7 June 2002

Young Britons can see upside Down Under

With its subsidy-free

agriculture and relaxed

lifestyle, New Zealand is

luring a growing number

of UK farmers to the

southern hemisphere.

FWs Kiwi correspondent

Hugh Stringleman reports

OVER the past five years about 25,000 acres of farmland/year has been approved for foreign purchase by the New Zealand governments overseas investment commission and much of the demand has been from Britain.

"Discontent with the farming scene in the UK is causing many would-be emigrants to consider New Zealand," says Kim Shannon, international sales development manager at Hamilton-based agent Wrightson Real Estate.

"The majority are looking to relocate and become owner-operators, especially the younger farmers who may also be bringing retired parents. These folk want 5000+ stock units (1 SU = 0.8 breeding cows or 1 breeding ewe), which is a big expansion on numbers from their UK experience," reckons Mr Shannon.

Will Naylor, of FPDSavills Banbury office, has also noticed a trend. "In the past 18 months I have sold three farms for people heading to NZ. These are good farmers free of debt, not those that are struggling. I think they are frustrated with the amount of paperwork and lack of government support here."

The most popular NZ farm types for UK immigrants are dairy and beef operations, with some interest in arable farms also. When contemplating such an upheaval, and with the currency exchange working in their favour, UK farmers often seek prime locations in coastal regions, with river frontages, native bush or farm forestry blocks.

At the same time good prices for farm products have driven farmland values higher and dairy land in particular is fetching record prices. One medium-sized property in Waikato, central North Island, recently sold for NZ$3.1m (£1m) – a 20% premium over the usual milk solid productivity indicators and previous land values achieved in the region.

Kiwi dairy farmers are not paid per litre of milk delivered, but on a milk solids equivalent basis, around 7-8% of total weight. As a result farms tend to be valued on productivity rather than area, and are currently selling in the range of NZ$17-25/kg (5.60-8.30) of production capacity.

This season the giant NZ dairy co-operative Fonterra is paying NZ$5/kg (£1.55/kg) for milk solids. But it has reduced the 2002-2003 season milk solids payout forecast to NZ$4/kg (£1.33/kg), because of depressed international dairy commodity prices, caused partly by increased subsidies paid to their own dairy industries by European countries and the United States.

Farm consultants and valuers expect a small correction in dairy land prices, but point out that confidence in the dairy industrys export earning potential, farm aggregation and investor interest are three influences which will maintain land values.

As in Britain, it is not just farmers who are buoying land values. City-based investors are often attracted by the larger trophy holdings, especially those with aesthetic appeal and sufficient economy of scale to enable operation under management, says Mark Winter, managing director of agent Bayleys, in Waikato. &#42

Kiwi dairy farms tend to be on a much larger scale than in the UK

&#8226 Two-thirds of agriculture on North Island.

&#8226 14,000 dairy farms (average 230 cows).

&#8226 20,000 stock farms.

&#8226 1500 arable farms.