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Sunflower field
The NCREIF Australian Farmland Index, which is heavily weighted to permanent cropping, shows total returns held up fairly well despite drought across much of eastern and northern Australia.
With drought leading to record-high water prices in south-east Australia last year, investors have started to look north in search of returns – but there are huge barriers to overcome. Daniel Kemp investigates what efforts are being made to unlock the opportunities.
Map showing Australia fire risk index
Data analyzed by Digital Agriculture Services found that Queensland saw the most agricultural land affected by fire, but timber plantations in New South Wales and Victoria were also hit hard.
Credit Suisse has highlighted the 'perfect margin squeeze' for agribusinesses and primary producers presented by water scarcity but efficiency innovation continues to present investment opportunities.
Interest from institutional investors and private equity remains strong in Australian agriculture despite difficult conditions because of a belief in the asset class’ ‘long-term thesis’.
NAB and Dairy Australia said continuing high input costs, exacerbated by drought, have led to a decline in production, with further falls expected this year.
Cow in field after fire
Digital Agriculture Services found a strong correlation between drought-affected and fire-hit land, with 86% of fire-hit land suffering at least a 1-in-10-year rainfall deficit.
Raging bush fire
The unprecedented bushfire season is playing out in a way that climate scientists predicted years ago, demonstrating again how agriculture assets, especially those in a country like Australia, are vulnerable to climate risk.
Basin state governments all said progress was made at a meeting this week, although claims of an ‘overhaul’ of the Plan by the NSW government were dismissed by observers.
Drought in Australia
Rabobank found that 41% of farmers thought agricultural conditions would worsen in the coming 12 months, after ABARES revised down its winter crop forecast for 2019-20 by 13%.
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