Positive outlook for Agribusiness sector despite global disruptions

The outlook for the Australian Agribusiness sector remains positive this year, partially due to its non-discretionary nature and its highly important role of ensuring Australians have food on their table throughout the COVID-19 outbreak.

 The Colliers International Agribusiness Research and Forecast Report for 2020 found that the sector is supported by the growing worldwide population; the affordable nature of Australian land values compared to other countries and the increasing worldwide demand for Australian high-quality food production.

 “Despite the negative economic conditions and market uncertainties, we know that demand for food will never cease which provides a bullet-proof scenario for the Agribusiness sector, supports its long-term financial sustainability, and positions the sector as a key driver of the recovery process for society and the economy,” said Alex Thamm, Head of Agribusiness Valuation and Advisory Services at Colliers International.

“IBISWorld industry research forecasts a gradual increase of agricultural output volumes over the medium term, underpinning a forecast annual growth in agribusiness revenue of 1.6 per cent, from $282 billion in June 2019 to $305 billion in June 2024.”

Colliers’ report found that apart from weather conditions and natural disasters, divergent factors are forecast to continue influencing the outlook of the Australian agribusiness sector in 2020.

The recently endorsed Indonesia-Australia Comprehensive Economic Partnership Agreement is expected to facilitate export activity to Indonesia, with the beef, wheat and sheep industries being three of the main winners due to the automatic issue of import permits. The removal of tariffs on 99 per cent of selected Australian goods will also be beneficial for various agribusiness operators.

Karina Salas, Associate Director, Research said, “Australia’s case for agricultural prosperity is well known due to its proximity to Asian markets, its stable political structure and transparent legal system. The low exchange rate of the Australian dollar is also another factor improving the competitiveness of the sector internationally and supporting a positive outlook this year.

“Taking into account the increasing demand of Australian agricultural products, good rainfall events across significant areas of the country in 2020 and generally strong commodity prices Colliers International forecasts general value stability with possibly some firming of rural land values in selected sectors in 2020."

From a capital investment perspective, the report revealed that the Australian agribusiness sector has become a solid alternative investment asset for institutional investors looking for long-term returns and portfolio diversification.

However, family farms continue to dominate the market due to their deep-rooted standing and sector know-how. The new FIRB rules requiring approval for all foreign investment transactions during the COVID-19 outbreak provides the opportunity to the Australian superannuation funds to expand their investment in agricultural assets.

The Agribusiness Research and Forecast Report found that the Australian volume of agribusiness sales (above $5 million) increased by 30% in 2019 to reach $4.3 billion compared to $3.3 billion in 2018, recording the highest level of capital investment in 2019.

“The Queensland market attracted the largest 2019 capital on farming properties across Australia of $1.3 billion off the back of over 90 transactions,” said Rawdon Briggs, Head of Agribusiness, Transaction Services at Colliers International.

“Meanwhile, Victoria remained the second largest farmland investment market in Australia for the second consecutive year, reaching an estimated volume of sales of $1.2 billion in 2019, while investment volumes on farming land in NSW reached $1.1 billion, underpinning over 25 per cent of the annual capital investment across Australia in 2019.”

The outlook of the Agribusiness investment market in 2020 is steady and largely driven by the consistent increase in demand for quality agricultural product. The clearly recognised investor comfort displayed by private and institutional investors who partner with reputable farmers nationally, all of which have a long-term investment horizon of farmland as a stand-alone asset class globally, said Mr Briggs.


Related Experts

Rawdon Briggs

Head of Agribusiness | Agribusiness Transaction Services

Brisbane CBD

Rawdon is a direct and to the point communicator that focuses on clients long term outcomes and objectives. Rawdon  is a 5th generation rural land owner in Central QLD, well  known as an Agribuiness Broker  who follows through on what he says. A regarded negotiator that is versatile,  adaptive and outcome driven.

Rawdon is a focused specialist within Beef, Cotton & Grain commodity disciplines of agricultural that are either corporate farmers and traditional farming family owners or operators.

Colliers Internationals has enabled Rawdon to partner with some of Colliers finest people & platforms to ensure the clients brief is delivered from preparation to settlement for any asset Sale, Lease or J.V.

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Alex Thamm

Head of Agribusiness

Adelaide

Alex and his team specialise in the the provision of valuation and consultancy services to the rural and agribusiness sector on a national and international basis. They have specific skills in the wine, forestry, agriculture, horticulture, fisheries/aquaculture and large scale grazing and cropping sectors. The team also has plant and machinery qualifications, and deal with complex and specialised assets including large multi-jurisdictional portfolios on a regular basis.

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Karina Salas

Associate Director, Research

Brisbane CBD

Karina began her professional career in Peru in the areas of credit analysis and banking negotiation, shaping the analytical skills supporting her current portfolio of clients at Colliers International.

During her experience as an Analyst Supervision with APRA and in corporate finance, she has gained experience across many facets of business and project investment including research, feasibility analysis, forecasting, risk management, funding structure and financing.

Her passion for the property sector supported her decision to change careers and invest in the delivery of a portfolio of small development projects for the residential sector. Karina has gained solid experience in the property sector across various investment assets including residential, commercial and industrial.

Throughout her career, Karina has gained a vast knowledge in risk management, project management, finance and property research, making her a valuable asset for our clients in the Brisbane office.  

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