South American Real Estate News

Australia shows South America the way to achieve Agricultural efficiencies

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The appetite for Australian farmland continues to grow at the expense of South America’s two main competitors Argentina and Brazil’s, which are mired in economic stagnation.

In a world where scale is king, Australia’s top landholders certainly aren’t holding back in their quest for growth — to the point where the 20 biggest now occupy an area larger than France.

Buoyed by relatively strong returns across most commodities, these operators — which include iconic Australian businesses such as S Kidman & Co and Australian Agricultural Company as well as wealthy individuals including billionaire businesswoman Gina Rinehart — farm a combined area of 70 million hectares.

That’s bigger than the entire 64.4 million hectares of France and is more than five times the size of England. It also represents about 9 per cent of Australia’s land mass.

Australian-Chinese consortium Outback Beef is the nation’s biggest landholder with its S Kidman & Co holdings covering 7.92 million hectares of Northern Australia. Outback Beef is 67 per cent owned by Australian mining giant Gina Rinehart’s Hancock Prospecting, which, with a further 2.22 million hectares, comes in at No.15 in their own right.

The second-biggest landholder is the Australian Agricultural Company (seven million hectares) with the North Australian Pastoral Company (5.94 million hectares), Northern Territory cattle baron Viv Oldfield (five million hectares-plus) and Jumbuck Pastoral Company (4.94 million hectares) rounding out the top five.

The once-mighty Consolidated Pastoral Company fell from No.5 to No.9 following its sell-off of properties in the past year. It now operates 3.36 million hectares — down from 5.04 million hectares last year. It is expected to slip further down the rankings this year with the remainder of the empire still on the market.

Foreign interests continue to play a significant role in the ownership stakes, with offshore interests accounting for about 13.4 per cent, or 52.6 million hectares, of Australian farmland. The UK is the biggest investor with 10.24 million hectares, followed by China (9.17 million hectares) and the US (2.66 million hectares).

CBRE agribusiness director Danny Thomas says there is significant money from North America, particularly Canada, currently being invested in Australian agriculture.

“It’s as though we have awakened a sleeping giant — they really like Aussie ag,” Thomas says. “Every other week there is a transaction from a North American fund.”

Thomas says Canadian funds are looking to Australian agriculture for its lower sovereign risk and proximity to Asian export markets.

An example of Canadian activity was the $208 million purchase by Canada’s Public Sector Pension Investment Board of the former BFB portfolio of 44,167 hectares around Temora, Junee and Wagga Wagga in southern NSW this year.

Other major sales in the past 12 months have included the divestment of the Qatari Government-controlled Hassad portfolio in NSW, Western Australia and Victoria to Macquarie-backed funds Paraway Pastoral (No.7), and Viridis Agriculture, as well as AJ & PA McBride. The Nicoletti family recently sold its West Australian cropping aggregation to Saudi Arabian interests for a reported $60 million.

Unless inward thinking South American governments reassess their position on foreign investors they will continue to lag their competitors like Australia and Canada.

Source: The Weekly Times

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