Returns in Australia’s agricultural sector in 2016 outpaced the previous year by more than 7 percent to hit 16.4 percent, according to data released by the Australian Farmland Index.
Of the 16.4 percent, AFI said 8.5 percent resulted from operating income, and 7.9 percent from an increase in land values. The result is 7.1 percent more compared to the 9.3 percent reported for 2015. Returns resulting from land value appreciation experienced the sharpest rise from 2.5 percent in 2015 to 7.9 percent last year.
The results were calculated based on an analysis of over A$1 billion ($743.6 million; €667.3 million) worth of agricultural land representing 57 farms that produce a wide range of products – both permanent crops and livestock – across the country.
The Index, which was launched in the beginning of 2015, is compiled by the National Council of Real Estate Investment Fiduciaries (NCREIF), a non-profit organization based in Chicago that has been collecting data for the NCREIF index for North American agricultural investors, since 1990.
According to AFI’s statement, the Australian index uses the same methodology as that used for North America but with minor adaptations to accommodate differences in Australian agriculture. Its purpose is to provide “quality information on institutional grade assets so that professional investors can fully assess the sector from both an income and capital return basis as compared to other investment classes.”
Data is collected on a quarterly basis.
Businesses that currently contribute data are Growth Farms, Blue Sky, goFarm Australia, Rural Funds Management, AAG Investment Management and Hancock Agricultural Investment Group.