The impact of nutrient regulations on dairy farm land values in Southland

Figures & data

Figure 1. Diagrammatic representation of expected capital gains assumptions (blue line) relative to operating profit (green line), with expected capital gains being either at a constant real value (dashed blue line from T = 1) or at the same proportion of operating profit (solid blue line from T = 1).

Table 1. Effects of modelled N regulations on dairy farm land values in Southland.

	Impact of N loss regulations
Target reduction in N leaching (%)	0	−5	−10	−15	−20	−30	−40
Percentage of farms that could achieve targeted reduction (%)	–	100	100	95	93	76	29
Impact on operating profit (%)	0	−4	−8	−11	−14	−20	−28
Operating profit ($/ha)	2457	2359	2260	2187	2113	1966	1769
CVTotal/ha ($)	40,613	38,988	37,364	36,146	34,927	32,490	29,241
CVLand/ha ($)	32,846	31,221	29,597	28,379	27,160	24,723	21,474
Reduction in CVLand/ha (%)		−4.9	−9.9	−13.6	−17.3	−24.7	−34.6
Reduction in CVTotal/ha (%)		−4.0	−8.0	−11.0	−14.0	−20.0	−28.0
Operating profit 25th percentage quartile (%)		−5.5	−10.4	−14.3	−17.2	−23.7	−33.5
Operating profit 75th percentage quartile (%)		−2.5	−4.6	−7.3	−10.5	−15.8	−21.7
Operating profit interquartile range (%)		3.0	5.8	7.0	6.7	7.9	11.8
Land value 25th percentage quartile (%)		−6.9	−13.0	−17.9	−21.5	−29.6	−67.4
Land value 75th percentage quartile (%)		−3.1	−5.8	−9.1	−13.1	19.7	−47.5
Land value interquartile range (%)		3.8	7.2	8.8	8.4	49.3	19.9

Table 2. Effects of modelled P regulations on dairy farm land values in Southland.

	Impact of P loss regulations
Target reduction in P loss (%)	0	−5	−10	−15	−20
Percentage of farms that could achieve targeted reduction (%)	–	98	80	46	22
Impact on operating profit (%)	0	−10	−18	−25	−28
Operating profit ($/ha)	2457	2211	2015	1843	1769
CVTotal/ha ($)	40,613	36,552	33,303	30,460	29,241
CVLand/ha ($)	32,846	28,785	25,536	22,693	21,474
Reduction in CVLand/ha (%)		−12.4	−22.3	−30.9	−34.6
Reduction in CVTotal/ha (%)		−10.0	−18.0	−25.0	−28.0
Operating profit 25th percentage quartile (%)		−5.5	−10.4	−14.3	−17.2
Operating profit 75th percentage quartile (%)		−2.5	−4.6	−7.3	−10.5
Operating profit interquartile range (%)		3.0	5.8	7.0	6.7
Land value 25th percentage quartile (%)		−24.0	−32.6	−40.1	−43.3
Land value 75th percentage quartile (%)		8.6	−3.7	−14.4	−19.0
Land value interquartile range (%)		32.6	28.9	25.7	24.3

Figure 2. Impact of N loss regulation on operating profit and land value, for the 76% of modelled farms that could mitigate to a 30% reduction in N loss. Dark blue data series is the average impact of reducing N loss on operating profit. The light blue data series is the associate average impact on land values. The black bars represent the range of impacts that reducing N loss had on the operating profit of the case study farms.