Dairy industry complains over cheap milk as market for properties stalls
The Western Australian dairy industry was in a state of uncertainty, with low confidence and limited to no activity in the property marketplace. The dairy industry is based in the south west of the state.
But overseas buyers looking to secure food future opportunities are circling.
Although WA has had some recent rainfall, which will assist with winter pasture growth, the outlook was bleak, according to Herron Todd White.
Much of the uncertainty stems from the collapse of Challenge Dairies, Western Australia in 2010, which HTW valuer David Abel says forced producers to desperately seek out an alternative buyer/processor for their milk.
There were also fears that a farm gate price reduction was imminent, in what was believed to be the fallout from the retailer price wars.
“As a result of the above factors, the confidence within the industry has taken a real blow and with what may be considered a bleak outlook, the dairy farms on the market are receiving limited to no interest,” Abel says.
“The limited number of purchasers in the marketplace are reported to include overseas buyers looking to secure food future and investment opportunities.
“These purchasers are often well informed and aware of market conditions, so will be unlikely to be paying any ‘premiums’, and more likely to be seeking out ‘bargains’,” Abel says.
“Due to the lack of activity in the Western Australian market, there is no tangible evidence of reductions in market value, however the property market as a whole has seen a price correction and therefore, for those looking to leave the dairy industry, the term ‘price the property to meet the market’ has never been more imperative if a sale is to be achieved.
“It is my opinion that this is a time of rationalisation on a global scale and that however small and far away the white light at the end of the tunnel is at the moment, the optimist in me can see it,” he says.
“After all, the majority of us like to put milk on our cereals, in our tea, in our coffee, we like our bread to be buttered, and where would we be without cheese in our sandwiches?”