lack of profitability becomes more apparent.
Zespri Gold orchard sales on the other hand, are showing a 10%-20% increase on sales last year. Our sales analysis indicates levels around $330,000 - $430,000 per canopy hectare for mature vines (including crop), and are likely to consider to further increase in value this year.
The orchard gate return for Zespri Green is $3.70 per tray (up from $3.11 per tray the previous season). Zespri Gold orchard gate return is $5.42 per tray (up from the previous $4.45 per tray).
Indications for the 2009 crop is likely to see payout levels slightly less than last season for green (around $3.57 per tray) compared to gold which is forecast significantly stronger at $7.43 per tray (a 37% increase).
There is likely to be much greater variation in price levels from one orchard to the next over the next 12 months or so, as purchasers become more particular in assessing profitability associated with fruit size, storage ability and taste/dry matter. They will be looking at trays sold rather than trays produced and the orchard gate return per tray.
Analysis
of most recent sales (to May 2009) have reduced by around 20% from last season to levels of
around $130,000-$210,000 per canopy hectare or $20-$23 per tray (Zespri Green)
exclusive of house
site allowance or buildings.