Permanent crops still ripe into 2018

There has been continued investment interest in high-value permanent crops into 2018. Currently,
around 10% of Australia’s agricultural production land is used for permanent crops, but with the
number of property conversions underway, as well as increased green field investments along the
Murray Darling Basin and across Northern Australia, this may increase.
Underpinning this interest is the rising value of fruit and nuts (excl. grapes) which have risen 25%
according to the latest ABS figures. There has also been interest in table grapes which last year
became Australia’s highest-value horticultural industry with production now worth more than $600
million.
Australian citrus is also benefiting from increased global demand with exports for the 2017 season
valued at $377 million – a 31 per cent jump on the 2016.
The interest in nuts has been primarily driven by strategic investments into both established, and
green field, almond assets. US almond producers and investors have learnt some valuable lessons
following the 2011-2016 drought in California which saw poor yields drive up global almond prices.
With around 80% of the world’s almond production in California, investors are continuing to mitigate
the environmental risk of such a heavily concentrated production area.
There has also been some high profile investments into permanent crops including Andrew ‘Twiggy’
Forrest’s plan to convert 90 hectares of cattle country into irrigated horticulture to grow mangoes in
North-West Western Australia.
Chinese investors such as Shanghai Zhongfu are also developing over 3000 hectares of land in
Western Australia to grow permanent crops such as citrus and mango trees. Both of these
investments are export focused to supply Asian markets.
Avocados also can’t stay out of the news with Jasper Farms recently selling
for $180m to Canada’s Ontario Teachers Pension Fund.
Smith Agri International Senior Executive, Tim Smith said “Ontario Teachers
Pension Fund is considered one of the most sophisticated and largest
provident funds in the world with over AU$175bn worth of assets under
management. An investment of this scale into the Australian agri sector will
no doubt be closely monitored by the Australian superannuation funds who
are lightly exposed and considering increasing exposure to agri.”
There are a number of reasons for the rise of permanent crops including that they can provide more
efficient water use and often require less cultivation and herbicides than annual crops. In addition,
permanent crops do not need to be sown annually which can reduce soil erosion and maintain soil
nutrient levels. Permanent crops can also allow for dual use of land as by supporting mixed farming
operations. However, investors do need to consider these crops as a long-term investment, with
some crops not delivering a commercial harvest for a number of years.
Smith Agri International works with qualified investors to support and identify growth and acquisition
opportunities across the agribusiness sector, including permanent crops. We work to identify
suitable targets domestically and internationally drawing on our comprehensive and meaningful
industry relationships.
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