Discover agricultural investment funds in Australia

For individuals looking for a long-term investment opportunity, an agricultural investment fund offers access to a sector that has seen sustained demand and healthy revenue growth.

The Australian agricultural sector benefits from worldwide population growth and demand for its food products. An investment in a portfolio of high-performing agricultural assets offers diversification and potential distribution yields.

Invest in agriculture funds Down Under

Australian agriculture has evolved into a high research and development endeavour. Livestock and crop farmers are increasingly using innovative farming techniques to reduce environmental impacts by growing food products in protected environments (i.e. a glasshouse). Additionally, using agtech, Australian farmers have the ability to produce bountiful yields, at a higher quality and with a better taste. Australian agriculture is known worldwide for its farming practices and regulations that ensure the highest quality raw food products. Australia’s geographic location puts us at the centre of Asia’s “Food Bowl,” meaning that Australia exports 3% of the world’s food or enough for 77 million people.

Key characteristics of Australian agriculture real estate that make it an attractive investment include:

• Access to Asian markets with a growing middle class that increases the demand for Australian food exports.
• Farmland values have been steady, which has resulted in long-term appreciation.
• Technology in farming to reduce waste, mitigate supply chain issues, which help to achieve higher operational efficiency and profitability.
• Sovereign stability makes Australia an attractive and reliable trading partner.

As a primary industry for Australia, agriculture and farming contribute to the nation’s economic and environmental future. Any investor should also be aware of the ways in which agriculture real estate is exposed compared with other commercial property. Farming is impacted by environmental and climate factors. Therefore, investors in an agricultural property fund should feel comfortable with the investment team’s background and experience with the agricultural property sector.

Unearth an agricultural investment in Australia

Today, access to one of Australia’s primary industries through a well-managed agricultural investment fund is readily available. Even better, there’s no need to run a farm to invest in food production bearing the label “Australian Made.” However, it’s worth touching on how to identify a good agricultural investment strategy.

To deliver a regular income stream and the potential for capital growth to investors, an agricultural investment fund strategy seeks to diversify the portfolio by asset type and target allocation. A well-managed portfolio seeking exposure to the agriculture sector may invest directly in agricultural property, real estate investment trusts (REIT), Australian Stock Exchange (ASX)-traded (listed) funds and unlisted property funds to reach the desired asset allocation. As with other commercial property investment strategies, an agricultural investment fund manager should look at the fundamentals, including:

• Geographic location and environmental, social and governance (ESG) credentials of a property.
• Strength of the particular agricultural sub sector (e.g. precision farming, agri-logistics, non-perishables, animal farming and water rights).
• Reputable tenants and strong lease covenants.
• Development opportunities inherent in the property.

An agricultural investment portfolio manager should have the background and expertise to perform the due diligence and select an experienced operator as the tenant.

Australia’s agricultural investment market

The Australian Government has a plan to increase the value of the Australian agricultural sector from $60 billion to $100 billion by 2030. That growth will require continued capital investment to meet the growing demand for its products in the country and around the world.

Historically, foreign investment in Australia’s agricultural land, from countries like China, U.K., Netherlands and U.S.A., has helped to bridge the gap between debt capital and retained earnings. Indeed, the same factors which make agriculture attractive to foreign investors apply to the Australian investment market. The benchmark for Australia’s agricultural sector’s performance, the S&P / ASX Agribusiness Index, has shown the resilience of the Australian agricultural sector despite global challenges such as COVID-19.

What types of agricultural investments are there?

Investors interested in an Australian agricultural investment fund have the option of including the following agricultural subsectors for their asset allocation:

• Precision farming of perishable products like fruits, tree nuts, seeds, vegetables and vineyards using methods such as glasshouses, vertical farming and netted cropping.
• Premium non-perishable products like cereals, oilseeds and grains from experienced operators who have proven performance through challenging weather cycles.
• Agriculture supply chain businesses involved in processing, storing, packaging and distributing on a national level.
• Animal farming of proteins and associated byproducts from operators with ESG credentials.

There is no way to predict the performance of one agricultural investment fund over another, but investors looking for a long-term investment could consider investing in Australia’s agricultural sector.

Centuria Capital Group has $20.2 billion in Assets Under Management as at 31 December 2021, and a proven track record delivering REIT and unlisted property funds in the commercial, healthcare and agricultural sectors. Learn more about the Centuria Agriculture Fund.