On top of a typically fertile spring rural property market, all signs are pointing to an unprecedented season for the agribusiness sector, exemplified in the recent sale of a 11,254 hectare Queensland farm after 157-years in one family.
According to CBRE’s latest market review of the sector, the spring of 2021 is set to outperform its predecessors with both market and environmental conditions shining in favour of farmers.
Across the countries eastern seaboard, for example, grain growing regions are expected to see yields exceeding an average spring for the second consecutive year, with prices also underpinned by emerging global grain shortages and quality issues.
“This is potentially creating the perfect outcome for Australian grain growers, where they have high yield potential and high grain prices at the same time,” said David Goodfellow, agribusiness managing director at CBRE.
ABARES in its Australian Crop Report, has forecast the country’s new-crop wheat production at 32.6 million tonnes, up 17% from June estimates, with barley at 12.5 million tonnes and canola at a record 5 million tonnes.
According to ABARES, that national winter crop harvest is expected to reach 54.8 million tonnes, up 32% on the 10 year average.
While in livestock, prices are also experiencing an uptick with both the EYCI and Restocker lamb indicating reaching 1000 cents for the month, supported by plentiful supplies of grass.
Lamb exports were reported at a 5% increase for the year, exports to the US up 21% for the year.
Horticulture and dairy are also forecast for an ample result this season, with dairy farmers in Tasmania producing a record 961 million litres for the year ending June 20.
“Many of the irrigators in southern NSW are gearing up for large summer cropping programs this year, particularly to grow rice and cotton as water is plentiful and gross margins for both these crops are looking very positive again this year,” said Boo Harvey, associate director at CBRE.
According to Harvey, wool is shaping up to be the only commodity that is not preforming so well, experiencing overall losses in recent weeks, though some of this will be made up in strong restocker prices.
“Equity levels in agribusiness properties have, in most cases, strengthened as balance sheets are updated with current land and commodity prices. Combined with record low interest rates and the view that agriculture is a safer lending proposition is underpinning unprecedented buyer demand,” said Goodfellow.
Despite this, farmers are bucking predictions that saw many selling in light of such ideal conditions.
“In many cases, families are not so much thinking ‘let’s sell and everyone can get their share’, but more thinking ‘let’s get bigger’ for greater economies of scale and to acquire more land for future generations,” added Harvey.
The positive outlook is enticing investors with Macquarie Crop Partners this week selling its 105,000 hectare Lawson Grains portfolio for more than half a billion dollars to Sydney-based New Forests and Canada’s Alberta Investment Management Corporation (AIMCo).
Meanwhile the Crothers family have offloaded Booligar, their 11,254-hectare irrigation and grazing farm in Dirranbandi, Queensland, which has changed hands for the first time after 157 years.
Sitting 44 kilometres outside the centre of Dirranbandi, Booligar was purchased by to the Hunt family, from Mallawa, who will operate the property with the Swain family from Walgett.
The farm was sold with 687-hectares of irrigation and 3,600-hectares of dryland farming, in addition to livestock.
After suffering under drought conditions for years, the Dirranbandi region has seen a turnaround in conditions, with rains bringings dust storms to manageable levels and cotton to new highs.
The season left Booligar’s storages filled to capacity at 9,210-megalitres, while adding to its value the farm holds water licences with a nominal entitlement of 4,005ML,volumetric licence of 4,834ML and a further 298ML of overland flow.
While the sale price of the farm was not made public, it is reported to be in excess of the $14 million offered at auction in 2014.
Those following the trend are taking advantage of current windfalls to upgrade machinery and equipment, offsetting tax and creating greater labour efficiencies.
“However, it can’t be forgotten that agriculture is no different to any other industry in that we have booms and busts – everything has a cycle,” said James Auty, associate director at CBRE.
“We are certainly in a boom cycle and how long it lasts for only time will tell, however we do know that we have never seen it better certainly in our lifetime or our parents’ lifetime for that matter,” he concluded.