Originally posted August 26, 2016
The Sustainable Agriculture Fund (SAF) has enjoyed a strong year, delivering a total before tax return of $13.4 million. Underpinned by strong cash operating returns, agCap as trustee of SAF, has declared a distribution of $10 million for its Australian superannuation and institutional investors.
Once again, SAF’s diversification and approach to farming has proven a benefit for investors. Strong performance at its New South Wales’ grain and cotton enterprises and its King Island Beef operation offset the difficult operating conditions at its Tasmanian dairy and Victorian cropping enterprises.
Martin Newnham, Chief Executive Officer of agCap said: “SAF’s returns have held up really well despite difficult seasons and market prices for some of our commodities. This has really vindicated our diversified portfolio approach and our farming philosophy, which is about taking the best of the family farming model and overlaying it with good governance and financial discipline.”
Sales results have also reflected the strength in rural land prices. Deo de Jesus, General Manager, Strategy: “Sentiment is good for the sector. Last year we foreshadowed improving asset values with a continuation of a lower Australian dollar and recent increases in asset values has supported this view”.
agCap anticipates continued strength in rural land prices. “We expect there to be further catch-up in land prices after the flat period at the start of this decade. We anticipate the benefits of the free trade agreements entered into in the last couple of years will support land prices, particularly when the cycle turns in the wheat and dairy sectors.
There is now an opportunity for institutional investors to invest in SAF. Martin Newnham explains: “We have supportive foundation investors that would like to remain and indeed grow their investment in SAF. However, there are other investors for their own internal reasons have asked us to test the market.”
Owned by Australian institutional investors, SAF has a diversified portfolio of agricultural assets that operate along Australia’s eastern seaboard, including grain, cotton, dairy and beef enterprises. SAF provides investors with exposure to land-rich Australian broadacre cropping and livestock sectors. Well managed agricultural investments have demonstrated benefits to investor’s portfolios through their inflation hedging characteristics and low correlation with traditional asset classes.