INSTITUTIONS and individuals investing large volumes of capital, foreign or domestic, into Australian agricultural land is not new – but good land management that also increases productivity and profitability from this investment lies in the hands of some smart local land managers.
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Two Australian farmers, both with tertiary agricultural qualifications who are heavily involved in productivity gain and capital deployment, Andrew Parkes and Andrew Ordish, have forged a conduit between these investors from the late 2000s through their business, Customised Farm Management (CFM), Moree.
Andrew Parkes said they could initially see increasing property investment, but wondered how investors were going to run those farms, providing the possible opportunity for their company business plan.
“Investors had the capital, but not the understanding or knowledge of what assets they should buy, and how they operate them,” Mr Parkes said.
“We recognised that opportunity and started our company.”
Mr Parkes said they were lucky to start off with an association with a AAA rated US based agricultural asset management company that had already purchased properties in Australia.
“They were a leading institution in terms of deployment of capital into agricultural assets at the time, so we set our business up to manage their assets.”
“That experience gave us the understanding of what we had to build within a business to help satisfy the requirements of that capital being deployed,” he said.
Today CFM is managing 20 properties in Queensland, NSW and Victoria, totalling an area close to 110,000 hectares for 12 different clients varying from high net worth individuals and institutions, both foreign and domestic.The collective value of assets currently under management is almost $350 million, with CFM participating in some ownership where appropriate.
Mr Parkes said all the investors they work for understood farming as being a business, with the objective of pushing their assets to their limit to increase their returns while maintaining and focusing on sustainability and long term viability .
“”They are very much number orientated, very clever people who foresee through their due-diligence and research that an investment into agriculture is a smart thing to do from both a short and long term perspective.
“They then usually want to know what they need to do to any purchase to make it better, more productive and efficient.”
They ask about development projects, changing irrigation systems, moving to no-till farming, growing alternative crops,” Mr Parkes said.
“And when a cost-benefits analysis is explained and the pathway forward is agreed to, the go ahead is given and the required money is invested.”
Mr Parkes said one of the major benefits to the agricultural industry from those investors was how well deployed capital could benefit development and productivity gains.
“Never in my time in agriculture have I been made as aware as I am now of how constraining the lack of capital can be to farming until I saw what having access to capital and what knowledgeable financially-based deployment of that capital can to do a farm.
“That is not only something good for the asset itself and the investor, but it’s also good for local service providers and the local people in the community who will be asked to help deliver that uplift.”
Mr Parkes said investors did not bring with them the service providers to make all of that happen.
“We engage those people locally where possible. This adds to possible increases in employment, opportunity for business growth and development, and all of this flows through to further benefiting the community.
“You can see that actual material benefit coming through that deployment of capital.” Sighting examples of foreign capital that had been deployed in the Riverina, southern and southwest NSW.
“Places like Griffith and Narrandera and smaller towns like Darlington Point, Hay and Hillston are experiencing positive effects from that investment,” he said.
“I have two people in our office going through eight on-farm development projects that we would expect to put in place in the course of the next three or four years.
“We have to complete detailed budgeting and gain an understanding of all of those projects before we ask our clients to approve them, but once we have that we are comfortable in going to other groups and service providers saying this is what we have going on, what can you help with?”
Mr Parkes said once neighbours and locals in the nearby community saw finances flowing through they gained better understanding and generally become more willing to accept this new dynamic.
“Many are even prepared to grow on the back of what the developments bring as we like to sit with local business people and explain what we plan over the course of the next three to five years and most see an opening for the advancement of their business.
“Every one of these investor groups prefer we use local people wherever we can and it is rewarding to see this manifest in increased productivity on the assets, an opportunity for local business growth and employment as well as a more vibrant ‘buzz’ within the community.”
