Index shows cropping, livestock farm values boom

The latest quarterly Australian Farmland Index report has been released and cropping and livestock farm values have soared.

The value of prime farmland used for cropping and grazing has soared in the past year, according to the Australian Farmland Index.

The annualised total return for farmland used for livestock grazing and planted to annual crops was 39.22 per cent for the year to March 30, largely driven by capital growth of 27.16 per cent, the index shows.

Released quarterly, the Australian Farmland Index tracks the financial performance of 65 agricultural properties, with a combined market value of more than $1.8b.

Of the properties, 52 per cent are planted to horticultural crops and 48 per cent are annual farmland assets, mostly livestock grazing and broadacre grain and oilseed operations.

Index properties are owned and managed by institutional investors including Gunn Agri Partners, Riparian Capital Partners, goFARM Australia, Argyle Capital Partners, Rural Funds Management and Aware Super.

Gunn Agri Partners managing director Brad Wheaton said since the beginning of last year, there had been a rapid uptick in the value of cropping and grazing land.

“So from an index perspective that means on an annualised basis, the last year has seen capital growth of 27 per cent, which is well above trend,” he said.

Since the inception of the index, average capital growth is 13.5 per cent.

“We saw a jump going back towards the end of 2020, and we’ve seen positive growth since (then), albeit with a plateau in the rate. And in terms of income, on an annualised basis, for the quarter we’ve seen income return at 10.28 per cent, which is well above trend,” he said.

On an annualised basis, total Australian farmland returns were 14.68 per cent for the 12-month period to March 31 this year, with contributions from income return of 7.21 per cent, and capital growth of 7.10 per cent.

Annualised returns for permanent farmland, such as properties planted to horticultural crops including almonds, macadamia and avocados, remained stable, with a 7.46 per cent one-year total return for the year ending March 31. The annualised income for these properties was at 6.12 per cent, while the annualised capital growth was 1.25 per cent.

Established in 2015, the index is compiled by the Asian Association for Investors in Non-Listed Real Estate Vehicles.

Mr Wheaton said the index pointed to the relative strength of Australian agriculture amid global turmoil.

“In periods of inflation, the evidence points to agricultural investments performing well due to the link between inflation and the flow-through effect into food prices. And on top of that, in the last period, what we’ve seen is the performance of ag investments has been attractive relative to other investment types and absolutely less volatile,” he said.