Why purchase an ex dairy farm for a conversion?

Agri Business: 31/07/2019
When you see people paying over $4,000ac for cropping ground at Lake Bolac (average rainfall 512mm), but you can buy land around Timboon for between $4,500- $5,500 (average rainfall 956mm) where would you rather your purchase be?

Over the past two years there has been a change in the agricultural profile surrounding the southwest region. As a child my memories show that the area was heavily concentrated by dairy farms. But, go back 30 years and the area was once home to some of the largest prime lamb sales. And well, maybe, this is where we are heading back to again.

The down turn of the dairy industry over the last five years has resulted in many people exiting the industry and moving off the land and into towns. Land that had been relatively tightly held is now on the move providing opportunities for those as the locals would say are “outsiders”.
In the area in which I grew up alone there are four dairy farms in the last two years that have changed hands and are now conversions, with the new owners choosing to operate beef and sheep back down in the cold & wet south-west Victoria. I guess if the value for money (or value for rainfall) doesn’t appeal to you here are some of what we perceive to be some of pros and cons for purchasing land outside your current local:
Cons:

  • Infrastructure only suited to dairy cows.
  • Fencing is usually in poor condition; therefore, replacement is needed.
  • Some land may be able to be leased back to dairy operations, but most operators have reduced heard sizes to cut costs, so limited leasing opportunities may be available.
  • Multiple neighbours.
  • Different set of management skills needed compared to some areas.
  • Just remember things may seem easier where things are always green (it’s not), but wet areas bring with it a different set of challenges.

Pros:

  • High rainfall.
  • Strong fertilizer history – grow grass like you never have before.
  • Easily accessible to a variety of market options.
  • Quality summer feed for livestock.
  • Huge capital growth potential (In 2007/08 you would have paid closer to $6,000/ac for land) at today’s market values you can purchase for under $6,000ac. Due to the decline of the dairy industry land values have been affected by this.

 
What’s our advice, don’t be afraid to look outside your current zone – diversity can be a great key to success.
Want to look at this opportunity for your business we have relationships with a number of different agents that may be able to help you further. We can help you with the budgets and crunch the numbers. We can help to get your finance sorted.    Dare to be different!

~ Bronte Gorringe