Australia as an agricultural exporter
Australia’s geographic isolation as an island continent and its strict quarantine laws have kept it relatively free from many of the agricultural pests and diseases that affect other countries. This has considerably benefited the competitive position of Australia’s agricultural industry in global export markets.
Although Australia accounts for a relatively small proportion of global production, its low population density allows two thirds of its agricultural output to be exported. This equated to average annual exports of AU$30 billion over the last five years, equivalent to a 12% share of Australia’s annual exports, making Australia one of the world’s largest agricultural exporters.
Grains account for the largest share of Australian agricultural commodity production (25% of total agricultural production value) with an average annual gross value of production of AU$11 billion over the past five years. Over half of all grain production is exported, making Australia one of the world’s top grain exporting countries.
Australian wheat and grain exports, 2007-08 to 2011-12
Grain production has increased by 69% in the last five years (2007-08 to 2011-12). Because of relatively fixed domestic demand, these production surpluses have increased the volume of Australia’s grain exports by 176% over the same period (although it should be noted that 2007-08 was a below average production year so this skews the figures somewhat).
Australia is the world’s largest producer and exporter of premium white wheat which is particularly well suited to a broad range of high demand uses such as noodles and bread making. Because of its high and consistent quality, Australian produced white wheat often commands a price premium on the international market.
Proportion of Australian wheat production exported, 2007-08 to 2011-12
In 2011-2012 wheat exports reached 78% of total production, with export volumes having increased by 211% since 2007-08. Over the same period Australia’s share of global wheat exports also more than doubled from 6.7% to 15.9%. This makes Australia the third largest exporter of wheat after the United States and the European Union.
Australia’s share of global wheat production and exports, 2007-08 to 2011-12
References and data sources:
- Australian Bureau of Statistics, Australian International Trade Data Series, 2012
- Australian Government Department of Agriculture, Fisheries and Forestry, Australian Bureau of Agricultural and Resource Economics and Sciences, Agricultural Commodities Statistics, 2012
- United States Department of Agriculture, Production, Supply and Distribution Database, 2012
- Organisation for Economic Co-operation and Development (OECD), Agriculture and Food Statistics, 2012
Farming is like any other business: all other things being equal, income is dictated by the quality of the management team. Even enterprises with similar soil, climate and business model can show a high degree of variance. This means tenant / manager selection is a critical component of the agricultural investment process.
Inefficiencies in the farmland pricing mechanism are one of least exploited opportunities to increase returns as a farmland investor. When it comes to buying agricultural assets, we are able to help our clients beat the market because of our unconventional approach to acquiring farms and the information advantage we have in the markets in which we specialise.
Investing in Australian agriculture
Australia’s robust economy, strategic location and investment friendly business environment have made the country one of the world’s top destinations for foreign investment, with FDI inflows of over twice the OECD average (% of GDP basis, 2011).
Geographic and sector focus
For investors, the choice of agricultural sector will be driven by your risk tolerance and overall investment objectives. As a general rule, arable agriculture (i.e. the cultivation of annual crops, in particular grain) is the least volatile farming sector.