Australia as an agricultural producer

The agricultural industry makes a significant contribution to Australia’s national GDP. The average value of agricultural commodities produced in Australia over the past five years was AU$44 billion (2007-08 to 2011-12). This excludes the significant downstream contribution of over AU$100 billion from marketing, refinement and processing.

30 year trend in total value of Australian agricultural production, 1981-82 to 2010-2011

Notwithstanding seasonal variations in crop yields, the value of agricultural production has grown at fairly consistent average annual rate of approximately 4.5% since the early 80s. During that time the total value of agricultural production has more than doubled, with average annual production in the last decade being 131% higher than in the 80s.

Trends in total value of Australian agricultural production by sector, 1980-81 to 2009-10

Crop production has grown more rapidly than livestock, with the average annual production value of crops over the last decade being 172% higher than in the 80s, compared to a rise of 97% for livestock. Crops now account for over 57% of agricultural production value and livestock and animal products for 43% (2010-11 figures).

Australian agricultural commodities by production value, 2010-11 (AU$48,674 total production value)

References and data sources:

  • Australian Bureau of Statistics, Australian National Accounts, National Income and Expenditure Data Series, 2012
  • Australian Bureau of Statistics, Value of Agricultural Commodities Produced Data Series (chain volume measure), 2012
  • Australian Government Department of Agriculture, Fisheries and Forestry, Australian Bureau of Agricultural and Resource Economics and Sciences, Agricultural Commodities Statistics, 2012

Investment returns

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.

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Investment style

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.

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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).

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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.

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