This article is from the Australian Property Journal archive
GROWTH across the Australian farmland sector is still limited, though the forecast on seasonal earnings is looking more optimistic in 2024.
According to ANREV, Australian farmland has recorded a total annualised return of 10.86% from its inception in 2015 to the end of 2023, with contributions from income return of 5.10% and capital growth of 5.57%.
“These annual farmland returns well-outpaced the permanent cropping sector, where we have seen a further deterioration of capital values of -6.9% over the prior 12 months, bringing the total return to -7.7% and resulting in an annualised capital growth since inception below 3.0% for the first time,” read participant commentary from Riparian Capital Partners.
“Despite continued support of positive annual crop performance, the overhang of a challenging 2023 permanent crop season has continued to temper overall results in the sector.”
For Q1 2024, there was a total return of -0.89% with income returns of 0.80% and capital growth of -1.70%.
Over the last five years, Australian farmland has recorded a total annualised return of 8.30% with a 4.28% income return and 3.89% capital growth.
Over the summer, rainfall was mixed across the country, with levels above average in the north and centre but below average in many of the key agricultural regions in the west and south.
Pasture growth was strong across key livestock regions, seeing a boost to cattle and sheep prices.
While summer cropping harvests were delayed, leading to some negative impacts to quality.
“Winter cropping prospects have been buoyed in the east with strong stored soil moisture profiles but pressured in the west and south due to a very dry summer and late autumn break,” read the commentary from Riparian Capital Partners.
“Water storage levels remain considerably above long-term averages supporting both the annual and permanent crop irrigation sector outlooks.”
Interest rates are a major player in the agricultural sector banks to this point have been supportive of sensible debt positions, while the weather outlook is uncertain and the Bureau is forecasting neutral conditions.
Last month, the 2024 Rural Bank Australian Farmland Values Report revealed the national median price increase by 6.4% to $9,575/ha in 2023, reflecting the second-lowest year of growth for the decade.
