News of a review of New Zealand’s immigration policy has some in the primary sector a little nervous.
REINZ data released in January 2021 show that 1,462 farms were sold in the year to December 2020, 15.6% more than were sold in the year to December 2019, with 26.2% more Dairy farms, 9.6% less Grazing farms, 32.0% more Finishing farms and 23.8% less Arable farms sold over the same period.
The recently released Climate Change Commission Report highlighted that under current government policies, New Zealand will not achieve the Government’s target of being Zero Carbon by 2050.
The burgeoning wine industry in New Zealand attracts a lot of interest, with many people acquiring property either for serious production purposes or a combination of production and lifestyle.
Why go to auction? As one Hawke’s Bay vendor recently discovered, going to auction was exactly what was required to get the result they were looking for, and quickly.
Farmers receive a relatively small percentage of the consumer dollar paid for their products and are always on the lookout for ways to increase their margins.
An obvious way to achieve this is by increasing the size of the operation. Economies of scale are present in most types of farming, but higher total production does not always lead to greater margins. And for smaller producers who are producing a premium product, this may not be an option or even desirable.
Interest rates are at an all-time low but access to funding for rural property is becoming more difficult. The Reserve Bank’s proposal to increase capital requirements will reduce the banks’ ability to lend, at least until their reserves are built up, and could increase the cost of capital as the banks move to protect their margins.