The median price of Australian farmland grew by more than 20 per cent last year — far outpacing growth on the ASX 200 and residential property price rises, according to Rural Bank.
The soaring prices came despite the highest number of transactions in almost three decades, with a total area of just under half the size of Victoria changing hands.
In its yearly Farmland Values Report, specialist lender Rural Bank said the demand for farmland was being fuelled by historically low interest rates, soaring commodity prices and strong production.
The median price per hectare (ha) grew by more than 30 per cent in Victoria ($10,583/ha), Queensland ($,6,827/ha), and Western Australia ($4,178/ha).
Nationally it sits at $7,087/ha.
The growth in farmland value over the past 20 years has risen to 8.4 per cent, outpacing the ASX200's 4 per cent growth over the same time frame, and the capital city residential market's 5.4 per cent rise over the past 18 years, according to Rural Bank.
"Generally we've had a very favourable season for agriculture in 2021," Rural Bank general manager sales, partnerships and marketing Simon Dundon said.
Commercial real estate firm LAWD senior director Danny Thomas told a recent NSW Farm Writers event the market "was absolutely red hot".
"There's very few segments of the market that are not performing extremely well, and the depth of purchases is unprecedented," Mr Thomas said.
Rising rates
Rural Bank anticipated demand for farmland would remain strong through 2022, but noted rising interest rates could curb the extent of the demand.
"Finance is an input, and it will certainly play on people's minds," Mr Dundon said.
"But the caveat I'd put on that is that interest rates are still at historically low levels and farmers are generally long-term investors."
Who's buying?
The Weekly Times has revealed Australia's richest woman, Gina Rinehart, is no longer the largest landholder in Australia, with Crown Point Pastoral Company's Viv Oldfield and Danny Costello now sitting at the top of the list.
Crown Point Pastoral now owns a total of 7.2 million hectares of land across northern Australia, after it purchased four stations from Ms Rinehart's Hancock Prospecting and S Kidman & Co portfolio, for $3.1 million, Weekly Times editor James Wagstaff told RN's Country Breakfast.
A spending spree by Canadian pension fund PSP Investments has resulted in a $5 billion portfolio of assets, and places the fund as the biggest owner of farmland by value.
In 2020, the ABC revealed PSP, which manages the pensions of the Canadian Royal Mounted Police and its public service and armed forces, was the largest owner of water rights in the Murray Darling Basin.
Through its subsidiaries, Daybreak Cropping, Australian Food and Fibre, Aurora Dairies among others, it acquired AusCott in May last year, including AusCott's 40,000 hectares of land and cotton gins in northern NSW and the Riverina.
Earlier this year PSP Investments acquired 1.1 million hectares of land in the NT, for $96 million.
Family farms expanding
At the same time larger corporate players have been expanding their holdings, across the country some of the highest prices paid for farmland have been by family farms looking to acquire neighbouring or local parcels of land that have hit the market.
"Some corporate landowners have been selling off land, and it has been really refreshing to see the family farmers expanding and buying those properties," Mr Dundon said.
That was the case in 2020, in southern New South Wales, when the Westchester Group, a US fund, listed an aggregation of broadacre properties that were purchased in smaller parcels by neighbouring family farming operations.
Oxley Capital Partners managing director Ben Craw said investments made 7 to 10 years ago by fund managers were winding down.
"There's been anecdotal evidence in the market of a number of closed-end funds reaching the end of their time horizon," he said.
The latest data from the Foreign Investment Review Board revealed a slowing in foreign purchases of Australian farmland.
But Mr Craw said the ability for large corporate investors to sell off land to local buyers made Australia an attractive investment.
"It's a positive, and the groups we speak to, domestic investors and offshore capital, they see Australia very favourably.
"So there's a lot of appetite, and a lot of money that still has Australia in its sights."
Good days
Mr Dundon expects the market to remain "buoyant" in 2022.
Mr Craw said the run of good seasons, and the cash flowing through the regions was reaching beyond the farm gate.
"There is a lot of prosperity when you go into the regions," Mr Craw said.
"You talk about the social fabric of regional Australia, you can really feel the prosperity, which will influence more younger people to come into agriculture."
