Local investors overlook agriculture to their own detriment

9 May 2019
| By Hannah |
image
image
expand image

Local institutional investors aren’t getting around emerging opportunities in Australian agribusiness, despite the country’s environmental practices, food safety, and close proximity to booming Asian population growth making it an appealing investment.

The gross value of Australian production last financial year was $50 billion, of which $50 billion were exports, while median prices for farmland had grown on average 6.6 per cent annually for the last two decades.

Despite this, the larger Canadian, UK and US investment funds were bigger investors in Australian agribusiness than local institutions. The superannuation industry, for example, was underweight in local agriculture, with Industry Super Australia citing funds’ total allocations at 0.3 per cent.

National director of Cushman and Wakefield Agribusiness, Richard Brookes, said that while there were some good reasons for the under-allocation, the combination of yield via income from farming activities and capital growth meant that it was still a missed opportunity for investors.

“Challenges include a lack of nimbleness and a lack of information. Investors often go big in one sector, and risk being heavily exposed to one industry, whereas most family farmers understand the need to diversify,” he said.

Some institutional investors had some success partnering with large family operators, hoping to overcome this issue by leaving family management, who already had expertise in the investment, in place.

Brookes warned however, that choosing the right partners was crucial if going down that path.

“Institutional investors who are successful in agribusiness are good at going and finding the best producers once they have decided the industry they wish to invest in, whether it’s cattle or cropping. They have strong due diligence around who they partner with.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

10 months 2 weeks ago
Kevin Gorman

Super director remuneration ...

10 months 3 weeks ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

10 months 3 weeks ago

The central bank has served up a disappointment for punters on Melbourne Cup Day....

1 hour 55 minutes ago

The fund’s inaugural chief retirement officer is looking to establish a new venture. ...

6 hours 43 minutes ago

The sovereign wealth fund remains cautious of the impact of high inflation as it announces a strong return in its latest update....

1 day ago