Dairy Market & Valuation | Kiwifruit Market
Dairy Market & Valuations
Stabilisation in farm values on the back of improved profitability.
The dairy industry has been in a holding pattern in recent times but noting the last 2-3 seasons pay-out have seen some stabilisation in farm values following a period of reducing farm values throughout 2018 – 2020 period.
The final 2020 – 2021 season estimated at $7.45 - $7.65/kg of milk solids, with forecast 2021 – 2022 season in the range of $7.25-8.75/kg milk solids. This provides good support to farm values and a shift in the previous negative sentiment on back of fewer farms for sale. Well run dairy farming businesses are now showing reasonable yields in relation to low interest rates and shortage of alternative investment options.
The most recent sales indicate values at around $35-40/kg milk solids. Further analysis indicates land without buildings and Title allowance at $30,000-$35,000/ha or $25 - $30/kg milk solids.
The size, standard of improvements, location and soil types are key factors in determining saleability and value. The subdivision potential and house site allowances provide additional value over and above the productive base and also reflect a degree of liquidity of security.
More recently the demand for horticultural land has propped up the value of a number of farms in the Bay of Plenty region.
Kiwifruit Orchard values have continued to strengthen driven by the confidence in the new gold (G3) variety with good productivity and tolerance to the disease, Psa.
Green value levels now predominantly in a range of $480,000 - $600,000 per canopy hectare (including crop) with emphasis on orchard gate returns which can range predominantly from $65,000 - $100,000 per canopy hectare. There is evidence of small, very well located orchards selling upwards of $700,000 per canopy hectare.
The mature gold orchard values indicate value between $1,400,000- $1,500,000 per canopy hectare (including crop). These are full producing good quality orchards with very good infrastructure. They include licence value which following recent Zespri release, indicates values of around $550,000 per canopy hectare.