Investment in Agriculture – Head Winds and Tail Winds
Investment in Agriculture – Head Winds and Tail Winds
Re-visiting Agriculture as an Investment
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This presentation contains general information and does not contain personal advice or financial product advice. The information contained in this presentation has
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invest. You should make your own investigation and analysis before you invest.
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Furthermore, past performance is not a true indicator of future performance. Any past performance information in this presentation has been given for illustrative purposes only
and should not be relied upon as an indication of future performance.
An investor in agriculture is subject to various investment risks and other known and unknown risks. There is no guarantee that an investor in rural property will achieve any
particular rate of return on investment (or return at all). There is a risk that an investor will make a loss and/or suffer ongoing losses on their property investment, and may not
receive a return of all of the capital invested.
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• The Big Picture
23 Million Now
42 Million by 2050
7.0 Billion Now
8.9 Billion by 2050
Tail Winds – The Asian Food Bowl
•In just 8 years time it is predicted that half of
the world’s population will be on Australia’s
•4 billion people across Asia, enjoying
economic growth of around 10% pa
represents unparalleled opportunities for
Australia’s economy, especially the farm
Source: NFF Farm Facts 2012
•The Farm Gate contributes 3% ($48.7 billion)
to Australia’s total GDP. Including along the
Value chain the contribution is 12% ($155
•Approx 60% of what is grown and produced is
exported ($32 billion in 2010/11) – enough to
feed 60 million people.
•Australian farmers own and care for 61% of
Australia’s land mass.
•Australian farmers produce 93% of Australia’s
domestic food supply.
•Source NFF 2012
398 million hectares of Agricultural land.
$264.6 billion the estimated value of
11% or 45 million hectares of Agricultural
land has a degree of foreign ownership.
6% or 23 million hectares of Agricultural
land is owned in the majority by Foreign
Source: Unearthing Foreign Investment In
Australian Farming PPB Advisory 2013
Return Expectations - Crosswinds
Are Investors return expectations
An Investment in Agriculture requires
Patient Capital – It’s a long term
Returns dependant upon - capital
availability, capital allocation, Industry,
production, Market Position, Water, soil and
A need to be Innovative
Management is Critical to Delivering Top Quartile Returns
ABARES Data from Australian Farm
Survey 2012-2013 notes the
substantial differences in
performance between top 25% of
Farmers to the average and bottom.
Land prices for broadacre farms, by zone
Holmes & Sackett in Ag Insights Vol
15 highlighted that in their 2012
benchmarked farms the top 20%
performers delivered an average
8.5% return on assets managed.
(The range being 14.1% to 7%)
100 = 1977-78
p ABARES preliminary estimate
“The intention is for these agricultural
investments to produce a stable and secure
long-term return and contribute as a
complement to the rest of the
portfolio through a differing return pattern”.
Source Forsta AP-Fonda PF1 Annual report 2012
Performance of Different asset classes (end date 2008)
Top 25% Correlation of Asset Classes
Ag top 25% by
30 years 15 Years 10 Years 5 Years
to other asset classes
Source: Cornish Consultancy – Analysis of Australian Broadacre Farming
Performance From an Investment Perspective August 2011, ABARE
Environmental (Climatic, Degradation,
Access to Capital Employment
The Three Key Ingredients
Think Long Term
Do Your Research
Touch and Feel it
The current international capital flowing
into the industry cannot be wrong
Returns from Agriculture are
comparable to alternative asset classes
The Medium to Long term Fundamentals for
Agriculture look very strong
Investors need to seek out the best operators and
Innovation and Capital will be key to driving
productivity and returns
Food for Thought
Creative risk taking is essential to success
in any goal where the stakes are high.
Thoughtless risks are destructive, of
course, but perhaps even more wasteful is
thoughtless caution which prompts inaction
and promotes failure to seize opportunity.
Gary Ryan Blair .
The pessimist sees difficulty in every
opportunity. The optimist sees the
opportunity in every difficulty.
Australian Outback Grazing
Phone +61 (0)44 7575 088
Email [email protected]