Foreign investment: Canada’s PSP Investments buying up Australian farmland

Canadian buyers splurge more than $10 billion on Australian farming assets.

Macquarie Agriculture – the nation’s second-biggest farmland investor – this month sold its Lawson Grains portfolio comprising 105,000ha to Canada’s Alberta Investment Management Corporation.

Canada’s multi-billion dollar love affair with top-grade Australian farming assets is gathering steam.

An investigation by The Weekly Times shows that Canadian buyers have stumped up almost $1.5 billion in six major farmland and water deals in the past year as part of a trend driven by strong investor returns, access to cheap capital globally and a stable trading environment.

The investigation also found that Canadians have been behind more than $10 billion worth of investment in Australia’s agriculture, forestry and fisheries space since 2014-15, including the four biggest farming deals in the nation’s history.

The rush on sales attracted headlines again last week when Canada’s Alberta Investment Management Corporation paid $600 million for Macquarie Agriculture’s Lawson Grains business, covering 105,000ha of cropping farms in NSW and Western Australia.

The landmark deal came just months after Canada’s PSP Investments – the pension fund for the nation’s public service including the world-famous Royal Canadian Mounted Police – paid similar money for the Auscott Limited cotton business in NSW through its Australian Food and Fibre joint venture.

Other major farmland deals involving Canadian interests in the past year have included the $55 million sale of Gray Wigg dairy farms in Victoria’s Gippsland region to PSP last October and Ontario Teachers Pension Plan’s purchase of Pomona Valley orchards in the Goulburn Valley in April this year.

More recently, PSP – through its Hewitt Cattle Australia joint venture – paid more than $40 million for the iconic Tubbo Station at Darlington Point in the NSW Riverina and about $25 million for the Brewarrana property at nearby Narrandera. Last June, PSP – through its Aurora Dairies business – outlaid $40.4 million for a collection of Beston Global Food Company dairy farms near Mt Gambier in South Australia.

According to the Foreign Investment Review Board, Canada’s investment in Australia’s agricultural industry has risen from $240 million in 2015-16 to $2.55 billion in the most recent reporting period of 2019-20. Investment peaked at $2.62 billion in 2017-18.

FIRB said Canada was the fourth-biggest foreign investor in terms of freehold and leasehold country during 2019-20 with 2.61 million hectares, behind China, the UK, the Netherlands and the US. In terms of freehold country it was ranked third with 907,000ha.

At June 30 last year, Canada was the biggest foreign owner of Australian water with 698 gigalitres. Since it has added another 143 gigalitres with PSP Investments’ purchase of Auscott Limited cotton business and 3.1 gigalitres with the Brewarrana deal.

The two biggest farmland and water deals in Australian history are the $860 million sale of Olam Orchards’ almond farms at Robinvale and the $854 million sale of the ASX-listed Webster Limited, both to PSP.