Geographic and Sector Focus Introduction
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. Over the long term the level of risk per unit of return in arable agriculture is disproportionately low compared to livestock only and permanent crop enterprises (i.e. tree, fruit and vine crops with longer life cycles) with liquidity in arable farmland markets generally being higher.
Consortium Land has found that these characteristics meet with the diversification objectives and risk profile of the great majority of investors entering the agricultural sector. For any investor considering arable agriculture, Australia is usually at or near the top of the list in terms of value and risk adjusted returns.
Thus, due to the preference of the majority of our clients, Consortium Land has developed a high level of specialisation and expertise in Australian arable farming. Nevertheless, members of our team have operated large commercial farms in other sectors as diverse as sheep and beef livestock, sugarcane, coffee, cocoa, rubber and citrus. Therefore, on a case by case basis (subject primarily to project size), we are able to offer our full range of advisory services in most of the primary agricultural sectors.
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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.