Welcome to a new podcast brought to you by Property Brokers and powered by The Country. In Episode One of Land and Lifestyle Property Markets, Jess Davidson discusses with Property Brokers Rural General Manager Conrad Wilkshire, some of the current trends, sector insights, and the future long-term outlook for the Rural Property Market.
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Speaker 1 (00:01):
Land and Lifestyle Market Insights on the Country with Property Brokers.
Speaker 2 (00:13):
Welcome to Land and Lifestyle Market Insights over the Country,
proudly brought to you by Property Brokers. I'm Jess Davidson
and in this episode we look at the rural property
market and today we're joined by Conrad Wilkshire, Rural General
manager at Property Brokers. Hey, Conrad, how are you great?
Speaker 3 (00:31):
Jess, good to be on the show.
Speaker 2 (00:32):
Yeah, nice to have you with us. Now, before we
rip into what's happening in the rural market, I thought
i'd ask you a little bit about you and your
background in the rural property market. So firstly, what does
your job generally entail.
Speaker 3 (00:46):
That's a great question. Well, largely I help steer the
ship if you like, in terms of market development, working
with the team from Richly, from from our aid right
down to MBICAGL. So it's very much a national role
and it's there providing the team to support and the
resources they need to be able to execute well for clients.
So everything from how we coordinate our marketing and our
(01:09):
strategy to supporting the team within the business development opportunities
in front of them, and most importantly it's about getting
close to farmers and actually working with farmers day to day.
So I spent a lot of time in the regions
catching up one on one with farmers.
Speaker 2 (01:23):
Sure it's such a personal experience, isn't it. It's selling
any property, but in particular rural properties.
Speaker 3 (01:30):
Yeah, absolutely, and it's built on a lot of trust,
and it's built on a lot of the relationships that
the team has Whi's been again brought over many years.
Speaker 2 (01:39):
Yeah, and I expect, Conrad, your experience or your knowledge
base would have to be pretty broad when you're covering
a market like that.
Speaker 3 (01:47):
Yeah, I've got a few years to lean on, jests.
I started in the Rural Bank in nineteen eighty nine,
so it was about twenty three I think back then,
so and that was here in the matter of too.
But I've had the opportunity work across New Zealand, North
and South Oland and some general management roles in Auckland
with the Benz and then obviously I had quite a
(02:08):
time almost nine years with FMNG there as the chief
operations officers, so I've had the benefit of that. But
actually it's eight years now with property brokers, and I've
seen in that eight years, I think some of the
most significant swings in rural real the state that you
could imagine. So it's been you know, it's had its
own set of unique challenges, but also we're in very
(02:29):
different times at the moment.
Speaker 2 (02:30):
Yeah, sure, and I want to talk to you about
that today, Conrad. So firstly, how's the market tracking right now?
Speaker 3 (02:37):
Well, I'd have to say the market settings at the
moment would be as strong as any time up to
preceding the GFC in terms of we haven't seen market
settings as favorable to farming as they are now for
probably fifteen years.
Speaker 2 (02:53):
Gosh, wow, And I see sales are already topping over
two hundred million for the season.
Speaker 3 (02:58):
That's amazing. Yeah, that's that's South sales. Yeah, actually that's
a little bit long dated.
Speaker 2 (03:03):
Now.
Speaker 3 (03:03):
If I roll September into that, we've been close to
the three hundred and fifty million of sales through to
the end of September. So we've seen winter and early
spring activity at levels we'd never anticipated. And largely while
the vices are farming, per hectiats more around just farms
sold and people prepared to bring their farms forward much
(03:25):
earlier in the season and would typically be the case,
and the market's been there to meet them.
Speaker 2 (03:32):
And Conrad and I note that particularly the South Island
has been quite strong.
Speaker 3 (03:36):
Yes, it's definitely, there's definitely is a South Island influence
to those results, and saying that though there's been some
there's been some big sales in the North Island, but yes, no,
definitely there has been I think strong interest in Canterbury
Targo Southland particularly for some time, and then you know,
I've just got a willing buy a willing seller. I
(03:57):
think these larger transactions there's a lot of information around
the particular property. You really informed buyers. And also I
think they've got the green light from both their board
and their banks to have a good crack at their
growth and their business expansion. So it's all tied together
and it's lends itself to a lot of transactions, no
(04:20):
question about.
Speaker 2 (04:20):
It, and that calms down. The big thing is confidence,
isn't it? And that seems to be there right now.
Speaker 3 (04:27):
It really is, and I don't believe it's misplaced in
any in any way if you look at important considerations.
I think I think we often overlook we talked about
farmer confidence driving things, but really financial things drive things.
And the interest rates farmers and grass are enjoying today
(04:49):
competed at the same time last year, particularly from a
partial farming context, is for those with a decent mortgage,
it's equivalent the savings this year compared at the same
time last year, equivalent entire fertilizable. Wow. And so you
know you're talking significant shifts and interest rates in the
period of twelve months. And then obviously no announcements of
(05:11):
the last week around the two and a half percent
just further solidifies that view. And obviously there may be
a bit more of a haircut to come after that,
but there's no question you've got to go back to
August twenty two to see a two and a half
percent rate. So these are and if you have a
look at that the settings and support of farming, you've
got an exchange rate. Because of the economy is battling
(05:33):
a bit, the exchange rates not exactly favorable, but it's
very favorable from the exporter point of view, so there's
some significant advantage there as well. So you know, in combination,
you've got two very strong things, and then you've also
had a bit of moderating in this. You know, the
environmental settings. I believe the compliance and the investment gone
into properties of the last decade have been massive. However,
(05:58):
the perception around farming and how its and the environmental settings,
I think there's just been a bit of moderating on
how that's actually implemented because we had some quite obscure
settings which where you had a dairy support being viewed
as more intensive than a dairy farm. And I think
a lot of that has been moderated now and I
think that's helped too, because all of a sudden, now
(06:19):
you've got a much broad range of properties to sell
on what I think are long term sustainable on a
long term sustainable production basis.
Speaker 2 (06:28):
Yeah, and it is intriguing to see that the diverse
nature of the farming well, the types of property that
are continuing to sell. It's across the board.
Speaker 3 (06:36):
Yeah, absolutely, Dairy is starting to lead that obviously in
terms of across the board, and I think not before time,
because when you look at during this actually if you
go back ten years, we're not producing a kilogram more
milk solids than we were ten years ago, and there
are fewer dairy farms. There's been a lot of de
(06:57):
conversion of farms over that time, and yet it's contributions
to new general exports sitting about twenty nine billion forecast
for US during just gone off the MPI situation Outlock report,
if you relied on that, we're actually over that ten years,
which two times the level of exports from the largest
export producer in the country. So yet the valuations of
(07:19):
those dairy farms over the last ten years haven't really
gone anywhere in any substantive level. So I think the
kind of demand was seeing for dairy and sent some
of the prices that are firming very much in line
with what the returns are. It's very in line with
what the long term projections look like, and it's probably
a little bit overdue because they've probably been artificially suppressed
(07:40):
for some of those reasons I spoke about previously.
Speaker 2 (07:43):
Oh absolutely, And now let's look conrad at the BUI
versell perspectives. What are the mindsets of buyers.
Speaker 3 (07:51):
Well, I think from a BASS perspective, they're looking at
it from the next five to ten years, so they're
looking at this asset and I think that's important obviously
from a sellers perpective that they're they're looking at it
in terms of the here and now, so by then
looking at how does it fit strategically, they're not looking
to lose the lessons of the last ten years. I
(08:13):
don't believe buyers are out there to pay money that
can't be paid back, because I think they've had the
benefit of just how challenging that is if you forward
price it too far out into the future. But I
think also they're recognizing that you've got to have your
business is either growing or it's going backwards. There isn't
really anything in the middle and so and I think
(08:35):
there's general recognition now that actually the settings are strategically
long term favorable and not to operate at the moment.
It's like, you mean, it's probably going to be more
expensive this time next year.
Speaker 2 (08:47):
Absolutely? And what about on the flip side of the sellers,
I think.
Speaker 3 (08:52):
The big question always is how good is good? And
often they think about, well, maybe one more year, which
is a little bit like the warriors. The what I
would say is how good's good? Well in terms of
all the opportunities for a ventor, and feel confident that
the market is at a good place and that I'm
(09:13):
optimizing the value. It is hard to imagine many more
stars lining up for that to happen. So then obviously
people are looking at maximize their income, but they get
the opportunity to do that this season and benefit from
I'm thinking the dairy side particularly benefit from Fonterra capital payments,
et cetera. However, you know, whenever you start going out
(09:35):
to twenty six twenty seven settlements, you know during twenty
seven settlement there's a lot that's going to happen between
now and then. There's going to be an election, there's
a whole bunch of other things around the market uncertain
and what have you. And I think from a sellers perspective,
their timeframe is a lot shorter. So if you're a
buyer and you maybe overpay a little, you've got you've
got the future to sort that out and to win
(09:57):
it back. If you're selling and you you don't get
quite get the timing right, it can be it can
be quite a correction. And so taking the win while
it's there is important, And I think from the byers
point of view, getting on the Royal pupy Ladder is
also important.
Speaker 2 (10:11):
Sure, And what about the long term outlook? What is
the land or the horizon? A head for investors.
Speaker 3 (10:19):
I think land has always been a very good asset
on long term and if you have a look at
sheet and beef over the last fifteen years, those you've
gone from a medium price for let's say two hundred
hectier plus health country that's gone from about six and
(10:40):
a half thousand hectai to about twelve and a half
thousand hectare over that period. And it's had and amongst
all that, that's had some extra stimulation from the likes
of some of those forestry settings, which is all washed
through now though I know people will want it a
bit hard to believe, but it really has. And so
what we're seeing now, even over that period of time,
(11:00):
we have seen a long term strong values. The dairy side,
I think has been sort of artificially suppressed with a
lot of challenges to farming practices, environmental settings, et cetera,
et cetera. Those things have I think largely worked themselves through.
I think there's really good science now that supports farming practices,
(11:21):
and I think farmers themselves have invested billions of dollars
nationally over the those ten years to actually meet those requirements.
So what I think now the stage is set for
a much more confident for you. I think the other
factor in here thinking long term is Fonterra is a
really good heart, and I think Miles Hrrell on the
Fonterier team should be congratulated on an excellent job. If
(11:44):
you compare that we it might have been in twenty
nineteen from a balance sheet point of view to where
it is today. The strength and its underlying earnings is
exceptionally strong. And that's a look very straight into a
provincial New Zealand as well, because it puts billions of
dollars back into print your economies. So I think that
all those things are very real and they're not going away.
(12:06):
And I suppose it's always sounds a little bit apple
pilot's statement, but it's eighty percent plus in New Zealand's experts. Strategically,
we kind of need it to actually go away out
of the kind of pickle we find a thousand with
the GDP and the settings not being where they need
to be. We need we need strong farming sectors. So
sure need your investment.
Speaker 2 (12:27):
Yeah, yeah, absolutely. And those wanting to exit the market,
Conrad is now the right time, say they're looking the
next two or three years, is this the best time
for them to be looking at that aspect?
Speaker 3 (12:39):
Well, certainly if you were to go back the last
ten years. It really does depend where you're sitting in,
what industry you're and so I put the cavet out there.
Everything's down to individual circumstances. But if you're looking to
sell into a market where the banks and credit appetite,
and I think that's the other thing. It's not only
the interest rates, but it's the fact that there is
(12:59):
a real banking appetite to see in advanced new capital
to farming, because you know, the balance sheets are well
structured now. So I think selling into a strong market
where there are there's the bank appetite to see the
sect to grow, and the interest rate terms are affordable,
and the commodity cycle is strong, and the commodity cycle
(13:23):
is strong across many of the kerry fruit sheet and
beef probably not arable so much, but there's ultimate land
news for arable farm systems and daring. If you have
a look at all those in combinations, you'd have to say, yes,
now is a good time. And I think from a
family succession point of view, as the person who's going
to take the business forward is making those decisions. I'd
(13:45):
encourage them to make those decisions sooner, not kick the
can down the road another three or four years, because
it's just hard to see how that country is not
going to be more expensive in three to four years time.
So there's a lot of overdue catch up.
Speaker 2 (13:57):
Yeah, and we're focused on quite a bit on dairy
in this so far, Conrad. But it's it's so encouraging
to see sheep and beef prices staying strong as well.
Speaker 3 (14:09):
And I wouldn't wander and they simate of twelve billion
dollar industry our our sheep be sectors being brilliant. That's
had a really good run. Of course, you know, we
and some of that was off ultimate land use options,
which was very challenging for the sector to work through that.
I think sheep and beef went through a reset in
(14:31):
pricing the last couple of seasons, and largely Gabriel, particularly
on the East Coast, had a big impact in terms
of impact on farm systems and having to absorb farms,
having to really dig deep and actually, you know, look
at Klomba's defencing and how they've worked help recover their
pastures so that that hasn't been easy. And then you
(14:53):
also through that whole period too, you know, you've had
the forestry thing work itself, had forestry's license to operate
has changed significantly. Forestry, I would say, has historically had
quite a symbiotic relationship with help country, but it's been
out of kilter. And I think the out of kilter
that is that everything else was regulated, but the forestry,
(15:17):
to a last degree and has a particularly parted the
tree conversion was very much unregulated, and that's moving now
from unregulated to regulate it. So what that means is
that you're just not seeing the same supply availability of
that land, and so you've also also hadn't got the
buyers the operating because of the regulation. So lots sum
(15:41):
it up, you can now buy a sheep and beef
farm for what the farm can actually produce. From a
sheep and beef point of view, it's actually allowing a
lot more farmers back at the table because the farmers
historically were often the underbidder and that was very frustrating
for the market. So I think farmers themselves and the
forested themselves still operate, but at different levels. So we
(16:02):
still were going to see forestry in the market, but
it's going to be at much produced levels and that's
healthy for the market anyway. So long story short, sheep
beef farmers are actively looking at the future for good reason.
You know, this time last year, there might have been
budgeting six dollars fifty schedule and we've got current schedules
(16:23):
ten dollars plus. Not that anybody need should be budgeting
at that level, but they said would be budgeting at
six dollars anymore. And that's that's having a huge impact.
And you know, truck and trailer unit loads of cattle
going out and yeah, sort of one hundred thousand dollars
on the track. So it's not hard to see how
sentiment for shep beef farmers is going to improve. But yes,
the one last thing on that though, is they're coming
(16:46):
off a tough couple of years, and so I think
when you look at sheep beef farmers, they've had to
absorb high intrast rates and it hasn't been that easy
commodity cycle wise, and then they've had the benefit of
the district recovery, but there's still quite a bit of
catch up to do. Caple fertilized that might have been deferred,
so they're unlike the dairy job it's had two or
(17:08):
three good years on the trot. This is quite a
different situation. And I think the sheep and beef outlook
will continue to improve and I think and then the
balance sheets of farmers, sheep beef farmers will reflect that
improvement over the next couple of years.
Speaker 2 (17:22):
It's just so heartwarming, as you say, Conrad, after all
of all of the trials and tribulations and in all
of the rural sector has that but to see that
bouncing back and just the I can't even describe the
positivity that we're really feeling around the sector at the moment.
Speaker 3 (17:36):
Yeah, well, I couldn't agree more. I chair a charitable
trust for smed Least Station and Hawks Bay. It's based
in taking Keno and it takes about fitting young people. Yeah,
and we've you know, we've seen you unprecedent levels of
applications coming forward and it's in the next generation. Are
(17:57):
definitely saying this notion that there's anybody out there to
take things forward. I think there is actually a lot
of good young people saying it's the shep and beef
sector up talking about here seeing big opportunities in that sector.
And if you look at the tech that's coming alongside
the sheep and beef sector and the need to adapt
and evolves somewhere thinking around how we use tech on farms,
(18:18):
we've never been better placed.
Speaker 2 (18:19):
Well, it's been insightful, Conrad. But I guess the key
takeaway is get on the ladder or miss out, isn't
it at the moment?
Speaker 3 (18:26):
Well, and certainly I don't think holding out a year
or two is going to for those who've got them
who want to get ahead, is going to help you much.
What I've seen is those that get on the property
ladder will stand a benefit from the current outlot and
it's better to be involved other than the outside looking at.
Speaker 2 (18:44):
Good on you wise advice. Hey, Conrad, it's been a
pleasure to chat with you today. Thank you for your time.
Speaker 3 (18:49):
Oisy's good to talk.
Speaker 2 (18:51):
That is Conrad wilksh Rural General Manager at Property Brokers.
If you're wanting further information, visit property Brokers dot co
dot nz, Forward slash land, Monstyle
Speaker 1 (19:01):
Land and lifestyle market insights on the country with Property
Brokers
Land and Lifestyle Market Insights on the Country with Property Brokers.
Speaker 2 (00:13):
Welcome to Land and Lifestyle Market Insights over the Country,
proudly brought to you by Property Brokers. I'm Jess Davidson
and in this episode we look at the rural property
market and today we're joined by Conrad Wilkshire, Rural General
manager at Property Brokers. Hey, Conrad, how are you great?
Speaker 3 (00:31):
Jess, good to be on the show.
Speaker 2 (00:32):
Yeah, nice to have you with us. Now, before we
rip into what's happening in the rural market, I thought
i'd ask you a little bit about you and your
background in the rural property market. So firstly, what does
your job generally entail.
Speaker 3 (00:46):
That's a great question. Well, largely I help steer the
ship if you like, in terms of market development, working
with the team from Richly, from from our aid right
down to MBICAGL. So it's very much a national role
and it's there providing the team to support and the
resources they need to be able to execute well for clients.
So everything from how we coordinate our marketing and our
(01:09):
strategy to supporting the team within the business development opportunities
in front of them, and most importantly it's about getting
close to farmers and actually working with farmers day to day.
So I spent a lot of time in the regions
catching up one on one with farmers.
Speaker 2 (01:23):
Sure it's such a personal experience, isn't it. It's selling
any property, but in particular rural properties.
Speaker 3 (01:30):
Yeah, absolutely, and it's built on a lot of trust,
and it's built on a lot of the relationships that
the team has Whi's been again brought over many years.
Speaker 2 (01:39):
Yeah, and I expect, Conrad, your experience or your knowledge
base would have to be pretty broad when you're covering
a market like that.
Speaker 3 (01:47):
Yeah, I've got a few years to lean on, jests.
I started in the Rural Bank in nineteen eighty nine,
so it was about twenty three I think back then,
so and that was here in the matter of too.
But I've had the opportunity work across New Zealand, North
and South Oland and some general management roles in Auckland
with the Benz and then obviously I had quite a
(02:08):
time almost nine years with FMNG there as the chief
operations officers, so I've had the benefit of that. But
actually it's eight years now with property brokers, and I've
seen in that eight years, I think some of the
most significant swings in rural real the state that you
could imagine. So it's been you know, it's had its
own set of unique challenges, but also we're in very
(02:29):
different times at the moment.
Speaker 2 (02:30):
Yeah, sure, and I want to talk to you about
that today, Conrad. So firstly, how's the market tracking right now?
Speaker 3 (02:37):
Well, I'd have to say the market settings at the
moment would be as strong as any time up to
preceding the GFC in terms of we haven't seen market
settings as favorable to farming as they are now for
probably fifteen years.
Speaker 2 (02:53):
Gosh, wow, And I see sales are already topping over
two hundred million for the season.
Speaker 3 (02:58):
That's amazing. Yeah, that's that's South sales. Yeah, actually that's
a little bit long dated.
Speaker 2 (03:03):
Now.
Speaker 3 (03:03):
If I roll September into that, we've been close to
the three hundred and fifty million of sales through to
the end of September. So we've seen winter and early
spring activity at levels we'd never anticipated. And largely while
the vices are farming, per hectiats more around just farms
sold and people prepared to bring their farms forward much
(03:25):
earlier in the season and would typically be the case,
and the market's been there to meet them.
Speaker 2 (03:32):
And Conrad and I note that particularly the South Island
has been quite strong.
Speaker 3 (03:36):
Yes, it's definitely, there's definitely is a South Island influence
to those results, and saying that though there's been some
there's been some big sales in the North Island, but yes, no,
definitely there has been I think strong interest in Canterbury
Targo Southland particularly for some time, and then you know,
I've just got a willing buy a willing seller. I
(03:57):
think these larger transactions there's a lot of information around
the particular property. You really informed buyers. And also I
think they've got the green light from both their board
and their banks to have a good crack at their
growth and their business expansion. So it's all tied together
and it's lends itself to a lot of transactions, no
(04:20):
question about.
Speaker 2 (04:20):
It, and that calms down. The big thing is confidence,
isn't it? And that seems to be there right now.
Speaker 3 (04:27):
It really is, and I don't believe it's misplaced in
any in any way if you look at important considerations.
I think I think we often overlook we talked about
farmer confidence driving things, but really financial things drive things.
And the interest rates farmers and grass are enjoying today
(04:49):
competed at the same time last year, particularly from a
partial farming context, is for those with a decent mortgage,
it's equivalent the savings this year compared at the same
time last year, equivalent entire fertilizable. Wow. And so you
know you're talking significant shifts and interest rates in the
period of twelve months. And then obviously no announcements of
(05:11):
the last week around the two and a half percent
just further solidifies that view. And obviously there may be
a bit more of a haircut to come after that,
but there's no question you've got to go back to
August twenty two to see a two and a half
percent rate. So these are and if you have a
look at that the settings and support of farming, you've
got an exchange rate. Because of the economy is battling
(05:33):
a bit, the exchange rates not exactly favorable, but it's
very favorable from the exporter point of view, so there's
some significant advantage there as well. So you know, in combination,
you've got two very strong things, and then you've also
had a bit of moderating in this. You know, the
environmental settings. I believe the compliance and the investment gone
into properties of the last decade have been massive. However,
(05:58):
the perception around farming and how its and the environmental settings,
I think there's just been a bit of moderating on
how that's actually implemented because we had some quite obscure
settings which where you had a dairy support being viewed
as more intensive than a dairy farm. And I think
a lot of that has been moderated now and I
think that's helped too, because all of a sudden, now
(06:19):
you've got a much broad range of properties to sell
on what I think are long term sustainable on a
long term sustainable production basis.
Speaker 2 (06:28):
Yeah, and it is intriguing to see that the diverse
nature of the farming well, the types of property that
are continuing to sell. It's across the board.
Speaker 3 (06:36):
Yeah, absolutely, Dairy is starting to lead that obviously in
terms of across the board, and I think not before time,
because when you look at during this actually if you
go back ten years, we're not producing a kilogram more
milk solids than we were ten years ago, and there
are fewer dairy farms. There's been a lot of de
(06:57):
conversion of farms over that time, and yet it's contributions
to new general exports sitting about twenty nine billion forecast
for US during just gone off the MPI situation Outlock report,
if you relied on that, we're actually over that ten years,
which two times the level of exports from the largest
export producer in the country. So yet the valuations of
(07:19):
those dairy farms over the last ten years haven't really
gone anywhere in any substantive level. So I think the
kind of demand was seeing for dairy and sent some
of the prices that are firming very much in line
with what the returns are. It's very in line with
what the long term projections look like, and it's probably
a little bit overdue because they've probably been artificially suppressed
(07:40):
for some of those reasons I spoke about previously.
Speaker 2 (07:43):
Oh absolutely, And now let's look conrad at the BUI
versell perspectives. What are the mindsets of buyers.
Speaker 3 (07:51):
Well, I think from a BASS perspective, they're looking at
it from the next five to ten years, so they're
looking at this asset and I think that's important obviously
from a sellers perpective that they're they're looking at it
in terms of the here and now, so by then
looking at how does it fit strategically, they're not looking
to lose the lessons of the last ten years. I
(08:13):
don't believe buyers are out there to pay money that
can't be paid back, because I think they've had the
benefit of just how challenging that is if you forward
price it too far out into the future. But I
think also they're recognizing that you've got to have your
business is either growing or it's going backwards. There isn't
really anything in the middle and so and I think
(08:35):
there's general recognition now that actually the settings are strategically
long term favorable and not to operate at the moment.
It's like, you mean, it's probably going to be more
expensive this time next year.
Speaker 2 (08:47):
Absolutely? And what about on the flip side of the sellers,
I think.
Speaker 3 (08:52):
The big question always is how good is good? And
often they think about, well, maybe one more year, which
is a little bit like the warriors. The what I
would say is how good's good? Well in terms of
all the opportunities for a ventor, and feel confident that
the market is at a good place and that I'm
(09:13):
optimizing the value. It is hard to imagine many more
stars lining up for that to happen. So then obviously
people are looking at maximize their income, but they get
the opportunity to do that this season and benefit from
I'm thinking the dairy side particularly benefit from Fonterra capital payments,
et cetera. However, you know, whenever you start going out
(09:35):
to twenty six twenty seven settlements, you know during twenty
seven settlement there's a lot that's going to happen between
now and then. There's going to be an election, there's
a whole bunch of other things around the market uncertain
and what have you. And I think from a sellers perspective,
their timeframe is a lot shorter. So if you're a
buyer and you maybe overpay a little, you've got you've
got the future to sort that out and to win
(09:57):
it back. If you're selling and you you don't get
quite get the timing right, it can be it can
be quite a correction. And so taking the win while
it's there is important, And I think from the byers
point of view, getting on the Royal pupy Ladder is
also important.
Speaker 2 (10:11):
Sure, And what about the long term outlook? What is
the land or the horizon? A head for investors.
Speaker 3 (10:19):
I think land has always been a very good asset
on long term and if you have a look at
sheet and beef over the last fifteen years, those you've
gone from a medium price for let's say two hundred
hectier plus health country that's gone from about six and
(10:40):
a half thousand hectai to about twelve and a half
thousand hectare over that period. And it's had and amongst
all that, that's had some extra stimulation from the likes
of some of those forestry settings, which is all washed
through now though I know people will want it a
bit hard to believe, but it really has. And so
what we're seeing now, even over that period of time,
(11:00):
we have seen a long term strong values. The dairy side,
I think has been sort of artificially suppressed with a
lot of challenges to farming practices, environmental settings, et cetera,
et cetera. Those things have I think largely worked themselves through.
I think there's really good science now that supports farming practices,
(11:21):
and I think farmers themselves have invested billions of dollars
nationally over the those ten years to actually meet those requirements.
So what I think now the stage is set for
a much more confident for you. I think the other
factor in here thinking long term is Fonterra is a
really good heart, and I think Miles Hrrell on the
Fonterier team should be congratulated on an excellent job. If
(11:44):
you compare that we it might have been in twenty
nineteen from a balance sheet point of view to where
it is today. The strength and its underlying earnings is
exceptionally strong. And that's a look very straight into a
provincial New Zealand as well, because it puts billions of
dollars back into print your economies. So I think that
all those things are very real and they're not going away.
(12:06):
And I suppose it's always sounds a little bit apple
pilot's statement, but it's eighty percent plus in New Zealand's experts. Strategically,
we kind of need it to actually go away out
of the kind of pickle we find a thousand with
the GDP and the settings not being where they need
to be. We need we need strong farming sectors. So
sure need your investment.
Speaker 2 (12:27):
Yeah, yeah, absolutely. And those wanting to exit the market,
Conrad is now the right time, say they're looking the
next two or three years, is this the best time
for them to be looking at that aspect?
Speaker 3 (12:39):
Well, certainly if you were to go back the last
ten years. It really does depend where you're sitting in,
what industry you're and so I put the cavet out there.
Everything's down to individual circumstances. But if you're looking to
sell into a market where the banks and credit appetite,
and I think that's the other thing. It's not only
the interest rates, but it's the fact that there is
(12:59):
a real banking appetite to see in advanced new capital
to farming, because you know, the balance sheets are well
structured now. So I think selling into a strong market
where there are there's the bank appetite to see the
sect to grow, and the interest rate terms are affordable,
and the commodity cycle is strong, and the commodity cycle
(13:23):
is strong across many of the kerry fruit sheet and
beef probably not arable so much, but there's ultimate land
news for arable farm systems and daring. If you have
a look at all those in combinations, you'd have to say, yes,
now is a good time. And I think from a
family succession point of view, as the person who's going
to take the business forward is making those decisions. I'd
(13:45):
encourage them to make those decisions sooner, not kick the
can down the road another three or four years, because
it's just hard to see how that country is not
going to be more expensive in three to four years time.
So there's a lot of overdue catch up.
Speaker 2 (13:57):
Yeah, and we're focused on quite a bit on dairy
in this so far, Conrad. But it's it's so encouraging
to see sheep and beef prices staying strong as well.
Speaker 3 (14:09):
And I wouldn't wander and they simate of twelve billion
dollar industry our our sheep be sectors being brilliant. That's
had a really good run. Of course, you know, we
and some of that was off ultimate land use options,
which was very challenging for the sector to work through that.
I think sheep and beef went through a reset in
(14:31):
pricing the last couple of seasons, and largely Gabriel, particularly
on the East Coast, had a big impact in terms
of impact on farm systems and having to absorb farms,
having to really dig deep and actually, you know, look
at Klomba's defencing and how they've worked help recover their
pastures so that that hasn't been easy. And then you
(14:53):
also through that whole period too, you know, you've had
the forestry thing work itself, had forestry's license to operate
has changed significantly. Forestry, I would say, has historically had
quite a symbiotic relationship with help country, but it's been
out of kilter. And I think the out of kilter
that is that everything else was regulated, but the forestry,
(15:17):
to a last degree and has a particularly parted the
tree conversion was very much unregulated, and that's moving now
from unregulated to regulate it. So what that means is
that you're just not seeing the same supply availability of
that land, and so you've also also hadn't got the
buyers the operating because of the regulation. So lots sum
(15:41):
it up, you can now buy a sheep and beef
farm for what the farm can actually produce. From a
sheep and beef point of view, it's actually allowing a
lot more farmers back at the table because the farmers
historically were often the underbidder and that was very frustrating
for the market. So I think farmers themselves and the
forested themselves still operate, but at different levels. So we
(16:02):
still were going to see forestry in the market, but
it's going to be at much produced levels and that's
healthy for the market anyway. So long story short, sheep
beef farmers are actively looking at the future for good reason.
You know, this time last year, there might have been
budgeting six dollars fifty schedule and we've got current schedules
(16:23):
ten dollars plus. Not that anybody need should be budgeting
at that level, but they said would be budgeting at
six dollars anymore. And that's that's having a huge impact.
And you know, truck and trailer unit loads of cattle
going out and yeah, sort of one hundred thousand dollars
on the track. So it's not hard to see how
sentiment for shep beef farmers is going to improve. But yes,
the one last thing on that though, is they're coming
(16:46):
off a tough couple of years, and so I think
when you look at sheep beef farmers, they've had to
absorb high intrast rates and it hasn't been that easy
commodity cycle wise, and then they've had the benefit of
the district recovery, but there's still quite a bit of
catch up to do. Caple fertilized that might have been deferred,
so they're unlike the dairy job it's had two or
(17:08):
three good years on the trot. This is quite a
different situation. And I think the sheep and beef outlook
will continue to improve and I think and then the
balance sheets of farmers, sheep beef farmers will reflect that
improvement over the next couple of years.
Speaker 2 (17:22):
It's just so heartwarming, as you say, Conrad, after all
of all of the trials and tribulations and in all
of the rural sector has that but to see that
bouncing back and just the I can't even describe the
positivity that we're really feeling around the sector at the moment.
Speaker 3 (17:36):
Yeah, well, I couldn't agree more. I chair a charitable
trust for smed Least Station and Hawks Bay. It's based
in taking Keno and it takes about fitting young people. Yeah,
and we've you know, we've seen you unprecedent levels of
applications coming forward and it's in the next generation. Are
(17:57):
definitely saying this notion that there's anybody out there to
take things forward. I think there is actually a lot
of good young people saying it's the shep and beef
sector up talking about here seeing big opportunities in that sector.
And if you look at the tech that's coming alongside
the sheep and beef sector and the need to adapt
and evolves somewhere thinking around how we use tech on farms,
(18:18):
we've never been better placed.
Speaker 2 (18:19):
Well, it's been insightful, Conrad. But I guess the key
takeaway is get on the ladder or miss out, isn't
it at the moment?
Speaker 3 (18:26):
Well, and certainly I don't think holding out a year
or two is going to for those who've got them
who want to get ahead, is going to help you much.
What I've seen is those that get on the property
ladder will stand a benefit from the current outlot and
it's better to be involved other than the outside looking at.
Speaker 2 (18:44):
Good on you wise advice. Hey, Conrad, it's been a
pleasure to chat with you today. Thank you for your time.
Speaker 3 (18:49):
Oisy's good to talk.
Speaker 2 (18:51):
That is Conrad wilksh Rural General Manager at Property Brokers.
If you're wanting further information, visit property Brokers dot co
dot nz, Forward slash land, Monstyle
Speaker 1 (19:01):
Land and lifestyle market insights on the country with Property
Brokers
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