Canterbury Dairy Sales Map - March 2019

Canterbury Dairy Sales Map - March 2019

Canterbury Dairy Market – March 2019.

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The market for dairy farms throughout Canterbury, particularly large-scale properties, has continued to ease throughout the 2018/19 season. While transactions are very slowly occurring, market sentiment is still cautious with no sense of urgency to buy.

Despite good news such as positive GDT auctions in 2019 and an increased payout forecast for the remainder of this season and next, we believe farmer confidence has remained relatively low due to a culmination of factors such as the uncertainty created by how new policies, as either already introduced or to be introduced by the Labour-led Government could impact on the profitability of the sector i.e. Green House Gases (GHG), Carbon Taxes, Water Taxes or Capital Gains Taxes.

Additionally, international trade protectionism and tariffs being introduced on goods traded, particularly between the US and China, as well as the uncertainty surrounding Brexit also appears to have knocked farmer confidence.   

Concern due to the detection of Mycoplasma bovis, (M. bovis) which for those impacted adds significant complexity operationally, appears to be easing. While several transactions have occurred where M. bovis has been a factor, other factors seems to have contributed to a discounting of value to a greater degree.

We understand banks are also requiring farmers to consolidate their positions, in some instances to be in a stronger equity position than prior to the dairy downturn.

Overseas buyers, while not the only buyers in the market, have historically created additional liquidity, particularly for larger scale properties. In our opinion, removing these buyers from the market means that there has been a significant reduction in liquidity and subsequently the size of the buyer pool and this is evidenced in the lack of sales over the last 6-12 months.

We consider that the low sales volumes also demonstrates a gap between vendors expectations and the negotiating strength of the reduced pool of active buyers. Vendor expectations may need to soften further in order for more transactions to occur. 

We also expect a further widening of the gap between better quality ‘Tier 1’ type properties and those with detracting features to occur, such as more labour intensive irrigation infrastructure, steeper contour and high cost or unreliable irrigation water. We anticipate buyers will become more focused on their cash return on investment driven by the cost of production.

For more information please contact:

Ryan Bratty

Registered Valuer

+64 27 631 1077 | Ryan.Bratty@colliers.com


Tim Banks

Valuer

+64 21 199 4599 | Tim.Banks@colliers.com


Greg Petersen

Registered Valuer

+64 21 991 348 |  Greg.Petersen@colliers.com


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