Australian Farmland Index: Grain and cattle provide record returns
The Australian Farmland Index’s 2020 results reveal record returns for farmland last year, with two sectors leading the way.
A RECORD east coast grain harvest and high cattle prices have combined to post the best return ever for farmland planted to annual pasture and crops, according to the latest Australian Farmland Index results.
Gunn Agri, one of the six corporate farming groups providing farm data to the index, said performance for the annual pasture and crops segment had annualised returns for 2020 of 30.26 per cent.
Annual pasture and crops — mostly livestock grazing and broadacre grain and oilseed operations — account for 26 per cent of the 42 properties providing data to the index, with permanent crops making up the other 74 per cent.
Overall, total farmland returns for the year to December 31 were 11.69 per cent, with the income return of 7.31 per cent and capital growth of 4.11 per cent.
The AFI is compiled by the Asian Association for Investors in Non-Listed Real Estate Vehicles.
ANREV director of research and professional standards Amelie Delaunay said investments in Australian farmland showed remarkable resilience compared to other asset classes during the turbulence of 2020.
Gunn Agri said the 30.26 per cent annualised return for 2020 was a record and included the highest quarterly income return ever of 10.12 per cent for January to March.
“Strong Q1 2020 results were driven by a well above average winter crop harvest on the eastern seaboard and soaring beef cattle prices as exporters and restockers fiercely competed for stock,” the company said.
“The performance in Q1 2020 is a positive sign for a follow up expected record performance in Q1 2021.
“GrainCorp reported in February this year that the combined intake across the 2020-21 harvest has totalled over 13 million tonnes of grower receivals year-to-date, eclipsing the 12.6 million tonnes of winter crop grower receivals delivered during the last bumper crop in 2016-17.”
Gunn Agri said farm capital values had benefited from the influx of capital into the sector, an easing of interest rates and relaxation of lending policies by rural financiers.
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