Agriculture an opportunity for super funds, ISA says

According to a statement, ISA said its paper responds to calls for the $2 trillion super sector to invest in local agriculture and support regional development.

ISA chief economist Dr Stephen Anthony said there are “real opportunities” in this.

“With scale and the right settings, the fundamentals of relatively stable returns, capital appreciation from rising land values and renewable income cash flows are very attractive,” he said.

“Into the future, the potential Australia has to position itself as the food bowl for Asia’s burgeoning middle class is really quite staggering. Australian superannuation funds could help take agriculture to the next level in global competitiveness.”

However, Dr Anthony points out there first needs to be some groundwork laid out.

“The funds will need reliable, independent data, agriculture-specific expertise and revised national policy settings,” he said.

The paper also shows that global investors are “rapidly accumulating” strategic stakes in local agricultural holdings, with Canadian and American pension funds investing over $1 billion in Australia since 2007.

“That global investors with big reputations think they can make a go of farming in Australia, and are prepared to invest significant amounts for the long haul, is encouraging,” Dr Anthony said.

“Australia is receiving ready-access to foreign capital and expertise, but our agricultural industry is being ‘cherry picked’ with quality assets falling into the hands of external investors.”