Limited Credit Funding Competition in Growing Agricultural Sector

There has been significant growth in agribusiness funding over the last decade. The number of food and agriculture funds with headquarters in Australia and New Zealand has grown from 2 in 2000 to 52 in 2019 with the ten largest having an aggregate AG AUM of $10.96 billion, (High Quest Partners-Global Aginvesting Rankings and Trend Report 2019). That report also estimated that the aggregated capital investment from the top 689 agricultural investors was USD $131 billion, with Australia and New Zealand highlighted as a geographic focus for the majority of the largest 30.

The reasons for the trend in investment growth are extensive. Beyond low correlation to broader macro-economic markets and diversification benefits agriculture brings to the investment portfolio, the current strength of the Australian and New Zealand agricultural sectors has attracted global interest. The Australia Farmland Index provides financial performance of 42 different properties of market value over $1.07 billion in farmland. In Q4 2020, the Index returned 11.69% on a 12-month rolling basis, a competitive performance compared to equity markets, listed property and commercial property.