28 Aug Investment in Australian Agriculture Swings in Favour of Domestic Buyers
Almost 2.2 million hectares of Australian grazing country has returned from foreign investors to Australian owners in the past nine months, signalling a change in the cycle of agricultural property investment.
The sale of Consolidated Pastoral Company in October got the ball rolling in 2018, with UK firm Terra Firma selling most of the portfolio as separate holdings to Australian owners. Cleveland Agriculture purchased Nockatunga Station (QLD) for around $50 million including plant and 5,000 cattle, as well as Ucharonidge Station in the NT for a further $30 million on a walk-in-walk-out basis. Earlier this year Sterling Buntine bought Mimong Station (NT) for $20 million as well as Comely Station (QLD) for $50 million, both without stock.
Aside from the divestment of CPC, several other transactions have contributed towards the reverse in trend including the sale of Edith Springs (NT) from Indonesian owners to former neighbour Steve Black for $4.71 million bare. The Qatari-owned Telopea Downs Station sold more in excess of $70 million to South Australian graziers AJ & PA McBride.
Filipino businessman Romeo Rozas sold Pine Hill Station to South Australian Greg Vickers for $12 million including 5,500 head of cattle, and Epenarra Station to Bass Cattle Co for $14 million in a walk-in-walk-out deal that included plant, machinery and 8,000 head of droughtmaster cattle.
Foreign investment has been a constant feature of the Australian agricultural landscape since European settlement. Until the 1960’s, the main source of foreign investment was the UK, before Hong Kong, Japan, China and US investors became active.
While some investors have been driven solely by financial returns, others have been driven by food security concerns. Muslim states, including Malaysia and Brunei, have previously secured Northern Territory cattle stations where livestock are bred, before being transported back to their home countries for fattening and slaughter.
While the cycle of foreign versus domestic-dominant investment in Australia agriculture continues, one expert warns that there are no certainties when it comes to how long it might last.
“There is a continuing cycle of change around people and investment exposures as a result of commercial and personal decisions. There aren’t many large corporations or overseas investors that stay in the market for a long period of time,” said David Crombie.
Mr Crombie, who owns farming land in Southern Queensland and is a board member of AAco, says the purchase and sale of land by foreign investors is a common feature of the landscape.
“It is not unusual for fund managers to exit particular investments on a regular basis. This is evidenced by current sale of Terra Firma’s Consolidated Pastoral Co’s northern grazing assets.”
“The strength of Australian agriculture is farm families and larger family companies. There is much talk about foreign investment, however the critical mass remains in the hands of Australian farm families. To me, that’s comforting, and the way it should be,” he said.
A recent report by Rabobank showed that 13% of Australian agricultural land is foreign-owned (including partial foreign investment) or 7% of land by value. By sector, horticulture attracts the most amount of foreign investment with 36% (area) or 23 % (value). Tasmania has the highest amount of foreign investment in Australia, by both area and value.