Farmland should be ‘exciting’, but investors are slow to embrace
However, she thinks Australian investors are still wondering when farmland will present itself as a “suitable asset class”, while mixed returns have also presented challenges.
The classification of farmland as an “alternative” asset presents challenges in attracting investors, managing director of agriculture-focused investment group AAM Garry Edwards told the summit.
“[But] there is literally nothing alternative in food production, it should be the main thing people understand and invest in,” he said.
“The fact that it’s placed in the alternative market often means that asset consultants, advisers and people who don’t do this work don’t really understand how to articulate the risk.”
An aging farming population means there are properties available for purchase with the potential to develop the land, added Tim Samway, president of pastoral land manager Packhorse Pastoral.
“We meet a lot of old farmers who have nothing to do but sell their property at the end of their life, and that’s how they make their money, but the reality is that they have underspent for the past 20 years because they haven’t had the capital,” he said.
“It is therefore an exceptional opportunity to find, indeed, companies but represented by land that has been underinvested for 20 years and to substantially change their performance.”
Mr Edwards said agriculture should not be valued like residential property and should be viewed as an entirely different asset class.
“Focusing on this issue of succession planning, there are literally hundreds of thousands of dollars of potential investment. Australia is an inhabited country, it is far from being a developed country. Much of the capital growth that is happening there is about a step change in improving productivity.