Agriculture Investment Update – 25/05/2020
Last Week’s Ag Journal reported the top Australian Land owners. Ranking in the top three were PS Investments ($3B+), Macquarie Ag ($2.7B) TIAA-CREF ($1.7B). These portfolios have been built relatively quickly, they have been strategic and diversified. You cannot help but commend their investment execution in an industry we all deeply believe in as we can see the merits of a solid agri investment strategy. I note a lot of the larger investors in Australian Agriculture have significant water entitlements to which I have noted on numerous times that it THE asset that is the cornerstone to any investment. Furthermore, water acts as wonderfull hedge in dry times as values generally appreciate. I am only disappointed that we have not been able to rally our own Future Fund to invest in agriculture to some relative degree. I note the Future Fund has an number of of Funds and mandates, one of these being the Future Drought Fund (with a benchmark target of 2-3% over CPI). Would it not make total sense that this fund is a vehicle to buy water entitlements for the benefit (returns and potential distribution to land holders)…
We all have been directly influenced by the pandemanic across the globe and God willing we in Australia have seen the worst. If we learn anything from this disaster it is that there is a new dynamic to work which has transported us forward many years in what was inevitable, in that it makes total sense to work from home. Other take outs is the resilience of agri investment. It did not miss a beat in that asset values and income rained generally steady whilst some markets imploded. Other take outs is our focus on Australia returning to manufacturing at home.
Surely the smart country can encompass out technology to gain advantage over cheap labour to be able to provide our nearest neighbours a products that is not only grown here but manufactured here. Bring on manufacturing assistance so we move away from an exporter of dumb commodities to the new world of value added food and fibre products. Lest ensure investment is not a sugar hit but real effort to support industry.
As a grower of commodities it infuriates me to see some of our largest export destinations put tariffs on our products at will. India and more recently China flexed their leverage muscles to make it nearly impossible for our commodities to make it into those markets withe flow on effects dropping commodities by a large chunk. Now, I’m a free marketer, have been and always will be however when the games changes, I think we need to react. Government dialogue should always continue and assist to build a long deep relationship with our nearest neighbours (and its great to see a Trade deal recently negotiated with Indonesia) and push hard to build new markets. But, here’s an idea, do we implement a National body to sell or our commodities? Boards were introduced back in the day to protect farmers from unscrupulous merchants at the time. Learning from the past, is there a way to gain leverage as a sole body with all the effectiveness of a free market to gain leverage in negotiations? I think there is…..
We have our new website up. We hope you like it . As allways, we are keen to get any feedback and if we can assit to invest or exit your agri enterprise, please feel free to have a chat.
Have a great weekend!
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