Discontent is "smouldering" in some regions as good pastoral land is converted to forestry to make it more sellable under overseas investment rules, Real Estate Institute of NZ rural spokesman Brian Peacocke said.
Peacocke, in releasing data showing that its All Farm Price Index fell by 4 per cent in the three months to May, compared with the three months to April, said overseas investment rules and other factors such as tighter credit conditions were making their presence felt in the rural sector.
"On the rural front, discontent smoulders strongly in a number of regions, fanned particularly by the ongoing emergence of evidence of sales of good pastoral land to forestry interests, this activity being aided and abetted by the Overseas Investment Office providing an environment conducive to investment from off-shore interests," he said in a statement.
"This factor, coupled with the inexorable grind of the full range of compliance issues and an evident hardening of lending criteria from within the banking sector is adding to a mood of widespread concern and caution within the rural sector," he said.
"Product prices continue on a solid note, albeit volatility in prices being paid under the Global Dairy Trade auction system, plus the diminishing values of Fonterra shares, is causing farmers and financiers alike to gauge and re-assess budgets and equity situations within the dairy industry," Peacocke said.