Market forces and profitability accelerate farm succession in New Zealand

Official statistics place the median age of New Zealand farmers at 49.8 years. The figure differs substantially between sectors: dairy farmers have a median age of 41, while the median ages in sheep and beef farming are 55.8 and 62.2 years respectively.

Rabobank estimates that, during the coming ten years, more than half of New Zealand’s 17,320 farm and orchard owners will reach 65. It puts the associated intergenerational transfer of wealth at approximately $150 billion.

Buyers focus on returns

Dan van der Salm, a consultant at rural property firm PGG Wrightson, said younger buyers were entering the market with a more commercial approach. According to the article, they are less tied to historic land valuations and place greater weight on prospective return on investment and current market fundamentals.

This approach is described as particularly relevant to sheep and beef farming. Those sectors have historically lacked the structured property ladders available in dairy, according to the report. The arrival of buyers assessing properties through expected returns provides a route for ownership changes in those parts of the industry.

Lenders and companies adjust

Financial institutions are becoming more receptive to lending to younger operators seeking to run larger-scale businesses, provided that the proposed business models indicate strong returns. The change is presented as part of a broader adjustment to the transfer of farms between generations.

Corporate measures have also created opportunities for ownership restructuring. Capital-restructuring initiatives and payouts from major companies, including Fonterra, have given families additional scope to reorganise farm ownership and speed up handovers.