Local investors overlook agriculture to their own detriment

9 May 2019
| By Hannah Wootton |
image
image
expand image

Local institutional investors aren’t getting around emerging opportunities in Australian agribusiness, despite the country’s environmental practices, food safety, and close proximity to booming Asian population growth making it an appealing investment.

The gross value of Australian production last financial year was $50 billion, of which $50 billion were exports, while median prices for farmland had grown on average 6.6 per cent annually for the last two decades.

Despite this, the larger Canadian, UK and US investment funds were bigger investors in Australian agribusiness than local institutions. The superannuation industry, for example, was underweight in local agriculture, with Industry Super Australia citing funds’ total allocations at 0.3 per cent.

National director of Cushman and Wakefield Agribusiness, Richard Brookes, speaking at the Property Funds Association Conference in Hobart this week, said that while there were some good reasons for the under-allocation, the combination of yield via income from farming activities and capital growth meant that it was still a missed opportunity for investors.

“Challenges include a lack of nimbleness and a lack of information. Investors often go big in one sector, and risk being heavily exposed to one industry, whereas most family farmers understand the need to diversify,” he said.

Some institutional investors had some success partnering with large family operators, hoping to overcome this issue by leaving family management, who already had expertise in the investment, in place.

Brookes warned however, that choosing the right partners was crucial if going down that path.

“Institutional investors who are successful in agribusiness are good at going and finding the best producers once they have decided the industry they wish to invest in, whether it’s cattle or cropping. They have strong due diligence around who they partner with.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 1 week ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 1 week ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 5 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

18 hours ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 3 days ago