Dairy Market Update

In this sector market update, we focus on the dairy sector with insight on market conditions from Bayleys Waikato Regional General Manager Mark Dawe.

The past 12 months have seen a considerable uptick in the level of buyer interest for dairy properties, with a number of identified contributing factors.

Dairy prices on the commodity market have been lifting in response to supply-demand fundamentals, and this has been reflected by stronger milk payouts for farmers.

These positive signals have in turn significantly improved liquidity in the market, with investor appetite reappearing as the return on investment becomes more competitive, and accessibility to debt somewhat improved as the banking sector regains confidence in the industry.

Given the positive milk price outlook, and commentary coming from economists, we expect to see a continued increase in the level of buyer enquiry for dairy properties through spring.

Waikato dairy farm sales, in particular, have seen a very positive lift in sales activity over the last year, compared to the 2019-2020 financial period.

REINZ farm sales statistics showed that while 10 out of 13 regions recorded an increase in the number of farm sales for the three months ended March 2021, compared to the three months ended March 2020 – the most notable was Waikato, up by 37 sales.

We have continued to see strong enquiry for sheep milking and goat milking units, with sales of dairy farms to each of these alternative uses this season. Both the level of demand, plus the move to alternative farming options, are positive signs for our rural market moving forward.

Along with increased levels of enquiry, the depth of the market appears to have bounced back. The Canterbury region stands out, experiencing multiple offers for many of their dairy property campaigns, with renewed interest in the higher weight-of-money opportunities.

Buyers are not limiting their search to their local regions but are hunting for the “right” dairy opportunity and looking nationwide.

In the deep south, the dairy property market remains extremely tight with the best of the tier one farms now fetching record prices.

With the continued positivity surrounding milk auction results, and the consolidation of the industry in the past few years, the outlook remains positive for dairy throughout the country.


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