Home Contact Us Farmers Investors

What is the general nature of the investment?

Partners in Farming is looking to invest in sound, productive farming land in Australia.  Our investment will be as tenants in common with the established farmers and the land will be leased back to the farmer at a competitive lease fee.  The injection of funds from Partners in Farming will be used to retire the farmer’s debt.  This will give the farmer a sound financial footing for his/her business.  We are looking to keep the experienced management in place because this represents an investment in a quality asset, often overlooked by investors who try to organise their own property managers.  The farmer will be granted an option to repurchase the land if they decide they are financially able to in the future.

We believe in the philosophy that the best fertiliser is the owner’s footprints.  This has lead to our decision to allow the farmer full autonomy to manage the operating business and to only be involved in the land ownership.

How secure is the investment?

Partners in Farming Investment Fund will hold a proportion of the land title as security to reflect the share of the land purchased.  The land title will be as tenants in common over all titles held by the farm owner.  This will mitigate the chance of the farmer caring more for one portion than another.  A condition of the agreement will be quarterly reporting by the farmer to Partners in Farming to fulfil extension services undertaken by Partners in Farming.

What returns are expected from the investment?

Lease payments from farmers will be structured to achieve a base rate, set down at the beginning of the agreement, and a performance rate.  This performance rate will be based upon the turnover of the farm.  It is predicted that the extra cash freed up in the farm businesses by the transition of debt finance to equity finance will be reinvested into productivity enhancing activities and the improved turnover will generate performance based lease fees.  Lease payments are expected to be in the vicinity of 3-5% of the capital value of the land base.

Historical capital gain on rural land has been in the vicinity of 6-7%.  In the past fifteen years capital gain has varied from a low of -4% to a high of 15% per annum for NSW farms.  However, the past performance is no guarantee of the future performance.

Can investors withdraw their money if necessary?

The nature of farming and the security required by procuring land title makes the investment a long term proposition.  As such the minimum investment period will be five years and withdrawals after that time may take some time to process if the withdrawal is for more than 5% of the total fund value. 

What risks are involved?

There is always risk involved in business, however by spreading our investments over a large number of farms, over a wide geographical area and including a wide diversity of commodities much of the risk normally associated with agriculture will be removed.  Further, our in depth research into the farms we are investing in will reduce the risk that we invest in underperforming businesses.  An analysis of the returns from farming in the past decade shows much less volatility than the share market.

Hasn’t agriculture been a poor performer as an investment?

The operational returns for agricultural pursuits has been impacted upon by the ‘Green revolution’, a result of a rapid change in technology in the latter half of the last century.  This resulted in oversupply of the food and textile markets and a lowering of the real price of rural commodities.  Despite this difficult trading period agriculture has still been a major wealth creating industry through capital appreciation of farm assets.  It is also forecast that the next few decades are expected to see an improvement in operational returns because economists predict that the growth in global demand for agricultural commodities will now outstrip the growth in supply.

What are the predictions for agricultural supply and demand?

In the first half of this century the global demand for food is likely to double.  About half of this demand growth will be due to the continued growth in world population and the other half will be the result of per capita income growth in developing and newly industrialising countries leading to increased food consumption.  Supply of global food is not likely to keep pace with the increased demand because the land that is available for agricultural production is limited, or water for food production is limited, and agricultural productivity growth rate is declining from a high of 4% growth per year in the 1960’s to 1980’s, to the present growth rate of 1% per annum.