Agribusiness transactions hit almost $4bn in 2022 but the price growth is expected to slow

Despite floods that wreaked havoc on farms on the east coast of Australia, the agribusiness sector will be strong in 2023 but growth in values will slow.

Cattle stations will continue to play a strong role in the agribusiness sector in 2023.

After a bumper 2022 for the agribusiness sector, growth this year is expected to be more subdued as the market catches its breath and the macroeconomic climate kicks in.

Overall, there was almost $4bn worth of national agribusiness transactions of more than $10m in Australia during 2022 compared with $2.25bn in 2021, as farmland values rose by more than 20 per cent – underpinned by higher commodity prices and except for the devastation wrought by floods, the continuation of good seasons.

Colliers International head of agribusiness transaction services Rawdon Briggs said while the sector would continue to be strong in 2023, price growth would soften.

“You won’t see the massive growth in values as we’ve seen in the past two years,” he said.

“Farmers in general and agribusiness professionals alike are very confident in the short to medium-term future and the upside could be significant if China re-engages within the wine, barley and beef sectors particularly in 2023.

“Generally there’s a very positive vibe in the bush nationally, even if costs of production inputs and limited staff are a real issue.

“However, I’ve seen a reduction in inquiries in most things and it’s starting to squeeze a bit now, so probably not in 2023 but certainly in early 2024 the agricultural sector will start feeling it.

“I see funds coming into their own again as the privates drop away and become more focused on their core businesses.”

The Beetaloo aggregation in the Northern Territory is on the market for more than $300m.

This year, cattle stations were still expected to grab the headlines with record beef prices and good seasons prompting billionaires Gina Rinehart and Brett Blundy to offload more than $1bn worth of property.

Ms Rinehart’s S Kidman & Co is in the process of offloading Bunchilly station on the Barkly Tablelands in the Northern Territory as well as Glengyle, Durrie and Naryilco in southwest Queensland in a sell-off totalling 2.4 million hectares.

Mr Blundy is also set to offload two of his massive NT cattle stations – the Beetaloo and Whalhallow aggregations making up more than 2 million hectares – for between $550m and $600m.

Other properties on the market include Sandmount Farms at Katunga, Victoria, which is made up of 27 individual farms worth about $250m; the three station Packhorse Pastoral aggregation in Queensland and NSW for about $120m; one of Australia’s largest irrigated cotton and cropping farms Gundaline Station at Carrathool in NSW for about $100m; and the Baker family’s grain aggregation at Howlong in NSW for about $100m

Mr Briggs described 2022 as a “surprise” with continued growth in agribusiness values.

“I guess we saw a few things in the market; clearly another run on protein prices with beef and lamb commodity prices driving up sentiment and that had a knock-on effect on the asset sales,” he said.

“The other thing we saw was the realisation of the lack of staff within the horticultural sector, which drove up costs and really hurt some of the earnings within those horticultural businesses which are highly reliant on a large number of staff.

“We’ve also noticed the slowing of the lifestyle market – the assets on the edge of the major cities – has slowed and inquiries are down 40 per cent in the last six months since interest rates started rising.”

The horticultural sector has taken a hit with a lack of workers.

Mr Briggs said although the rain events that caused widespread flooding on Australia’s east coast was disastrous for crops overall, he described the weather as “fantastic” from an agribusiness sense.

“Flooding is bad and terrible for those winter crop growers and all crops in general. But you make more money out of mud than you do out of dust. Dust wrecks everything but at least with mud you have some opportunities,” he said.

Last year the largest agribusiness transaction was believed to be an investment entity of the Public Sector Pension Investment Board of Canada purchase, for an undisclosed sum, of 35 vineyards from family-owned wine group Casella, which owns wine brands such as Yellow Tail, Peter Lehmann Wines and Morris of Rutherglen.

At the start of 2022 the Macquarie Infrastructure and Real Assets acquired the remaining 51 per cent stake in the renowned cotton grower Cubbie Station in southwest Queensland from Chinese company Shandong Ruyi for a large undisclosed amount.

Another mega sale in 2022 was the one involving NSW’s largest cotton growers, Peter and Jane Harris, who paid $380m for Mark Menegazzo’s 1.1 million hectare Gulf Coast Agriculture aggregation in far northern Queensland.

Australia’s richest person, Gina Rinehart, is selling her cattle station holdings.

CBRE Agribusiness managing director David Goodfellow said the volume of sales in 2022 remained at consistent levels to 2021, although they were lower than the five-year average.

“Most farmers are enjoying these great times and are actually wanting to expand their businesses rather than exit the industry. The heightened demand for rural land compared to the limited supply is the key factor that is driving up rural land prices,” he said.

“However, there has been the large step-up in the value of grazing land values, particularly in the areas measured to have lower rainfall reliability.

Mr Goodfellow expected another strong year in 2023.

“With the Bureau of Meteorology forecasting a return to more normal seasons throughout most parts of Australia … and with the outlook for commodity prices remaining optimistic, and with further rises in interest rates likely to correlate with further rises in commodity prices, things are looking very good,” he said.

“Furthermore, if the Australian government reaches a successful trade agreement with the EU, we will see greater access to these important foreign markets and potentially greater flow of investment capital from the EU into Australian agriculture, which will further increase the competition for rural land in Australia and further improve the balance sheets of existing farming businesses.”

Originally published as Agribusiness transactions hit almost $4bn in 2022 but the price growth is expected to slow