Agriculture Real Estate

April 3, 2023

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Agriculture contributed a record $85bn in gross value produced in 2022, benefiting from improved pricing and volumes following recent droughts. There has been increased interest in the sector as clients look for portfolio diversification, inflation linked returns and participate in the food security theme. Our report into the sector highlights a few interesting snippets for new investors. Did you know:

  • +10%.  Australia accounts for over 10% of global trade in Barley, Beef, Canola, Lamb, Sugar cane, Wheat and Wool. A very important contributor to global food security.
  • $4.4tn Asia opportunity. Asia is likely to consume an incremental $4.4tn in food during the coming decade. $2tn of this will be due to improved consumer choices
  • 197 gms per day. The average Australian diet has swung towards more healthy choices, with Vegetables (197gms per day), milk substitutes and leaner meats gaining share.
  • 13% annual returns.  ANREV estimates Australian farmland has provided a 13% annualised return 2015-2022. $102bn debt. Rural sector debt is $102bn, providing opportunities for credit investors.
  • 14% foreign.  14% of agriculture land is owned by foreign based investors, with Canada, China and United States based firms particularly active over the past decade.
  • Weather and climate change.  Government modelling suggests average farmland profits have fallen by 23% due to changes in seasonal conditions. Western cropping market is most at risk
  • Carbon opportunity. Farmers can earn Australian Carbon Credit Units for carbon storage.  The most recent auction yielded $17.35 per tonne.