Corporate investors send Australia’s land prices up

Western Producer | 23 March 2012
Land prices in Australia are beginning to reflect the fact that corporate investors like Cargill and Glencore are buying aggressively.

MELBOURNE, Aus. — Corporate control of Australia’s farmland is beginning to ruffle feathers among some of the country’s primary producers.

Peter Allen, a grain and oilseed producer from central New South Wales, said corporate land acquisitions in his area have risen sharply during the past few years.

At least three land acquisition companies have been accumulating land in the area.

One, the BFB Group, is associated with a subsidiary of Cargill, the world’s largest agribusiness company. 

Glencore International Plc of Switzerland is also acquiring a significant stake in farmland in the Australian states of N.S.W. and Queensland.

“We’ve seen a very rapid rise in the corporatization of agriculture,” said Allen. “They’re buying farms wholesale and turning it over to growers that they employ.”

Allen, who farms near Temora, N.S.W., said the BFB Group has invested heavily in his area.

“They’ve bought, I’d say, 17 or 18 farms and now they’re moving out of the area into another district, so they’re looking to assemble a fairly big stake.”

Land prices are beginning to reflect the fact that corporate investors are buying aggressively, he added.

Non-irrigated cropland near his farm is routinely selling for $1,000 to $1,200 Aus per acre.

“From a family farming business point of view, it’s very difficult if you’re going to try to compete against them to buy land and expand your operation,” he said.

“Land prices here seem to be disproportionate to their returns.”

Last month, an Australian newspaper reported that a hedge fund operated by a subsidiary of Cargill bought a significant stake in BFB Group.

The hedge fund, Black River Asset Management, took a $40 million investment position in BFB, which now controls more than $83 million in rural Australian properties and infrastructure.

BFB recently bought a large property known as Billabong Station for more than $9 million. The property is located east of Wagga Wagga, N.S.W., in the heart of one of the state’s most productive farming regions.

Accounts filed with Australia’s corporate regulators suggest the BFB Group had annual revenues of $20 million and recorded profits of $5.4 million in 2010.

Australia has foreign ownership laws that restrict how much land foreign interests can acquire.

Instead of buying land directly, large agribusiness companies are acquiring land through subsidiaries or making investments with land holding companies that are based in the country, Allen said.

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