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Dairy showing signs of increased demand

Dairyheader

There’s been a positive shift in the dairy market with a surge in enquiry for dairy property, according to Colliers’ national co-director of rural and agribusiness Ruth Hodges.

The demand for property comes against the backdrop of dairy commodities experiencing an upturn around the world with the Global Dairy Trade price index spiking by 15 per cent in March from its previous auction.

Reports that the Chinese government has issued a directive to the public to drink milk to ward off the ill-effects of Covid-19 is said to be contributing to this increase in demand.

In New Zealand, dairy co-operative Fonterra, which is owned by ten thousand farmers, subsequently announced the highest forecast farmgate milk payout price range in seven years, resulting in the potential for some $11.5 billion to be injected into the economy.

Hodges says that the thirst for dairy world-wide is resulting in growing sentiment among the community, and importantly increased cash flow for the sector.

“A recent survey by Rabobank showed that the sentiment among farmers is the most positive that it's been for ten years, with dairy farmers being significantly more optimistic about conditions in the agricultural economy than they were last quarter.

“As a result of this confidence, we are seeing a flurry in sales activity with farms selling both through marketing campaigns and off-market.

“REINZ data showed 129 more farm sales recorded for the three months ended February 2021 than in the previous corresponding period, a substantial increase of almost 40 per cent.

“Properties that have been on the market for a long time, or that were previously taken to market and did not sell are being snapped up in the current market conditions.

“In property campaigns we are starting to see multiple offer environments, especially for high quality assets in good locations with ample resources.

Rural is often regarded as the backbone of New Zealand’s economy, which became more apparent during the Covid pandemic when it overtook tourism as our largest contribution to GDP.

Dairy is a staple part of diets locally as well as in many countries around the world and is our biggest export and worth some 20 billion dollars a year.

New Zealand’s reputation as a high-quality producer provides ongoing confidence in the strength of this commodity.

Hodges also says the investor market for dairy is showing signs of growth, which is predicted to continue as capital availability loosens.

“For the first time in many years we are seeing strong interest from the investor market, suggesting that agribusiness is becoming a more desirable investment option.

“While banks still have strict criteria around dairy lending, we are finding they are now more willing to discuss future growth opportunities with their clients around acquisitions.”


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Ruth Hodges

Director

Queenstown

Ruth commenced her career in rural real estate in August 2009 before establishing the first Colliers Rural and Agribusiness franchise in New Zealand with Shane O’Brien in September 2014. Her experience and acumen led to a role operating at a national level, spearheading growth in Colliers’ Rural business between 2018 and 2021.

Now based in the Southern-Lakes district, Ruth is Managing Director of the Otago and Southland Rural business, of which she was one of the co-founders in January 2019.

Growing up on a large-scale, high-country farm in Central Otago set the foundation for Ruth’s involvement in the rural industry throughout her working life. After achieving a first-class honours degree from Otago University, Ruth commenced a career in rural finance that spanned nine years with the National Bank. She then joined the progressive new dairy company, Synlait, as Business Development Manager, focusing on growing their farming assets via key acquisitions around the Canterbury region.

Ruth is also involved in the rural building industry with her husband Nigel, and the experience of the incredible highs and lows that this industry has encountered over the past 13 years has honed her management and problem-solving skills to the highest level.

As a rural real estate professional, Ruth's strategy is based around the cornerstones of people and their farming businesses.  Focussing on these rather than solely the physical assets is key to how she achieves positive outcomes regardless of market conditions. Her underlying principles of trust and integrity ensure she continues to form long-lasting, genuine relationships and she applies an open, honest approach to all situations.

Furthermore, Ruth's comprehensive understanding of an often complex and evolving rural market together with her ever-present proactive attitude allow her to provide solutions that go beyond the traditional real estate model.

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