QUALITY farm offerings and strong red meat prices are keeping Western Australia’s farm prices strong, but depressed grain prices are keeping values in check in the eastern Wheatbelt, according to Rural Bank’s latest Australian Farmland Values report.
As reported in last week’s Farm Weekly, WA farm values remain strong with a 3.1 per cent increase in the median price last year of farmland across the State, which follows a 10.6pc increase in WA’s values in 2015.
Overall farmland value increased on average by 2.1pc over the past five years and 5.7pc per annum over the past 20 years, compared to the national 20-year average of 6.4pc.
The estimated area of farmland sold in 2016 was 496,000 hectares with the total value of farmland traded in the State worth about $823 million.
For 2016, land parcels of more than 700ha made up 33pc of sales with a median price of $1132 a hectare while properties between 50 and 99ha had an average price of $7326/ha.
Rural property sales of less than 50ha are not included in the overall data.
The median value of farmland in the Southern Coastal district, including the Esperance, Gnowangerup, Ravensthorpe and Plantagenet shires, saw the biggest increase of 14.9pc, while the value of farmland in the eastern Wheatbelt shires such as Mount Marshall, Koorda and Westonia dropped by 3.5pc due to a high number of sales in lower rainfall zones.
Rural Bank regional agribusiness manager Tim Batger said overall the trend over the past five years had been a steady increase in land value.
He said favourable seasonal conditions and strong livestock commodity prices in 2016 helped keep sales activity constant.
“Strong sheep and wool prices and demand from cattle and sheep producers contributed to higher land values in grazing zones, while broadacre cropping was also in high demand in the central cropping region,” he said.
“There has been a little bit more movement in the eastern Wheatbelt as farms are sold rather than passed on with succession in the broadacre areas.
“It is a combination of factors but something that does really affect the prices is the quality of the properties coming on the market, people will pay good money for good producing land whereas land that is not quite as productive won’t command such a high price.
“That can also affect the prices in a yearly cycle.
“In regards to the affect from commodity prices, if grain in particular remains depressed you might see that there is less demand for those broadacre areas that are specific to grain growing, which will quite possible drive down prices in the shorter term.”
Mr Batger said demand was likely to remain strong in 2017, particularly in the medium to higher rainfall zones while livestock prices remain strong.
“In agricultural markets overall prices in the red meat areas are all buoyant so that helps drive land values too,’’ he said.
“With broadacre cropping areas such as the eastern Wheatbelt, it will hinge on the weather conditions – those areas in the eastern Wheatbelt haven’t had a true break yet so how that pans out will determine what we see in the future as far as how buoyant values will be.”
Albany saw the biggest number of transactions in 2016 with 40 properties sold, followed by Esperance with 36 properties.
Landmark Harcourts Esperance real estate agent Paul Thomason said there was strong demand in the Esperance area for land but a small supply was helping drive values up.
In particular, buyers were chasing large parcels of land in high rainfall areas.
“There is definitely more interest in the larger end property and certainly anything in that 450mm rainfall zone has been strongly sought after,” he said.
“The majority of buyers are local as smaller or family farms are looking to try and push in and retain market share.”
Mr Thomason said he expected to see the demand continue into 2017 as buyers looked for areas with good production history and medium to high rainfall.
“We will see strength for anything that has dependable rainfall, good even soil profiles and good production history,” he said.
“Certainly the cropping side is where most people have their energy focused but there is a renewed interest in property for stock and farmers who have already got some numbers are increasing them.”
Despite a nervous start to the season for some farmers with a later break, investment intentions for farmers are at record highs, according to new research from the Commonwealth Bank.
The research, part of the bank’s latest bi-annual Agri Insights survey, shows that WA farmers will focus investments inside the farmgate and are much less likely than at this time last year to invest off-farm.
These investment plans have driven the WA Agri Insights Index to its highest level of 14.4 points, up 5.7 points on this time last year.
Almost 40pc of WA farmers indicated they will increase fixed infrastructure investment, 28pc say they will boost investment in plant and equipment and 12pc will increase the involvement of other family members in their farm operations, a new record for the State.
Commonwealth Bank WA general manager of regional and agribusiness Natasha Greenwood said farmers were optimistic and ready to invest in their operations as the outlook became more positive following recent challenges.
“The season finished strongly, with subdued grain prices mitigated by big yields and record livestock prices at recent bull and ram sales, contributing to a continued positive investment sentiment,” she said.
“Intentions have bounced back strongly after a dip this time last year and the focus is on farmers positioning their businesses for the future.”
