Annualised returns for investors with cropping and grazing farmland have leapt to almost 40 per cent on the back of the past year's bumper harvests, big grain and meat prices and soaring property values.
Red hot capital growth has largely driven total returns from cropping and livestock land to hit 39.2pc, with capital gains contributing 27.16pc in the year to April 30.
Latest Australian Farmland Index data shows income returns from the annual cropping and grazing category were also respectable, but much less, at 10.2pc.
The farmland index tracks the book value and earnings from a basket of institutional grade agricultural investment properties worth $1.8 billion.
Overall returns top 14pc
Its latest overall assessment of one year rolling returns across annual broadacre farmland enterprises and permanent cropping assets eased to 14.68pc, with income generating a 7.2pc return and capital growth slightly behind at 7.1pc.
The slowdown in total Australian farmland returns reflected rather modest annualised capital growth for land with permanent crop plantings, which was at just 1.25pc.
Permanent cropping farmland income was also notably behind that of annual crop and livestock holdings, but still solid at 6.12pc.
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The Australian Farmland Index monitors the capital and income appreciation performance of 65 properties managed by the likes of Rural Funds Management, Gunn Agri Partners and Growth Farms Australia.
It is compiled quarterly by the not-for-profit Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV), which follows similar assets across the agricultural, residential and commercial property market throughout Asia.
On a quarter-by-quarter basis the index recorded a positive total income return of 2.53pc on the previous three month period, including 2.02pc for income returns and 0.51pc for capital growth.
Annual cropping properties have a 48pc representation on the index and permanent cropping land 52pc, or 38pc and 62pc by market value.
ANREV noted how the farmland index's strong returns were fuelled by good seasonal conditions and strong commodity prices in the past year.
Past years higher
However, on a rolling annual basis since the index commenced in 2015, total returns were previously higher 2016 and 2017, around 19pc, when income and capital growth were both relatively bullish across both farmland categories.
Commentary from Gunn Agri Partners noted the current overall result remained strong from a historical perspective, particularly the above trend returns generated by annual production systems.
Annual farmland, which includes broadacre grain and oilseed cropping and livestock grazing, had recorded its best performance in the past four quarters.
Above average winter and summer crop harvests in eastern Australia and soaring beef cattle prices, as exporters and re-stockers fiercely continued competing for livestock, had kept income contributions above trend.
Gunn Agri noted projections were for another strong year for crop producers, with the national commodity forecaster tipping the gross value of grain production to reach $45 billion in 2022-23, just behind the current financial year's $48b record high.
"This reflects near-record winter crop production coupled with high world grain and oilseed prices," the commentary said.
"Income growth from livestock production is also expected, and while prices are forecast to ease, the Australian Bureau of Agricultural and Resource Economics and Sciences forecasts the gross value of production will rise 1.2pc to $35b in 2022-23."
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
