Farmers bullish but sales still easing

Eighty six per cent of farmers questioned in a Rabobank confidence survey believe land values will increase or stay the same over the coming 12 months.

This was up from 72% who had that view when the question was asked in April 2010.

But the optimism flies in the face of recent sales trends.

Nearly a third of farmers surveyed expected an increase in their land value, indicating they believe the land price cycle is beyond the trough or starting to improve.

The survey questioned 450 farmers.

Of those farmers expecting the agricultural economy to improve, 74% cited rising commodities prices as a major reason, while 18% attributed their optimism to the improvement in overseas markets and economies.

The survey showed confidence to be high across all sectors, with sheep and beef farmers particularly optimistic.

Meanwhile, the latest Real Estate Institute statistics show a continuation of the trend of falling sales over the past three years.

There were 190 farm sales in the three months ended March 2011 compared to 204 in the three months ended February 2011 and 210 in the three months to March 2010.  The number of farm sales for the year ended March 2011 was 869, compared to 2692 farm sales for the year ended March 2008, a drop of almost 68%.

The institute’s rural market spokesman Peter McDonald said that while there are signs of confidence in the rural sector with rising payouts and a strong improvement in sheep and beef farm profitability, this is not yet being translated in property activity.

“This is frustrating for the rural real estate industry, with a number of well presented and sound properties available for sale and good interest from buyers. 

“This may be due to conservatism on the part of buyers in ensuring that properties they are looking at really meet their needs, or continued restraints on rural lending by the banking sector.” 

Grazing properties accounted for the largest number of sales with 45.2% share of all sales over the three months.  Dairy properties accounted for 18.4%, Horticulture properties 10.5% and Finishing properties 14.7%. These four property types accounted for 88.8% of all sales during the three months ended February 2011.