Australian dairy real estate boom as farmgate flows to property price tag

Buyers are paying top dollar for dairy farms with five-figure sums per acre becoming the norm. See which regions are making the best prices.

Dairy property prices are booming across southeastern Australia with record prices paid for fields with proven yoghurt yields.

Farmers and real estate figures told The Weekly Times that the floor price for dairy property was hovering at about $24,000 a hectare in Victoria while $26,400 a hectare is becoming the benchmark in West Gippsland.

However, in northern Victoria, the Riverina and Mount Gambier regions prices were all tracking lower despite record farmgate prices being paid nationwide.

CBRE Matt Childs said prices “as high as $12,000 and $13,000 an acre” ($30,000 to $32,500 a hectare) were being paid across the Warrnambool region, while near Warragul was higher still “with $14,000 an acre ($35,000 a hectare) not out of the question”.

“We are talking extraordinary prices here but the dairy industry is in a real growth phase. Prices at the farmgate broke records in June and July and there’s a trend towards investment,” Mr Childs said.

“Record prices (per hectare) aren’t being paid everywhere though. It really is contained to southern Victoria. Buyers are picking districts that are elevated or have optimal drainage – especially given the news with the floods.

“But they also want that reliability with rainfall and many districts around southwest Victoria and Gippsland fulfil that.”

Of the notable properties on the market, Kangertong stands out from the crowd.

The Kangertong farm of dairy industry leaders Lisa and Eddie Dwyer covers more than 260 hectares at Purnim, northeast of Warrnambool.

Offers of more than $9 million are expected with CBRE inviting expressions of interest for the property by November 3.

Mr Childs said the highly productive operation produces more than 3.7 million litres of milk annually.

“The Dwyers have been leading participants in the Dairy Farm Monitor Project; the numbers speak for themselves,” he said.

Other southwest dairies on the market include the 836ha Spring Park at Tarrone.

The property, west of Koroit, was milking 950 cows and producing about six million litres of milk annually with an Australian Consolidated Milk supply contract in place.

Agents expect Spring Park to generate offers worth about $23-26 million.

Meanwhile, three contiguous properties located in the southern Riverina are currently open to expressions of interest.

Record prices are being paid for dairy farmland in southern Victoria. Picture Lachie Millard

RMS Advisory principal Peter Ryan is handling the sale of the 800-cow dairy feed lot facility near Finley which covers 534 hectares of border check irrigation.

“The Finley property involves modern feedlot infrastructure including five individual pens with 200-head capacity per pen,” Mr Ryan said.

“Each with a central shade deck, concrete troughs with pressurised water and access to a concrete feed pad.

“With the change in sentiment over reliability with the Murray-Darling Basin, there’s been an uptick in interest in dairy in the Riverina.”

Mr Ryan is based in the Mount Gambier region, where there have been few dairy properties on the market in recent times.

He said as a result, it was difficult to determine the average price of dairy land near the Limestone Coast.

“Aurora Dairies purchased some significant holdings around the (Mount Gambier) region a few years back and the talk at the time was that they overspent,” Mr Ryan said.

“Considering where the dairy property market is now, they were pretty clever investments. “Certainly farmgate prices have had a big impact on property price sentiment – there’s a real sense of growth in dairy that wasn’t as present a few years ago.”

Farmer Power chief executive Garry Kerr travelled through the Warrnambool region recently and said there was optimism among dairy farmers about future trading conditions.

However, he said dairy farmers weren’t necessarily keen to stick with the sector unless farmgate prices continued to provide returns into the future.

“A lot of dairy farmers have gone into beef in recent times,” Mr Kerr said.

“Before the mandatory code of conduct came into force (in July 2020), they were leaving in droves. That’s no longer the case, because there’s now some fairness in the relationship between farmers and processors.”