Company history and structure
Consortium Land was established in late 2008 by a small group of professionals from an investment and agricultural background. Early on in the financial crisis it was already quite clear that there would be opportunities opening up as investors sought alternatives to mainstream asset classes. We also understood that agricultural assets had many of the characteristics that investors would find attractive in the new environment (see Farmland investment basics).
What we hadn’t fully appreciated at the time was the extent to which the investment environment would change. Post-2008 it became clear that traditional risk management models were woefully unfit for purpose, having completely failed to predict the crisis or to protect investors’ capital as it unfolded. The old models are also failing in the current climate. In the new risk-on risk-off world assets that were negatively correlated pre-2008 are now moving in tandem. Markets that were once driven by fundamentals are now driven more by politicians and central bankers.
The “new normal” would have seemed highly abnormal to a pre-crisis investor. Few would have predicted that more than 5 years after the financial, the Euro area could still be facing a possible breakup, interest rates would remain near zero in many parts of the world, and that the global economy would remain sluggish with many Western consumers feeling like they’ve never really stopped being in a recession.
As a company Consortium Land has gone from strength to strength whilst the investment environment has lurched from crisis to crisis. But there’s been more to our success than simply backing the right horse (i.e. agricultural real assets).
We realised early on that the real opportunity was not that increasing numbers of investors would be looking at agricultural assets for the first time, but rather how poorly those that did were being served. It seemed that the embryonic world of agricultural investment was dominated either by financial professionals pretending to know about farming or by farmers pretending to understand financial markets. By bringing the two disciplines together under one roof, Consortium Land has been working hard ever since to provide a better alternative.
We chose the UK as our launch market and capitalised on some great buying opportunities that had arisen there as a result of the near collapse of the UK’s independent agricultural lending sector. We developed a groundbreaking purchase and leaseback transaction model, giving our investors all of the benefits of direct ownership and a stable income stream whilst allowing cash strapped farmers to continue farming.
As the opportunities dried up in the UK we switched our focus to Australia. This was driven by the fact that Australia is quite simply THE agricultural investment market of choice today for any serious investor. This website is laden with facts an analysis supporting this view (see Australia versus other agricultural markets and Investing in Australian agriculture), but in short, Australia offers investors developed world infrastructure, security and transparency at developing world scale and land prices. As a result, Australia offers arguably the most attractive risk adjusted returns of any major developed world producer.
In combination with our office in Australia we are now able to support professional investors in two time zones whilst having boots on the ground in the rural and agribusiness communities in which we operate. Our Australian subsidiary, Consortium Land Australia Pty Ltd (established in early 2010), is a joint venture between Consortium Land and Corporate Agriculture Australia Pty Ltd (CorpAg).
Combining the strengths of both companies has brought Consortium Land and its clients extraordinary benefits. CorpAg is a spinoff from FARMANCO Management Consultants, Australia’s largest agribusiness consultancy and agronomy practice. FARMANCO specialise in Western Australia, the country’s most reliable grain producing region and the Australian state with the most compelling investment fundamentals (see our downloadable report, Comparative Analysis – The West and the Rest and Investing in Australian Agriculture for the facts).
FARMANCO provide agronomic and management services to over 800 farms in the region, with a total farming asset base of approximately AUD$6 billion extending to over two million hectares of farmland with annual production of: