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China thirsty for Australian wine and citrus as agribusiness property prices soar

A Colliers International report has found Chinese thirst for Australian wine has tripled since 2013/14, with the total value of wine exports expected to reach $595 million in 2016/17.

 

China continues to be the key growth market for wine exports, after the more established markets in the US and UK which are still the largest importers of Australian wine.

 

Colliers International Rural & Agribusiness Research and Forecast Report (March 2018) shows wine is Australia’s fourth-largest agricultural commodity with a total export value of $2.64 billion, and a significant 12 per cent increase on last year. Large-scale commercial vineyards have seen their values nearly double in the past two years as wine continues to perform well.

 

The increased profitability of citrus enterprises, coupled with the lack of buying opportunities for purchasers has spiked demand for mature citrus orchards, with some notable transactions showing nearly 100 per cent increase in values in less than three years.

 

Colliers International Head of Rural and Agribusiness Rawdon Briggs and National Director Transaction Services Tim Altschwager agreed there was a “strong appetite for investment in Australian agriculture from farmers and agribusinesses, as well as investors.”

 

“We haven’t seen this level of activity in 10 years – some properties have seen nearly 100 inquries in recent weeks,” Mr Briggs said.

 

Mr Altschwager said this was off the back of record crop yields and rising prices.

 

“For instance, the values of large-scale commercial vineyards have nearly doubled in the past two years,” Mr Altschwager said.

 

Additionaly, Mr Briggs said the price of Wagyu boxed beef being sold to China was still increasing in price year on year. “With the rate of rise now slowing we still see this as a major investment driver in high value beef assets in NSW particularly close to export processing capacity,” Mr Briggs said.

 

Colliers International research manager Helen Swanson said there were four key trends occurring in the current commodity market.

 

“The top trend is the consolidation of entities within major Agribusiness sectors, resulting in improved productivity and cost efficiencies being unlocked further with technology,” Ms Swanson said.

 

“The second is macro-eocnomic impacts, a falling AUD could be expected to create a stronger export market for Australian agricultural produce.

 

“Other trends include sale and lease-back agreements for succession planning which are popular with families and co-orporations; along with greater dependence and development of agricultural technology.”

 

The report also looked at other commodities such as the domestic beef market, which continues to feel the pressure from increased pork and chicken consumption as a result of reduced supermarket prices. However, high-quality Wagyu continued to be in demand.

 

Australian beef exports ended the year in line with 2016 levels, while export markets for 2018 are forecast to be challenging, as many key competitors increase beef production, including the USA, Brazil and India.

 

Other commodity results include impressive sheep and wool prices, with property values likely to increase further. At present, demand for high-quality grazing assets is outstripping supply.

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