Farmland should be ‘exciting’, but investors are slowing uptake

However, she believes Australian investors are still wondering when farmland will present itself as a “right asset class”, while mixed returns also present challenges.

Classifying farmland as an “alternative” asset poses challenges in getting investors on board, chief executive of agriculture-focused AAM Investment Group Garry Edwards told the summit.

“[But] there is literally nothing alternative to food production, this should be the most important thing people understand and invest in,” he said.

“The fact that it is placed in the alternative market often means that the wealth advisors, advisors and people don’t really understand how to articulate the risk.”

An aging farming population means there are properties available to buy with the potential to develop the land, added Tim Samway, chairman of pastoral land manager Packhorse Pastoral.

“We come across a lot of old farmers who have nothing to do but sell their property at the end of their lives, and that’s how they make their money, but the reality is that they’ve been under-spending for the past 20 years because they have not had the capital,” he said.

“So it’s an excellent opportunity to find effective companies, but represented by land that has been underinvested for 20 years and significantly changing its yield.”

Mr Edwards said agriculture should not be valued as residential real estate and should be viewed as an entirely different asset class.

“If we focus on that succession planning issue, there is literally hundreds of thousands of dollars of investment potential. Australia is an inhabited country, it is far from a developed country. So much of the capital growth that’s happening there is about an incremental shift in productivity improvement.”

Leave a Comment