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Buying a Farm or Rural Business
LINK Rural was formed to address the need of rural business owners to have a better quality of agency conducting the sales process.
We believe that by presenting the business in a full and professional manner value will be optimised to both parties. Our brokers are both farmers and business professionals, bringing expertise, trust and understanding of stakeholder interests to create a win-win result.
A report commissioned by ANZ bank entitled “Greener Pastures” details the staggering potential for New Zealand food producers exporting to growing economies. New Zealand stands to earn an extra $300 billion to $1.3 trillion between now and 2050 by doubling the real value of agricultural exports.
The report said New Zealand was well positioned in terms of proximity, resources and skills to take advantage of new-found wealth in the developing world. Population growth combined with increasing affluence in developing countries will see world demand for agricultural output to rise by at least 60 per cent by 2050. The burgeoning middle class in China and other developing Asian countries are hungry for higher-calorie diets rich in protein; New Zealand’s biggest export.
The biggest challenge is meeting this demand is the huge shortfall in capital that currently exists. The nation’s farmers will need up to an additional $210 billion between now and 2050 for intensification, and a further $130 billion to purchase properties that enter the market as older farmers exit the sector. Traditional sources of funding - debt and retained earnings - would not be enough to bridge the gap.
New Zealand is the largest dairy exporter in the world, servicing approximately 45% of the internationally traded market. This country’s milk production and manufactured exports are forecast to steadily increase by around 3% per annum. Strong demand from emerging economies such as India and China are expected to be sufficient to ensure international dairy prices remain significantly higher than pre 2006 levels and underpin the market demand for NZ products into the medium term.NZ herd sizes will continue their trend to get larger as a result of increased profits from utilising technologies and economies of scale.
Dairy Farm Land Values
New Zealand dairying is unique with its pastoral base, its vertically integrated and its cooperative industry structure. Dairy Farm Land has averaged 8.5% annual growth in value over the last 30 years and of 8.6% growth over 60 years. –see Green Bar in below table. Historically, the industry has been strong on innovation, R & D, competition and extension services under the NZ Dairy Boards guidance. With the formation of Fonterra, an industry levy was put in place to fund further programs and practices that would continue to generate productivity gains and competitive advantage for NZ dairy farmers.
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