Dairy farm prices to boom anew in 2022

Land prices are hitting the stratosphere across southeastern Australia, with dairy farms chief among them, experts say.

Australia’s farmland price boom is set to roll on into the 2020s with dairy in the box seat, key property watchers say.

Nationally, land prices have increased by 15 per cent over the past five years, CBRE agribusiness managing director David Goodfellow told a Rural Press Club of Victoria seminar last night.

The five-year price rise was most pronounced in cropping districts with Wimmera and Mallee land rising from $800 an acre in 2017 to $2000 an acre in 2021 — a 20 per cent jump.

Southwest Victorian farmland only increased by 10 per cent during the same time frame — from $5500 an acre in 2017 to $8800 an acre in 2021.

But Mr Goodfellow and fellow panellists — Warakarri Asset Management’s Adrian Goonan and Rural Bank sales chief Andrew Smith — say Victoria’s Western District is one to watch.

“The dairy industry has a dominant footprint in southwest Victoria, for instance between Cobden and Warrnambool,” Mr Goodfellow said.

David Goodfellow during the Global Food Forum. Picture: Aaron Francis/The Australian

“We haven’t seen the same levels of growth there because the dairy industry has been going through a restructure after an oversupply not only in Australia but globally for the past eight to 14 years.

“Take Nullawarre for instance — where dairy country may have been worth $5500 an acre five years ago. It’s only gone up to $8800 (an acre). But that’s not a bad return, is it?

However, Mr Goodfellow said the reasonable returns witnessed in prime dairy territory was only the beginning of stronger prices into the 2020s.

“Cropping land has gone up in value so much faster than livestock land because it’s the croppers that have had access to capital,” he said.

David Goodfellow, Managing Director Australia, CBRE Agribusiness and Steve Kirby, CEO, Australian Cane Farms speaking at the Global Food Forum held in Sydney, Tuesday 1 June, 2021. Picture: Nikki Short

“But, now it’s the livestock farmers turn. What we’re seeing is that with new technologies and new farming systems, we’re getting much more efficient at intensifying agriculture without taking huge risks.

“Commodity prices are looking good. Obviously, interest rates have come down. Farming families need capital to buy the farm next door — they’ve now got that capital.

“But the big corporates, they haven’t turned away either. There is so much money lined up, still looking for a home in our industry, that it’ll just blow you away.”