Gypsy Day deals hit $600m as land values hold

COLLETTE DEVLIN
Last updated 05:00 31/05/2014

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Baby boomers cashing out and a demand for run-off blocks has pushed Gypsy Day transactions to $600 million.

Agri-insiders say during the past 12 months more money changed hands, pushing transactions back towards the $1 billion mark they hit in 2008.

This year, the number of dairy farms listed late in the season increased the supply of dairy farms on the market.

Land values held up because demand was strong on the back of a good season. The record milk payout continues to drive a positive outlook for dairy.

A big trend this year was demand for run-off blocks and the sale of smaller farms to buy larger properties.

Southern Wide Real Estate director Brett Lucas said in the past 12 months his firm dealt with 40 dairy farm transactions, valued at about $260m.

This year there was also an increase in the number of farms being sold to equity syndicates.

ASB Lower South Island regional rural Manager Blair Evans said the rise in equity syndicates was not surprising, given the total capital required to purchase farms.

A farm of 230ha and milking 700 cows, could have more than $14m tied up in the business, he said.

His Southland team had been working closely with customers, solicitors and accountants in preparation for the busy farm settlement period.

They had been involved with about $200m in transactions.

ANZ Gypsy Day payments were spread from April until July.

Regional manager Grant Dermody said its 21 transactions, valued at $210m, were double on last year.

With farmers using surplus cash to pay down debt, some banks are reporting record lows on overdrafts.

Westpac agribusiness area manager Pete Moynihan said: "The credit balance is the highest it has been".

BNZ agribusiness head John Janssen said while the focus on May 31 was not what it once was because of mid-year settlements, it was still a key date on the agri-calendar.

He expected its lending book to increase modestly on the back of supporting existing as well as new clients into new opportunities.

This year also had more changes in farm structures, with family members buying out older generations.

AWS Legal rural team partner Toni Green said her firm had dealt with more than $300m in transactions, which included changes of ownership within family farms and restructuring.

"We have had people here at all hours; it's been pretty intense."

Agribusiness firms have reported dealing with more succession planning than ever before.

Accountancy consultants Harrex Group director Brendon Harrex said baby boomers were at an age where they wanted to exit the business.

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He believed that people were moving further away from big centres, where they could buy bigger farms for less.

There had been higher demand for dairy farms in Central and Western Southland. Those outlying regions would greatly benefit, he said.

The leadup to Gypsy Day had also led to more transactions in other sectors, such as transport, services, engineering and contracting, which all hung off the dairy sector, he said.

MyFarm director Andrew Watters said there had been an active property market this year, which was up on the past five years. More people were looking for farms in Western Southland, where their dollar would stretch further, he said.

Crowe Horwath Southland managing principal Neil McAra said financial gains would depend on what tax year the deals were settled, which would mean some farmers would not deliver the income for another 12 months.

Traditionally, June 1 marks the start of the new dairy season when dairy farms are bought and sold, sharemilking and contracts are signed and farms are restructured.

- The Southland Times

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