Originally posted August 3, 2017
The Sustainable Agriculture Fund (SAF) has delivered a strong full year return of 18.7% after fees and tax, benefitting from both strong cash returns and capital growth. Net farm profit excluding capital appreciation this year was $9.8m ($8.8m in FY2016). While global grain prices have been low, winter crop yields were high and beef production and prices combined to provide a stellar result for SAF’s King Island Aggregation.
This is the fourth year in the row that SAF has increased its net cash profit from its portfolio and demonstrates the benefits of SAF’s diversification. Chief Executive Officer, Martin Newnham explains: “Despite agricultural commodity prices and weather conditions varying year-to-year and region-to-region, SAF’s operating profit has been remarkably stable. This is the benefit of having a diversified portfolio. While some observers may express surprise at the consistency given the well-known risks our performance in actual fact bears remarkable resemblance to the performance of the ABARES benchmark that the portfolio design sought to emulate.”
However, this is only one side of the story, with continual improvement an objective for agCap. “Growth in profits and farm net profit margins year-on-year is no accident. It is directly related to our pursuit of productivity and efficiency gains in every facet of our portfolio. Individually, such gains may be small, however collectively, they add up and deliver meaningful value to our investors,” explains Deo de Jesus, General Manager, Strategy.
The Sustainable Agriculture Fund is currently being offered for sale. CBRE are managing the sales process with offers due to be received in early August.