Investment returns – Introduction
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.
In order to optimise returns for our clients we thoroughly assess the background and historical performance of tenant farmers and operational managers against regional and sector based benchmarks. This will include an assessment of yield performance, soil management track record and other indicators of agricultural management capability.
Although land values are driven to a large extent by external factors such as economic and climate conditions, there are means by which agricultural investors can beat the averages. Buying at the right price is obviously critical. Consortium Land usually purchases farms on a subject to valuation basis and we pride ourselves on our ability to make below valuation acquisitions on behalf of our clients. We achieve this by taking a contrarian approach to selecting properties and identifying motivated sellers. (Click here for more information on our approach to buying farms.)
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.