Danny Thomas says corporate investors one piece of the ag investment pie

As the spring rural property market heats up, listen to The Australian Ag Podcast for the latest on Aussie farm investment.

Corporates do not present a threat to the family farming model, according to rural property specialist Danny Thomas.

Overseas or corporate investors are not “the boogey men” when it comes to paying big bucks for Australian farms and shutting out the next generation of family farmers wanting a start in the industry.

That’s according to rural property specialist Danny Thomas. Mr Thomas, senior director at LAWD, told The Australian Ag Podcast there was a range of investors currently competing strongly for farmland assets which combined made it more difficult for younger farmers to get a leg-up in the industry.

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“I don’t think the boogey men in it all are just the corporate and institutional investors,” Mr Thomas said.

“You can go through western Victoria and count up the significant number of family farmers now that have $15 million to $100 million balance sheets that will continue to pull on the place next door.

“And all of that will represent a barrier to entry for a new, aspiring farmer.”

Mr Thomas said there was “unprecedented demand” for Australian farmland coming from established family farming business as well as domestic and overseas institutions. He said, despite commentary from some sectors, land prices were sustainable in the face of commodity price, season and interest rate variables.

Family farmers, he said, were taking an informed view on “whether or not now is the right time to pull that lever to make a multi-generational decision to pull on extra land”.

“If they are well advised, if they are managing their agriculture risks they are used to, and they are managing their financial risks of prospectively rising interest rates into the future, these prices are sustainable,” Mr Thomas said.

On the global institutional buying front, Mr Thomas said he’d mistakenly called the top of such demand on a number of occasions. “I don’t do it anymore – every time I do there is a new pool of money that sees Australia as an attractive place to invest,” he said.

Mr Thomas said the motivation of many foreign buyers was geared around circumstances in their home countries, citing the current drought in the US state of California as an example. He said there were number of investors with exposure in permanent plantations in California now looking at other parts of the world to invest in and shore up supply of the likes of almonds, olives, citrus and wine grapes.

“Because of rule of law, the safe haven it is, the fact that it performs, and given it’s on the doorstep of Asia, increasingly they look to Australia,” Mr Thomas said.