Bonanza crop and grazing returns send farmland index leaping

Farmland returns spike after bonanza crop, grazing year


Earnings from annual cropping and grazing enterprises posted their highest ever quarterly result on the Australian Farmland Index in 2020.


After a bumper finish to last year's grain season and good pasture growth during 2020, earnings from annual cropping and grazing enterprises posted their highest ever quarterly result on the Australian Farmland Index.

Expectations are high for another big quarterly result when returns from the start of this year are assessed.

The huge 30 million tonne eastern states crop and soaring beef cattle values also helped drive a total return for the full year of 30.26 per cent for corporate scale livestock and grain holdings monitored by the index.

Capital value growth from farmland assets hit 15.03pc while income returns for the year were 13.35pc.

The 2020 result was also the best ever for farmland returns since the index began monitoring investor class farmland earnings in 2015.

Annual grazing and cropping enterprises, including broadacre cereals, cotton and oilseed operations, represent a quarter of the 42 properties monitored by the Farmland Index, while permanent crops such as nut, citrus and vineyard plantings make up 74pc.

For the full year to December 31 the index recorded an average total return to farmland investors of 11.7pc, incorporating income of 7.3pc and capital growth of 4.1pc.

Although that figure represented a solid performance when compared with other investment opportunities in 2020, such as the share market, on a rolling 12 month basis the year's returns actually ended lower than they began, around the 14.5pc mark because of a drop in capital growth returns which began in early 2019.

The AFI is compiled by the Asian Association for Investors in Non-Listed Real Estate Vehicles, whose director of research and professional standards Amelie Delaunay said despite the unprecedented turmoil of 2020, Australian farmland showed remarkable resilience compared to other asset classes.

Amelie Delaunay

Amelie Delaunay

"ANREV is delighted to be improving transparency in regards to the performance of this asset class," she said.

"We are actively looking for more contributors and subscribers to the index and will be working to further develop and promote the index in the coming year."

Gunn Agri, one of six corporate farmland owners and management groups monitored by the index, noted the performance of annual farming businesses for the year to December reflected nine months of capital value growth in 2020.

It also saw the highest income return recorded since the farmland index's inception - 10.12pc in the final three months.


Strong fourth quarter results were driven by a well above average winter crop harvest on the eastern seaboard where NSW harvested a whopper 18.6m tonnes and Victoria 9.6m, plus fierce demand from beef exporters and cattle restockers.

The bullish end of year performance also augured well for 2021, where the first quarter results were tipped to hit new records when released in early June.

Gunn Agri pointed to grain marketing, processing and logistics giant GrainCorp reporting how its combined intake for the 2020-21 harvest exceeded 13m tonnes by February, eclipsing the 12.6m tonnes of winter crop grower receivals delivered to its storages during the last bumper crop in 2016-17.

Nationally the grain crop totalled an impressive 55.2m tonnes, despite a drier than average West Australian growing season.

"Capital growth for the quarter remained well above long term trend for the third successive quarter as sustained high commodity prices flowed through to asset values," Gunn Agri reported.

"Agricultural asset values have also benefited from the flight towards real assets from capital allocators and an easing of interest rates and lending policies of rural lenders."

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