Perceived complexity hinders agricultural allocations

Despite being one of the oldest asset classes on the book, most Australian investors remain underweight the agriculture allocation, according to iPartners’ Head of Capital Markets, Toby Harham.

Welcoming a panel of experts at the iPartners Alternatives Investment conference held in Sydney on Wednesday, Harpham suggested the lack of allocation could be down to its perceived complexity.

“Agriculture is complex, especially for those who are not affiliated with it,” he said.

“The second part is that the majority of agriculture is privately funded, so it can be difficult to get your name out there.”

Argyle Capital President Kim Morison agreed with Harpham’s sentiments.

“One of the reasons I think the asset class has lacked allocation is that there aren’t many people walking the streets of major capitals like Sydney or Melbourne who have operational experience. on how to get the best returns,” he said.

“But certainly, out there among the farming community, although there are fewer farmers than there were in the 1940s, those who are still there are generally those who are able to generate very good returns.”

He added that one principle that applies is that around 15% of farmers make 80% of the profits and own 80% of the assets; “And those are the ones we really need to understand.”

AAM Investment Group Founder and Managing Director Garry Edwards said there has never been a better time to invest in agriculture.

“The really exciting thing about the industry right now is that with the right people and access to technology, there are dramatic shifts in asset values ​​that can be accomplished by executing well,” he said. he declares.

However, he agreed that a big challenge for investors getting involved is managing an asset or business they don’t understand.

“What we have found is that investors who have an interest in regional Australia or are involved in agriculture have become investors in our funds and therefore benefit from our professional management team,” a- he declared.

“Because we see assets on behalf of our investors, it sort of solves what has traditionally been the biggest problem and biggest limitation. A lot of people are excited to be involved, they just have no idea how they will manage or access management expertise.”

Sharon D. Cole