SEPTEMBER is always a critical time in south-western Victoria.

This year, more than most.

The month’s rainfall is critical to pasture and crop growth, as well as September seeing the kick-off of the spring farm real estate selling season.

Having come through an extremely difficult season with a bone-dry autumn, followed by some redemption from a wet July, farmers’ views of the year ahead are better than they have been for some time.

Farmland prices are also an area of great interest.

Following a significant correction from the heady days of late 2021, the current direction of land values will be updated over the next 10 weeks or so.

Farmer confidence

IN regard to farmers’ opinions, Rabobank this week published its Quarterly Confidence Survey.

This involves interviewing some 1000 farmers across the country in order to obtain their views on how they see the year ahead.

For Victoria, the results show an improvement in outlook compared to the preceding quarter.

The survey found: “Net farmer confidence in Victoria had seen a turnaround, increasing to -4 per cent this survey, from -31 per cent in the second quarter of 2024.”

“While still net negative – with more farmers pessimistic than optimistic about the year ahead – this boost in Victorian farmer confidence, following a decline in sentiment recorded midway through the year, is in line with a recovery in overall rural confidence across the nation this quarter,” Rabobank said.

The survey found a quarter (25 per cent) of the state’s farmers reported they are expecting agribusiness conditions to improve, which is up from just 12 per cent in the second quarter.

The survey went on to say; “There was also a decrease in the number of farmers holding a negative outlook on the agricultural economy in the year ahead (30 per cent, down from 43 per cent last quarter).

“A total of 43 per cent expected farm business conditions to remain unchanged.

“Positive seasonal conditions were the chief cause for optimism (nominated by 34 per cent of Victorian farmers surveyed this quarter, compared with 29 per cent last quarter).

“Stronger commodity prices were also a reason for positivity for 31 per cent (up from 25 per cent) and international market opportunities (23 per cent, up slightly from 21 per cent).

“However, a significant number of Victorian farmers continue to hold concerns about dry seasonal conditions (38 per cent, albeit down from 44 per cent last quarter).”

Rabobank state manager for Victoria and Tasmania, Sally Bull, said that Victorian farmers, particularly those in the south-west of the state, had been managing one of the driest seasons on record.

“There are reports that it has been the driest six months in the south-west since the late 1960s.

While there has been some rain, it has been very patchy, and a wet spring will be needed to replenish feed reserves,” she said.

The survey found that Victoria’s grain growers generally expected “agricultural economic conditions to remain unchanged in the year ahead.”

The land market

ALTHOUGH land sales occur throughout the year, the busy periods are the spring and, to a lesser extent, the autumn.

Since the interest rate hikes commenced in May 2022, there has been a weakening of land prices, which have come off boom (a cynic might say, bubble) levels.

The dry autumn and indications that bank lending to farmers had increased suggest that there will be some caution exercised by buyers, but there will also be some longer-term optimism.

Recently published sales results from larger holdings in New South Wales suggest that values are stable.

However, with above-average rainfall in eastern Australia, farmer confidence is in positive territory compared with the mild negative in Victoria.

Thus, sales results in this district will be of great interest.

One area that deserves attention is the method of offering properties for sale, whether by auction, expressions of interest, or private treaty with an asking price.

In recent years, with the strong sellers’ market, there has been an increasing emphasis on sales by ‘expressions of interest.’

This is essentially the meld of a sale by private treaty with a legal tender.

Normally, in a private treaty situation, the vendor names an asking price, and interested parties make offers.

Sometimes, however, no asking price is stated, and offers are invited.

In a formal legal tender situation, signed contracts, with the appropriate deposit cheque, are lodged by the intending purchaser with the vendor’s solicitor or agent before a deadline.

The highest tendered contract/bid, if acceptable, is executed by the vendor, the deposit banked, and the deal is done.

This method of sale is useful in certain situations, such as when a family member is a potential bidder and there is no appetite for any internecine argy-bargy.

One characteristic of this method is that the vendor sees all the bids, whereas intending purchasers do not.

Indeed, there may only be one bidder, although he or she will probably never know that.

With a sale by expressions of interest, the vendor sees offers or indications of interest from all parties but, unlike a formal tender, remains in a position to negotiate.

This often works beautifully for the vendor in a strong property market, as was the case from 2016 to late 2021.

Things are a bit different now, and this method of offering may be less effective if demand is sluggish.

In order to see how selling methods are lining up, we undertook an analysis of display advertisements in this week’s Weekly Times for properties over 100 hectares.

Of 35 properties being advertised across Victoria and the Riverina, 23 (65.71 per cent) were being offered by expressions of interest, five (14.29 per cent) by auction, and seven (20 per cent) by private treaty.

Thus, the ‘expressions’ method of offering remains popular and will be put to the test again this spring.

The proportion of auctions is lower than pre-boom times.

A disadvantage for intending purchasers with the expressions of interest method of marketing is that it does not give a current reading of where values are sitting, as is the case with auction sales and, to a lesser extent, passed-in properties.

In this regard, it is important for intending buyers to keep in regular contact with agents because where an offering by expressions of interest has failed, there will usually be an asking price quoted.

In this way, one can assess the strength and direction of the market which, at this point, is something of an unknown.

Finally, a word about finance.

In the boom years, banks were keen to lend for farm expansion.

Following increased levels of debt due to less favourable trading conditions and the dry season, this may no longer be the case.

Indeed, there have been recent complaints in the rural press regarding reduced numbers of rural banking executives.

Well-known Gritjurk farmer, Peter Small, writing in a privately-circulated newsletter recently, suggested that private equity finance may become appropriate.

In this regard, older readers will well remember the days of vendor finance being offered with properties.

If banks become hesitant lenders, this method of financing farm purchase may well return.

After all, there’s no harm in asking.