Emerging market demand for Australian agricultural commodities
Being within easy reach of the lucrative export markets of Asian and the Middle East, Australian farmers are ideally located to capitalise on the rapid rise in demand and changing diets in emerging markets. Exports to countries in these regions continue to rise dramatically, with grain exports to China having more than tripled in the last five years alone (2007-08 to 2011-12).
Five year rise in food exports to Australia’s largest emerging market export destinations
Rise in Australian crop exports to China, 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
- Organisation for Economic Co-operation and Development (OECD), Agriculture and Food 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.
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.
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.