Values
significantly lower than those 12-18 months ago at around
$40-$45/kg milk solids
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 $6.05 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 $40-$45 per kg ms or $40,000-$45,000 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.
Sale price related to Bay of Plenty (Waikato farms traditionally 15%-20% higher).
Kiwifruit Market
Zespri Green Orchard values have seen a further downward correction over the last 12 months, leading up to the harvest in 2010, with levels predominantly in the $120,000 - $230,000 per canopy hectare (land, vines, structures, irrigation, shelter and crop). 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 unseasonably low level of sales of green orchards as the underlying lack of profitability continues to become more apparent. Good quality green orchards with strong underlying profitability are in the main not being offered for sale.
Zespri Gold orchard sales on the other hand, are showing steady to slight increase on sales last year. Our sales analysis indicates levels around $330,000 - $450,000 per canopy hectare for mature vines (including crop).
The orchard gate return for Zespri Green is $3.58 per tray (down from $3.68 per tray the previous season). Zespri Gold orchard gate return is $7.64 per tray (up from the previous $5.41 per tray).
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.
The introduction of new varieties over the next 12 months or so will potentially provide value support to good located green orchards for suitability for grafting over to the new varieties.
Analysis
of most recent 'green' sales (to March 2010) have reduced by around 10% from
last season to levels to
around $120,000-$230,000 per canopy hectare (Zespri Green)
exclusive of house
site allowance or buildings.