Finding That Pot of Gold Not so Easy

By GRAHAM, Kathy

Waikato farmers and at least one local real estate agent are dismissing claims by the Real Estate Institute (REINZ) that record median prices for dairy farms will propel them into the rich list.

“We’ve been saying for a while, watch the flow-on effect of record dairy payouts on dairy farm prices,” said Peter McDonald, national councillor and rural spokesperson for REINZ yesterday. “The latest figures really promote dairy farmers into a new Rich List category of their own in the farming community.”

REINZ figures released yesterday show the median price for a dairy farm in the three months to January 2008 leapt to a new record of $4.25 million from $3.575 million in the three months to December.

“There has been a real surge in dairy farm sales on the back of the increased milk solids payouts, with existing dairy farmers taking advantage of the increased income to expand into further or larger properties, and also city investors deciding now is the time to invest in dairying,” Mr McDonald said.

Waikato Federated Farmers president Stew Wadey said the REINZ comment was not well informed. “I’m looking out over my farm now which is a very valuable asset, but at the moment it is essentially useless because there’s no grass growing.

It’s always been folklore that farmers are asset rich and cash poor. You won’t see many freehold farms in New Zealand, and a lot have mortgage debt to pay once they retire. Our land is our superannuation fund,” he said.

While the residential market had slowed down markedly, both non- dairy farms and lifestyle properties also showed an increase in median prices.

In the Waikato 116 farms including grazing, dairy, finishing, arable and horticulture, sold in January, an increase on the 85 sold in January 2007 and 109 in December 2007. The median farm price rose to $2.52 million in December, up from $2.36 million.

Meat and Fibre Producer Section vice-chairman John Mills, who farms near Te Awamutu, said it was likely farm borrowing was also at a high. “It’s like saying that everyone who lives in Remuera is a millionaire because they own a house there.”

Kevin Deane of Harcourts Kevin Deane Real Estate in the Waikato, was disappointed at the Real Estate institute statement. “They have obviously not visited the Waikato recently. If they had what they would see is although these farms are worth some money, the personal and financial stress out there is certainly out-weighing the benefits of being on a perceived rich list.”

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(c) 2008 Waikato Times. Provided by ProQuest Information and Learning. All rights Reserved.