Australian Farm Index rises on back of rain, low Aussie dollar
Good rain across eastern Australia in recent months has prompted an uplift in agricultural returns, as evidenced by the Australian Farm Index.
AUSTRALIAN farm returns are expected to rise this year after pulling through the east coast drought.
Already, the farm sector is beginning to shine in 2020, with the Australian Farm Index showing a lift in total annual returns from 13.93 per cent for the December quarter last year to 14.91 per cent for the first three months of this year.
The index shows the farm income return for the first quarter of this year to be 4.85 per cent, compared with 0.75 per cent for the same quarter last year.
The appreciation return — the return on farm capital investment — was -0.59 per cent, compared with 1.78 per cent for the previous corresponding period.
Total farm return was 4.26 per cent for the quarter, much higher than the 2.54 per cent recorded for the same period last year.
The AFI used data on the financial performance of 37 properties run by major corporate farm managers, Argyle Group, gofarm Australia, Rural Funds Management, Hancock Agricultural Investment Group, Laguna Bay and Gunn Agri Partners.
The 37 properties collectively account for $766 million in farmland value, of which 61 per cent were permanent horticultural crops.
Rural Funds Management said hot and dry conditions during the first few weeks of this year had hit almond crops but did not negatively impact on yields.
But higher than average rains in the eastern states and Northern Territory had turned the rural sector around, according to RFM chief operating officer Tim Sheridan.
“The rainfall over recent months has provided positive impacts on the production of most commodities,” Mr Sheridan said.
“Overall, Australian agriculture has fared relatively well during this period, despite the disruptions of the COVID-19 pandemic.
“The longer-term effects of the pandemic remain unclear, although we expect Australian agriculture to remain resilient and continue to perform well.”
Mr Sheridan said it was possible the demand for farms would continue to remain buoyant due to the low Australian dollar, low interest rates and profitability driven by a favourable season.
MORE ON AUSTRALIAN FARM INDEX
2019 DECEMBER QUARTER AFI RESULTS
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