Farmland and agricultural infrastructure are an emerging asset class which offers the following attractions:‐
- A real asset that is connected to humans’ most basic need – to eat!
- Strong long‐term macroeconomic fundamentals
- Food Security/Agricultural Fundamentals
- Growing world population,
- Rising incomes in the developing world
- Increased use of biomass for biofuels
- Definite supply of agricultural land – short of deforestation you cannot develop anymore!
- Attractive historical returns on land investment – The Australian Farmland Values 2015 Report from Rural Bank shows that the 20 year average growth from 1995 – 2015 was 5.8%pa
- Mix of current income and capital appreciation
- Low / Negative Correlation to Other Assets: low correlation between returns on farmland investments and the broader markets.
- Strong hedge against inflation
The FAO has predicted that the food productivity will need to double to meet the world’s demand for food by 2050 on significantly less farmland than we have today.
Australia exports more than 60% of our agricultural produce — much of it to Asia, which by 2030 will be home to two-thirds of the world’s middle-class.
This demand is driven by an increasing ‘westernisation’ of diets (with a focus on protein) and population growth, particularly in urban areas.
Australian agriculture is perfectly placed to meet these growing needs.
- We have a reputation as a ‘safe, clean and green’ food producer.
- We have stable government and well-regulated legal and financial systems.
- We have Free Trade Agreements (FTAs) or pending FTAs with most Asian markets, in particular the world’s largest emerging markets of China, India and Indonesia.