A rebound in the rural sector has seen stronger returns and bigger payouts for our farmers and growers. Its great news after several tough years. As confidence in the sector grows, so too does the interest in the rural property market. So, is it a good time to buy a farm? What operations are generating the most interest?
Joining the conversation to answer these questions and more is PGG Wrightson's General Manager for Real Estate and Livestock, Peter Newbold.
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Episode Transcript
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(00:10):
You're listening to Blue Shift Diary PGG Wrightson podcast
where we talk about the issues important to our farmers,
growers and rural communities. I'm your host and technical team
manager, Milton Monroe. A rebound in the rural sector
has seen stronger returns and bigger payouts for our farmers
and growers. It's a big relief after several
tough years. And as confidence in the market
(00:33):
seek to grows, so too does interest in the rural property
market. What's behind this growth and
what sectors are people most interested in?
So joining the conversation as Peter G Wrightson, general
manager for real estate and livestock.
Peter Newbold, welcome to the show.
Pete, thanks, Milton. We're gonna talk real estate
today and, and talking to some of the real estate agents,
(00:53):
they've said this is the best time to buy our first farm and,
and as long as they can remember.
Is that true? And and why is that?
Look, definitely it's a good time to purchase farms at the
moment. I think you've got to go back,
you know, a few years. We've come off some pretty lean
times as far as property sales go.
(01:15):
So we're coming out of that. We're on the on the better side
of the cycle. So definitely Tom cells have
increased dramatically these bigopportunities there and the
values are still what I would call pretty reasonable other
than you could probably put a little bit of a slightly
different stance in respect to dairy.
(01:37):
But definitely values are being maintained and there are
opportunities out there. So is it booming?
No, but it's very positive. And I think that's the way we
want to see it where you've justgot steady growth and I think
we're at the start of that cycleagain.
So you'd like to think we've probably got two or three years
of of good trading. Ohh, very good.
(02:01):
Well, that's actually, it's great to hear a little bit of
positivity in and around that real estate market.
So there's been a it's been a tough few years.
Ohh, look, definitely. And you know, see Johnny, I have
to go back a couple. But if you look at it now, I
think the the the good thing is,is that it's benefiting all of
rural New Zealand, you know, I guess all those farm gate prices
(02:22):
and values that are being achieved at the moment, philtres
down to all of provincial New Zealand and then the wider New
Zealand. But from a a property sales
perspective, you know, you sell a farm, you've got new people
coming into communities, you've got them going out of
communities and these sort of all sorts of other benefits that
come from it. So we're seeing probably the key
(02:46):
things that are happening at themoment is we're seeing a lot of
property sales going to neighbors or those that are
within the facility of. So that's probably the first key
piece. We've talked about succession
for a number of years and I think it's now a reality.
So we're seeing a lot of that starting to take place.
(03:09):
And I think this current Fonterra payment that they're
going to receive will only enhance that, that that
succession piece along with I guess stimulating others to, to
acquire an aid to. And I think that's the other
thing, Milton, is that there's, I think overtime we're going to
see farming operations get larger and larger.
(03:32):
Yeah, it's definitely a trend that is that is happening out
there and picking up on your piece, you know, a lot of
neighbors looking at picking up farms close to them and a lot of
them are actually using it to get a little bit bigger, sort of
get a wee bit of that scale kinds of properties are buyers
looking for at the moment. Are we seeing growth?
You've already mentioned, you know, dairy's probably a little
(03:53):
bit more robust than everything else, but we're still seeing the
the same sort of, you know, optimism in the sheep and beef
market and the horticulture market.
Yeah, if you go dairy first, definitely there's we probably
don't have enough stock to meet the demand.
I think that's pretty clear at the moment.
(04:16):
And I guess there's a we're seeing probably existing dairy
farmers and new entrants to the market taking place there.
So look, I don't think that's gonna change anytime soon.
If you go to other sectors, probably sheep and beef has been
slower to get out of the gates, if you know what I mean.
(04:37):
And we're only just starting to see momentum there.
Again, probably what has hindered that a little bit is
there's still a lot of vendors out there still thinking that
the forestry influences still taking, still taking place and
it's not. So the values are definitely
(05:00):
list, but as I've said to a number of people is that if you
look at the value of your stock now and you combine that with
your value of your property, you're probably pretty close to
those, those forestry, you know,highlights that took place a
couple of years ago. So we're just starting to see
sheep and beef move and my feeling is we're going to see
(05:24):
more activity in this autumn. So that's the pleasing thing.
The good thing about sheep and beef is, of course, you know,
you look at stock values and what they're, what they're
achieving at the moment, that's really put them back on track.
The other thing that's probably come into play a little bit and
(05:45):
you can understand it is that because of the returns they're
getting at the moment, they're sitting back and saying, well,
let's carry on for another year.And look, that's a natural thing
to take place. But the reality is, and it's not
me putting a sales head on, but you know, when the market's
strong, it's probably the best time to sell because as we all
(06:09):
know, things change pretty quickly.
They they certainly do. And you look, we're in a
commodity industry. There's there's ups and downs
and when things start to go down, yeah, everything sort of
rides on that one. What about a tick there?
Are we seeing that same sort of growth of of farm sales across
the horticulture industry? Interesting the yes, yes, as the
(06:31):
as the is the answer there. But there's been a big lull and
you know, we've been very much the forefront in this in the
Kiwi fruit side and we're just starting to see now blocks
starting to sell or orchards. And so I think that will
(06:52):
continue. And if you look at Zespri and
their outlook looks incredibly positive.
So yes, there that's we're starting to see some momentum
there and that industry start tomove off.
And recently, you know, we saw aquality orchard, you know,
transact at 1.8 million per canopy hectare.
Now I know that's a little bit of an outlier because it was an
(07:15):
exceptional property, but that tells you and gives you
confidence that that sector is moving.
Otherwise, if you take general horticulture, um, I would say
it's just been steady. So looking ahead, if I look out
over the next 12 to 18 months, Ithink we'll see upside and, and
(07:37):
definitely in Kiwi fruit and I think probably see more
stability in those other horde sectors.
That's my feeling. But you know what it's like in
real estate and and that things can change and but that would be
my feel at the moment. Are we seeing it kind of uniform
across the country or have we got any regions that are that
(07:59):
are sort of hotspots of activityat the moment?
If you look at dairy, you'd haveto say there's been a lot of
activity in that wider Canterbury area and a lot of
that is, you know, there's some of that's been supplied and then
the rest of the strong, you know, dairy areas, you know,
your white cados, for example, there's been good activity
(08:20):
there. But definitely you'd have to say
Canterbury is has been very strong in that place.
If I go to sheep and beef often think, you know, markets sort of
start on the South from a positive perspective and head
north. And so we've seen more activity
in the Otago's in the Southland,you know, I call it heartland.
(08:43):
The other area that has been is that sort of traditional King
Country area. But really if you had to single
two areas probably at the momentis, is that Southland, Otago and
I think that's just gonna slowlymove up the country.
If you then look at say support blocks and the like, that's
(09:04):
probably general right across the country.
I would suggest as we know horticulture, there's certain
key areas where business transact.
I guess if you look at an area, any specific areas that have
been challenged, I think Northlands had a pretty tough
(09:26):
time with weather, different weather events and their market
has been very up and down. You know, one month lot of
activity and then it's quiet fora couple of months.
And then the other area that's probably being is still, I think
finding its feet is probably that East Coast, but you're
seeing steps now we're it's starting to improve moving
(09:48):
forward. So, yeah, I think All in all,
um, right through the, the country we're starting to see
improvement, but there's certainareas that I guess I put it take
a lead. South of the target.
Always take the lead in most things, Peter, you know that.
Well, I've got a great football team, haven't they?
The Highlanders. You had to go there.
(10:11):
Well, actually it's not too bad of a year this year.
I have to say. I we've already talked, you've
already mentioned a little bit around succession.
We're actually starting to see just the way the market set up
at the moment and the potential around the payout from from
volunteer is allowing for for succession to to actually occur.
I'm still an affordable investment investment for for
(10:32):
the first time farmer. Ohh, it's it, it is still tough.
I don't, I don't think whicheverway you cut it, it's tough for a
young person to get into a farm.I think the reality is they
either have to start, you know, in, in some sort of equity
management role or in theory or start as a shemale or whatever.
Getting them to sheep and beef again, you need a level of
(10:55):
capacity or stock numbers. I think you need some level of
support to start out, to be brutally honest.
But I think if you go back to that succession piece, the
amount of farmers, ohh, farming entities that, um, need to move
(11:15):
on succession is huge numbers. We're talking billions of
dollars will transact over the next decade as a lot of the
farmers move on and pass it to their children or actually sell
up. A lot of them can't pass it on
because they're just not give economic units to do that.
But definitely there's a, there's a window now where we
(11:36):
will see a lot of activity take place.
And as you know, farming is a physical, physical occupation.
And a lot of them are in that bracket, you know, late 50s,
early 60s. And it's time to, you know, have
a change in direction. So yeah, to answer your
(11:58):
question, yes, I think the next 5 to 10 years, we're gonna see a
lot of change. But I think the thing that is
going to come into play is around that whole, you're going
to see a lot more farming entities, as I call them, get
larger and larger. I think that's pretty clear
where it's heading. No, they're definitely seems to
(12:21):
be the the case of things. Peter, hey look, thank you very
much for your time. Been great to get an update from
you and great to see you some growing positivity.
Out there and. The and the rural real estate
market. Yeah, no thanks, Maldon.
And it is, it is pretty pleasing.
As you know, you go into enter into the provincial New Zealand
today and a lot of people got smiles on their faces and those
(12:43):
small towns are prospering. So it's it's a wonderful space
to be in. Thanks for your time mate.
Thank you for joining the conversation at Blue Shield
Diary. For sure you don't miss a thing
by following our podcast. You'll be glad you did.
You're listening to Blue Shift Diary PGG Wrightson podcast
where we talk about the issues important to our farmers,
growers and rural communities. I'm your host and technical team
manager, Milton Monroe. A rebound in the rural sector
has seen stronger returns and bigger payouts for our farmers
and growers. It's a big relief after several
tough years. And as confidence in the market
(00:33):
seek to grows, so too does interest in the rural property
market. What's behind this growth and
what sectors are people most interested in?
So joining the conversation as Peter G Wrightson, general
manager for real estate and livestock.
Peter Newbold, welcome to the show.
Pete, thanks, Milton. We're gonna talk real estate
today and, and talking to some of the real estate agents,
(00:53):
they've said this is the best time to buy our first farm and,
and as long as they can remember.
Is that true? And and why is that?
Look, definitely it's a good time to purchase farms at the
moment. I think you've got to go back,
you know, a few years. We've come off some pretty lean
times as far as property sales go.
(01:15):
So we're coming out of that. We're on the on the better side
of the cycle. So definitely Tom cells have
increased dramatically these bigopportunities there and the
values are still what I would call pretty reasonable other
than you could probably put a little bit of a slightly
different stance in respect to dairy.
(01:37):
But definitely values are being maintained and there are
opportunities out there. So is it booming?
No, but it's very positive. And I think that's the way we
want to see it where you've justgot steady growth and I think
we're at the start of that cycleagain.
So you'd like to think we've probably got two or three years
of of good trading. Ohh, very good.
(02:01):
Well, that's actually, it's great to hear a little bit of
positivity in and around that real estate market.
So there's been a it's been a tough few years.
Ohh, look, definitely. And you know, see Johnny, I have
to go back a couple. But if you look at it now, I
think the the the good thing is,is that it's benefiting all of
rural New Zealand, you know, I guess all those farm gate prices
(02:22):
and values that are being achieved at the moment, philtres
down to all of provincial New Zealand and then the wider New
Zealand. But from a a property sales
perspective, you know, you sell a farm, you've got new people
coming into communities, you've got them going out of
communities and these sort of all sorts of other benefits that
come from it. So we're seeing probably the key
(02:46):
things that are happening at themoment is we're seeing a lot of
property sales going to neighbors or those that are
within the facility of. So that's probably the first key
piece. We've talked about succession
for a number of years and I think it's now a reality.
So we're seeing a lot of that starting to take place.
(03:09):
And I think this current Fonterra payment that they're
going to receive will only enhance that, that that
succession piece along with I guess stimulating others to, to
acquire an aid to. And I think that's the other
thing, Milton, is that there's, I think overtime we're going to
see farming operations get larger and larger.
(03:32):
Yeah, it's definitely a trend that is that is happening out
there and picking up on your piece, you know, a lot of
neighbors looking at picking up farms close to them and a lot of
them are actually using it to get a little bit bigger, sort of
get a wee bit of that scale kinds of properties are buyers
looking for at the moment. Are we seeing growth?
You've already mentioned, you know, dairy's probably a little
(03:53):
bit more robust than everything else, but we're still seeing the
the same sort of, you know, optimism in the sheep and beef
market and the horticulture market.
Yeah, if you go dairy first, definitely there's we probably
don't have enough stock to meet the demand.
I think that's pretty clear at the moment.
(04:16):
And I guess there's a we're seeing probably existing dairy
farmers and new entrants to the market taking place there.
So look, I don't think that's gonna change anytime soon.
If you go to other sectors, probably sheep and beef has been
slower to get out of the gates, if you know what I mean.
(04:37):
And we're only just starting to see momentum there.
Again, probably what has hindered that a little bit is
there's still a lot of vendors out there still thinking that
the forestry influences still taking, still taking place and
it's not. So the values are definitely
(05:00):
list, but as I've said to a number of people is that if you
look at the value of your stock now and you combine that with
your value of your property, you're probably pretty close to
those, those forestry, you know,highlights that took place a
couple of years ago. So we're just starting to see
sheep and beef move and my feeling is we're going to see
(05:24):
more activity in this autumn. So that's the pleasing thing.
The good thing about sheep and beef is, of course, you know,
you look at stock values and what they're, what they're
achieving at the moment, that's really put them back on track.
The other thing that's probably come into play a little bit and
(05:45):
you can understand it is that because of the returns they're
getting at the moment, they're sitting back and saying, well,
let's carry on for another year.And look, that's a natural thing
to take place. But the reality is, and it's not
me putting a sales head on, but you know, when the market's
strong, it's probably the best time to sell because as we all
(06:09):
know, things change pretty quickly.
They they certainly do. And you look, we're in a
commodity industry. There's there's ups and downs
and when things start to go down, yeah, everything sort of
rides on that one. What about a tick there?
Are we seeing that same sort of growth of of farm sales across
the horticulture industry? Interesting the yes, yes, as the
(06:31):
as the is the answer there. But there's been a big lull and
you know, we've been very much the forefront in this in the
Kiwi fruit side and we're just starting to see now blocks
starting to sell or orchards. And so I think that will
(06:52):
continue. And if you look at Zespri and
their outlook looks incredibly positive.
So yes, there that's we're starting to see some momentum
there and that industry start tomove off.
And recently, you know, we saw aquality orchard, you know,
transact at 1.8 million per canopy hectare.
Now I know that's a little bit of an outlier because it was an
(07:15):
exceptional property, but that tells you and gives you
confidence that that sector is moving.
Otherwise, if you take general horticulture, um, I would say
it's just been steady. So looking ahead, if I look out
over the next 12 to 18 months, Ithink we'll see upside and, and
(07:37):
definitely in Kiwi fruit and I think probably see more
stability in those other horde sectors.
That's my feeling. But you know what it's like in
real estate and and that things can change and but that would be
my feel at the moment. Are we seeing it kind of uniform
across the country or have we got any regions that are that
(07:59):
are sort of hotspots of activityat the moment?
If you look at dairy, you'd haveto say there's been a lot of
activity in that wider Canterbury area and a lot of
that is, you know, there's some of that's been supplied and then
the rest of the strong, you know, dairy areas, you know,
your white cados, for example, there's been good activity
(08:20):
there. But definitely you'd have to say
Canterbury is has been very strong in that place.
If I go to sheep and beef often think, you know, markets sort of
start on the South from a positive perspective and head
north. And so we've seen more activity
in the Otago's in the Southland,you know, I call it heartland.
(08:43):
The other area that has been is that sort of traditional King
Country area. But really if you had to single
two areas probably at the momentis, is that Southland, Otago and
I think that's just gonna slowlymove up the country.
If you then look at say support blocks and the like, that's
(09:04):
probably general right across the country.
I would suggest as we know horticulture, there's certain
key areas where business transact.
I guess if you look at an area, any specific areas that have
been challenged, I think Northlands had a pretty tough
(09:26):
time with weather, different weather events and their market
has been very up and down. You know, one month lot of
activity and then it's quiet fora couple of months.
And then the other area that's probably being is still, I think
finding its feet is probably that East Coast, but you're
seeing steps now we're it's starting to improve moving
(09:48):
forward. So, yeah, I think All in all,
um, right through the, the country we're starting to see
improvement, but there's certainareas that I guess I put it take
a lead. South of the target.
Always take the lead in most things, Peter, you know that.
Well, I've got a great football team, haven't they?
The Highlanders. You had to go there.
(10:11):
Well, actually it's not too bad of a year this year.
I have to say. I we've already talked, you've
already mentioned a little bit around succession.
We're actually starting to see just the way the market set up
at the moment and the potential around the payout from from
volunteer is allowing for for succession to to actually occur.
I'm still an affordable investment investment for for
(10:32):
the first time farmer. Ohh, it's it, it is still tough.
I don't, I don't think whicheverway you cut it, it's tough for a
young person to get into a farm.I think the reality is they
either have to start, you know, in, in some sort of equity
management role or in theory or start as a shemale or whatever.
Getting them to sheep and beef again, you need a level of
(10:55):
capacity or stock numbers. I think you need some level of
support to start out, to be brutally honest.
But I think if you go back to that succession piece, the
amount of farmers, ohh, farming entities that, um, need to move
(11:15):
on succession is huge numbers. We're talking billions of
dollars will transact over the next decade as a lot of the
farmers move on and pass it to their children or actually sell
up. A lot of them can't pass it on
because they're just not give economic units to do that.
But definitely there's a, there's a window now where we
(11:36):
will see a lot of activity take place.
And as you know, farming is a physical, physical occupation.
And a lot of them are in that bracket, you know, late 50s,
early 60s. And it's time to, you know, have
a change in direction. So yeah, to answer your
(11:58):
question, yes, I think the next 5 to 10 years, we're gonna see a
lot of change. But I think the thing that is
going to come into play is around that whole, you're going
to see a lot more farming entities, as I call them, get
larger and larger. I think that's pretty clear
where it's heading. No, they're definitely seems to
(12:21):
be the the case of things. Peter, hey look, thank you very
much for your time. Been great to get an update from
you and great to see you some growing positivity.
Out there and. The and the rural real estate
market. Yeah, no thanks, Maldon.
And it is, it is pretty pleasing.
As you know, you go into enter into the provincial New Zealand
today and a lot of people got smiles on their faces and those
(12:43):
small towns are prospering. So it's it's a wonderful space
to be in. Thanks for your time mate.
Thank you for joining the conversation at Blue Shield
Diary. For sure you don't miss a thing
by following our podcast. You'll be glad you did.
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