While a recent flurry of transactions has seen a number of farming aggregations change hands, the rate of foreign investment in Australia remains largely unchanged.
US-based pension fund Proterra Investment Partners has recently put the last of its Australian investments on the market, offering a portfolio of farming properties across three states.
Vaucluse (4,448 hectares) in Tasmania, One Tree (23,594 ha) in Queensland and New South Wales, and Racecourse (14,425 ha) in Queensland were recently listed for sale with an estimated price tag of around $400 million.
Proterra Investment Partners sold a 22,500 ha aggregation for $360 million late last year. Corinella Farms, comprising a total of 49 properties, included land across the Wimmera and South Australia with a predominant cropping focus.
“Proterra has done an outstanding job to strategically aggregate land and water assets and to transition these into highly productive aggregations, now representing more than $400 million in value, across wide-ranging geographical areas and commodities,” said Danny Thomas, a senior director at LAWD which brokered the sale.
While Proterra had planned to sell its Australian interests as part of a 10-year exit strategy, the recent surge in farmland values had forced the company to reconsider its timeline.
“It is a great time to capitalise on the existing strong market while there is an insatiable appetite from investors who want to enter or expand in the agriculture space,” said Becs Willson, managing director of Proterra.
Now looking at the sale of their remaining assets, Proterra will be looking to make capitalise on market buoyancy to give “strong returns to our investors”.
The redevelopment of properties like Vaucluse will likely provide the returns they’re anticipating, with the property now one of Tasmania’s biggest grain producers with the additional benefit of insufficient local supply.
“Operating a five-year crop rotation across the farm, we have established Vaucluse as a high-calibre, large-scale cereal producer to benefit from strong demand from the Tasmanian livestock and aquaculture industries in an operating environment where there is limited local production,” said Ms Willson.
The property features extensive irrigation infrastructure for the production of grains, poppies, carrots and hemp and has a water entitlement of more than 15,000 megalitres with 9000 ML of on-farm water storage.
“By investing heavily in water infrastructure and agronomics, we have significantly improved yields, while the construction of a 5424-tonne grain storage facility has further allowed us to extract a premium price by holding grain on behalf of customers and delivering throughout the year to guarantee a consistently high-quality product,” Ms Willson added.
Foreign Investment Rate Stable
Despite the activity among foreign investors, the foreign investment rate in Australian agricultural land has been consistent over the last five years.
China remains the biggest foreign stakeholder in Australia (2.3%), but the majority of Chinese interests are on a leasehold basis. Following the Chinese, the UK has a 2.2% stake, with the USA third (0.8%), the Netherlands (0.7%) and Canada (0.6%).
On a freehold only basis, the Netherlands is the most significant investor with 1.6 million hectares of Australian farmland.
At the end of the last financial year, 14.1 per cent of agricultural land has “some level” of foreign ownership – the equivalent of 53 million hectares.