The Australian agricultural sector is experiencing unprecedented demand. Every sector has a strong outlook according to the 2017 Colliers International Rural and Agribusiness research report.
“Rarely has there been a time where all of the agriculture sectors and commodities have experienced strong demand,” said Shane McIntyre, Head of Rural & Agribusiness at Colliers International.
“This is underpinned by low interest rates, positive seasonal outlook, strong commodity prices, the prospect of La Nina seasonal influence, short supply of property on the market and global respect for Australian primary produce.
“Prime investment opportunities will be found in those enterprises that are versatile in nature and possess multiple income sources which are highly sought after, like cereal cropping, fat lamb and beef.
“Rural properties geared towards beef production will continue to be in high demand due to the current low Australian beef herd numbers and it is likely that the supply/demand tension will continue for at least the medium term.
“Cotton and fat lamb production returns have been extraordinary and that trend looks like it is going to continue.
“Wool has had an outstanding recovery with a finer end of the market seeing a massive increase in returns with growers receiving more than $2,000 a bale, as indicated by the Australian Wool Network.
“Demand for Australian wine has continued to grow with the weaker Australian dollar and trade agreements with China contributing to strong recovery in sales to export markets. Total value of the 2016 crush rose 21 per cent; and average wine grape prices increased overall by 14 per cent - the highest since 2009.
“Cropping land values have increased at unprecedented rates over the last half decade, having improved by up to 30 per cent in parts of southern Australia and between 10-20 per cent in northern areas, of more marginal rainfall.
“Given the strong likelihood of a continuation of La Nina climate conditions, it is reasonable to assume an average or above average crop yields for the 2017/18 winter harvest. Current forecasts are suggesting a 2.4 percent increase in production of wheat for the coming season.
“The dairy sector has been challenged by low farm gate prices and high production costs for farmers. But there is an expectancy that farm gate prices will increase over the coming 12 months which will stabilise the returns in the sector.
“In New Zealand, dairy and milk processing provided the greatest level of offshore investment with China accounting for the majority of the activity. The rest of the market remains cautiously confident after property prices continued to increase last year, despite the lower annual sales turnover and a relatively challenging year at the dairy farm gate,” said Mr McIntyre.