Invest
Why all the fuss with agricultural investment?
When the government starts monitoring investment activity in a particular asset class, it’s time for investors to sit up and pay attention.
Why all the fuss with agricultural investment?
When the government starts monitoring investment activity in a particular asset class, it’s time for investors to sit up and pay attention.
The Deputy Prime Minister Barnaby Joyce has a sizeable bone to pick with the superannuation industry – it’s reluctance to invest in Australia’s agricultural industry.
At a time when super funds have a collective $2.1 trillion in funds under management, a paltry 0.3 per cent finds its way into rural investment. The anomaly is even starker when it’s considered offshore interests are queuing up to invest and super funds (especially self-managed super funds) are desperate for yield and reliable investment against a backdrop of ongoing share market volatility in 2016.
The reasons for this lack of investment interest have been regularly canvassed. The family-owned farming structure makes investment difficult, there is a lack of products to invest in, and the absence of knowledge about the sector and asset managers who have the expertise to advise on it.
The family-owned structure is an issue. But the other reasons cited are hard to excuse when measured against the sheer size of the industry: 12 per cent of GDP, generating revenue of $145 billion annually, and exporting, on average, more than $30 billion worth of commodities annually. Add to this the growing demand in Asia for our agri products, and the lack of investment interest is even harder to understand. It seems Barnaby might have a point. But it is not missed on foreign investors who are lining up for what is becoming the world’s biggest garage sale.
What’s rarely mentioned in the ongoing national debate is what agricultural assets have to offer. Although the value of rural land obviously fluctuates in line with market demand for agri commodities, the value of the dollar, and climatic events (think drought and flood), it attracts reasonable yields of between four and six per cent and enjoys solid capital gain.
It’s important to distinguish here between the failed tax-driven managed investment schemes of yesteryear with the genuine agricultural and animal production industries that have been integral to Australia’s economic landscape for more than 200 years.
In our opinion, domestic investment into agricultural assets has the potential to be a significant game changer in the rural sector as the replacement of debt with long-term investment equity not only provides stability to rural enterprises, but can substantially reduce the debt servicing load for the operating business.
This has many benefits, including more robust business structures by reducing debt servicing, the ability to reinvest by the operator into operating assets such as cattle, feed expansion, equipment for improvement, thus enhancing the outcome of greater revenue to increase equity or for further expansion.
And that is why the government is talking about agriculture.
Warren Gibson, general manager, sales and marketing, DomaCom
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
Granny flats become Aussie families' cost-effective solution to soaring living costs
As the cost of living skyrockets, a forward-thinking trend is sweeping across Australia – granny flats are becoming a favoured living arrangement for older Aussies seeking comfort and proximity to ...Read more
Property
Homebuyers grapple with extended savings period amid affordability crisis
Gone are the days when an Australian dream home seemed just within reach. The path to homeownership in Australia has extended by at least two arduous years, as revealed by the latest insights from ...Read more
Property
Hybrid development unlocks new potential for NDIS housing in metro hotspots
In a ground-breaking strategy aimed at addressing the stark imbalance between the location of Specialist Disability Accommodation (SDA) developments and the actual areas of demand, Aligned Disability ...Read more
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. Read more
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
Granny flats become Aussie families' cost-effective solution to soaring living costs
As the cost of living skyrockets, a forward-thinking trend is sweeping across Australia – granny flats are becoming a favoured living arrangement for older Aussies seeking comfort and proximity to ...Read more
Property
Homebuyers grapple with extended savings period amid affordability crisis
Gone are the days when an Australian dream home seemed just within reach. The path to homeownership in Australia has extended by at least two arduous years, as revealed by the latest insights from ...Read more
Property
Hybrid development unlocks new potential for NDIS housing in metro hotspots
In a ground-breaking strategy aimed at addressing the stark imbalance between the location of Specialist Disability Accommodation (SDA) developments and the actual areas of demand, Aligned Disability ...Read more
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. Read more