Agriculture investment opportunities in Australia

Australia’s agriculture sector is increasingly in demand around the world. Exports of agricultural goods to Australia’s eight largest Asian markets are rising as their population grows and consumer patterns change. The expectation is that global demand for Australia’s high-quality agricultural and food products should increase, thanks in part to our low sovereign risk, farming and supply chain innovations and greater access to agricultural investment.

So, what are the agriculture investment opportunities in Australia for individual investors?

Identify Australian agriculture investment opportunities

An Australian agriculture investment fund is one of the options to assist investors in taking advantage of the increasing global demand for Australian agriculture products. An unlisted property fund that targets high-quality, sustainable agricultural investments throughout the country will provide investors with the opportunity to gain exposure to the agriculture and agribusiness sectors without becoming farmland owners.

Identifying which investment funds will provide you with the desired yield, capital gain and tax advantage requires knowledge of the types of investment in Australia’s food and non-durable (soft) products that are part of the world’s food chain.

The Australian agricultural sector’s gross value is $75 billion as of 2020-2021, according to the Department of Agriculture, Water and Environment (DAWE). And approximately 72% of what we produce is exported. Our meat (beef, veal, mutton and lamb), grain (wheat, in particular), horticultural outputs (table grapes, citrus, nuts and stone fruit) and oilseed are high-value exports to Asian, U.S. and European markets.

Agriculture-related industries like production, packaging and supply chain are also potentials for investment. The research and development of these industries have not only improved our agricultural export’s global competitiveness but also generated scalable agriculture technology (AgTech) and Food Tech solutions.

As developing nations’ middle-class populations expand — with a taste for wider varieties of food and soft products and an eco-consciousness to their consumption habits — the Australian agriculture sector is well-positioned to grow in value. At the same time, government and the private sector buoy agriculture by a shared interest in innovation to mitigate challenges and help it remain globally competitive.

Agriculture sector performance

Despite weather conditions, rising oil prices and a disrupted supply chain, the agricultural sector has maintained its actual export value from 2015 to 2020. Additionally, market analysts anticipate the primary production sector to keep pace with global food chain demand because of its firm foundations, including:

• Access to growth markets in Asia
• Affordable land values
• Capital investment in agtech and foodtech.

However, when you seek to invest in a sector with a wide range of industries and products, you may seek the reassurance of its competitiveness. According to DAWE, key drivers of value creation in the agriculture sector include:

• Shifting production for exports from raw food to more processed food products (changing grain into flour) to prevent overreliance on animals and crop output.
• Improving traceability and organic production in farming could generate a higher return for farmers.
• Upholding favourable trade agreements with fast-growing countries to maintain and grow exports.
• Assisting in research and development by the government, removing red tape and aiding competitiveness.

Given the endowments — geographical, political and reputational — of Australia’s agriculture sector, its performance in the future looks positive.

Farmland investment in Australia

The opportunity for Australian agriculture to produce more processed products and develop Australian agribusiness also calls for capital investment in agriculture production and land.

The Australian Bureau of Statistics reports that our nation has 377 million hectares of agricultural land with 87,800 businesses. Land use by agricultural output dissects as follows:

• Livestock grazes on 325 million hectares.
• Crops use 31 million hectares.
• Forestry occupies 0.7 million hectares.

Investment in the land and production of meat and crops for export can add to the value chain of Australia’s agricultural sector.

About half of all vegetable growers sell their produce to a wholesale vegetable market. The larger farms have a more significant share of vegetables being sold directly to retailers and they earn larger cash incomes compared to farms selling in other markets.

Australia is a net exporter of vegetables like broccoli, celery, lettuce, carrots and mushrooms. Investing in eco-friendly farming that enables traceability, high quality and great taste can help keep vegetable exports up. Additionally, local consumption of vegetables and other food products will underpin fluctuations in the export market due to supply chain disruptions.

Private and foreign direct investment in Australia’s agricultural products and agribusiness sector are an essential part of broadening the sector and thus, developing the nation’s economy and market share of the global food supply chain.

Your future and the future of Australian agriculture

The National Farming Federation (NFF) set a goal for the nation’s agriculture industry to exceed $100 billion by 2030. With this target in mind, industry and government are working together to present opportunities for individual investors who want to be a part of the future growth and prosperity of one of the nation’s most trusted industry sectors.

The government has a significant role to play.

Achieving the NFF’s 2030 plan requires a national strategy for agriculture prioritised by local, state and federal governments. Large investments in physical, transportation and exportation infrastructure that can support the sector’s value chain will be essential. Also, government leadership will form a sustainability framework that addresses carbon emissions, land use, water use and food insecurity without harming the people, natural resources and market differentiation Australia currently enjoys. Farming will benefit from this increased focus and funding from the government.

However, farming has to make a great deal of investment to reach this ambitious goal.

One change critical to attracting the capital investment needed for the NFF’s 2030 plan is that more farms employ corporate governance boards that will improve planning, reduce risks and increase profits. As farming business models change, they’ll be able to access debt financing and institutional investment in farmland as a commercial property asset class.

Diversification and capital growth with Australian agriculture investment

Australia’s agriculture is an opportunity for investment because of its natural resources, sovereign stability, land value and a culture that supports farming and agribusiness as a driving force of the economy and the livelihoods of millions. Investing in an asset class such as agriculture property or an agriculture investment portfolio provides diversification, regular disbursement income and the potential for capital gain. It’s a sector with broadening and expanding opportunities underpinned by government and institutional investment.

Are you looking for an entry to investment in Australia’s agriculture sector? Learn more about available opportunities.

Interested in hearing about future unlisted property funds?

Please complete the form below to register your interest in receiving updates on future unlisted property fund opportunities.