Foreign investors are buying arable land worldwide and Australia is on their radar. Are domestic investors aiming to invest more in agriculture? MIRANDA WARD reports.
Tony Meppem, co-founder of Farmland Investment Management Australia (FIMA), which invests in properties, says opportunities in Australian farmland are “generational”. Our country “ticks all the boxes”.
Australia has a legal system that supports farmland ownership: an effective system of property rights; a sophisticated financial and agricultural marketing framework; good commercial support; and a sophisticated agriculture transport system, Meppem says.
This framework of support coupled with the competitive pricing of Australian agricultural land is being recognised by overseas investors but is lost to the domestic market, says Meppem. He blames the media. Bad press about farmers being forced to walk off the land has diverted investors’ attention away from an “incredible opportunity”.
“The next decade will see a huge amount of new capital go into farmland,” he says, particularly as more family-run farms sell to large companies operating multiple properties.
Meppem says agriculture is a low-debt asset class with good supply-and-demand dynamics for the next three-to-five years and beyond.
Peter Lunt, head of investment research and governance at VicSuper, which manages more than $8.5 billion, says foreign interest in Australian farmland does indicate good opportunities in the sector. He says Australia’s agricultural sector is attractive for several reasons: its proximity to Asia; reputation for producing good clean food with high standards of bio-security; and its legal, regulatory structures.
VicSuper holds interests in cropping and grazing, both dry and irrigated lands as well as water rights, says Lunt.
But while foreign investors may be convinced of the opportunities available in the Australian farming space – as indicated by the Qatar-based Hassad Foods’ purchase of more than 8000 hectares of sheep-grazing and cropping land in Victoria – most domestic investors are not.
Arthur Apted, executive chairman of the Sustainable Agriculture Fund, and Frank Delahunty, co-principal and managing director of the fund, say domestic investors do not want to follow the international trend.
“I think [foreign investment] will increase the amount of investor interest in the sector but it remains to be seen whether or not domestic investors will invest in the sector purely because overseas investors are doing it,” Apted says.
“Domestic investors will want to convince themselves from their own enquiry and their own experience about the profitability and the sustainability of investing in farmland.”
Mike Wyrsch, senior consultant for Frontier Investment Consulting, says the foreign interest in Australian farmland will bring competition. But it’s not only Australian farms attracting attention, he says.