Dairy farms hit record $3m mark

The median selling price for dairy farms has more than doubled in the past year, breaking through the $3 million mark for the first time, Real Estate Institute figures for last month show.

Institute vice-president Murray Cleland said the dramatic rise went hand and hand with the trend towards larger dairy farms.

"Whereas once a dairy farm would have 150 to 350 cows, we are seeing more and more with 1000."

It also showed there was still a high level of confidence in the sector.

"Existing operators are buying up more and more land," said Mr Cleland. "When the neighbour's property comes up for sale, farmers are going for it."

Last month's figures showed 38 dairy farms sold at a median price of $3.04 million - up from $2.1 million in October and $1.48 million in November last year.

With the median age of dairy farmers now over 50, the industry has identified the soaring cost of property as one of the barriers to the entry of new farmers.

A census released by DairyInsight and the Fonterra Shareholders Council last week highlighted the difficulties young farmers face in getting their own property through traditional means such as sharemilking. They are increasingly forced to set up equity partnerships to get their first farm.

The dairy industry has had a golden run this decade, with international milk powder prices reaching record highs twice in four years.

The strong prices have so far buffered farmers from the worst effects of the high New Zealand dollar.

Dairy co-operative Fonterra has warned that its present level of payouts will not be sustainable if the dollar remains high.

But despite that, Fonterra increased its 2005 payout forecast this month as international prices continued to rise.

The REINZ figures showed that price increases across all types of farms have been less dramatic but remain strong.

The median selling price across all types was $940,000 last month - up from $865,000 in October and $725,000 in November last year.

Dairy farm prices*

*Median selling price

Nov 2002 $1.55 million

Nov 2003 $1.48 million

Nov 2004 $3.04 million