MALAYSIAN owned company KLK Farms Pty Ltd has opened its cheque book again with the recent purchase of two farms at York.
The company is reported to have paid up to $2000 an acre for the 2050 hectare properties in order to add to its WA portfolio.
Having already invested in farms at Northampton and Williams, KLK Farms Pty Ltd reportedly also looked at a third York property in the lead-up to its most recent purchases but a satisfactory price agreement couldn't be met.
Farming Management Services managing director Geoff Collins confirmed the deal, telling Farm Weekly the York acquisitions formed part of KLK Farms Pty Ltd's plan to move parts of its primarily grain growing operation to more secure and profitable cropping regions.
Mr Collins said in order for that to happen KLK Farms Pty Ltd sold a number of its South Coastal and Esperance properties 10-15 years ago but was then unable to locate reasonable sized farms to make a worthwhile corporate investment.
But the current economic climate meant that had changed in recent years.
Mr Collins said unlike Chinese or American investors in WA agricultural land, KLK Farms Pty Ltd's main focus was profitability not scale.
This meant investment in one of the State's most reliable farming areas at York made sound business sense.
"It's one thing that doesn't seem to have been properly identified by a number of corporate and foreign investors," Mr Collins said.
"If they wanted to take it to the extreme and go to the Nullarbor Plains they would have millions of acres but what was produced from the land would be practically nothing.
"Productivity needs to be kept in sight and for us that equals rainfall and soil type."
While Chinese and American investors continued their hunt for significant co-located hectares in the Lakes district, Mr Collins said what had changed was the sudden availability of prime farmland away from marginal grain growing areas.
"We're not interested in acres," he said.
"Rather than re-investing in marginal areas after the sale of our South Coastal properties we decided to wait.
"And now economic factors have driven growers who farm on some of the State's best agricultural land to reassess their positions."
Mr Collins said KLK Farms Pty Ltd was able to make the best of prime land sales which had occurred during the last 12-18 months and "do what the company had originally intended to do" after the sale of its South Coast farms.
"KLK Farms Pty Ltd's main focus is cereal production and that's what brought about the re-location from the South Coastal areas," he said.
"The South Coast just gave us so much pain.
"We could grow crops but it cost us so much to get them in, then they would need to be dried or we would swath canola without being able to pick it up.
"Harvest went on forever.
"There are better locations if grain is what you really want to grow."
A part of the KLK company for 30 years, Mr Collins said if non-sovereign buyers like KLK Farms Pty Ltd weren't in the game of buying valuable properties, WA agricultural property values would continue to fall and banks would would continue to refuse farm finance on that basis.
When asked if KLK Farms Pty Ltd had plans to buy more land in the Avon Valley or surrounding districts Mr Collins pointed to the company's "very long-term" strategy.
"In a sense it really depends on what opportunities come along," he said.
"From time to time, in areas that we can see we could grow grain in and do it well, we might look at acquiring something else but we're not looking to go out and buy millions of acres or anything like that.
"We are governed by profitability, food security isn't an issue for us.
"We're out there farming just like everybody else."
KLK Farms Pty Ltd's York deals were brokered by Simon Wilding of VNW Independent real estate.
When Farm Weekly spoke to Mr Wilding late last week he said KLK Farms Pty Ltd was in expansion mode and had also bought "a whole lot of land" around Dandaragan with VNW Independent's involvement.
"There's not a lot of confidence among the larger farming group at the moment," Mr Wilding said.
"And it's still hard to say whether foreign or corporate investors will play a larger role in the Avon Valley area."
Mr Wilding said after personal communication with heads of KLK Farms Pty Ltd while on a tour of the region it was clear good quality country was what they were after and York's red loam soils provided just that.
"KLK Farms Pty Ltd has its smarts because at the end of the day the land purchased will look after the business down the track," he said.
"It's prepared to pay a premium for what it wants so it's a win for everybody involved."
Some reports suggested a number of neighbours to the two York properties were happy with KLK Farms Pty Ltd's purchase, citing increased equity in their land due to the heightened price paid by the Malaysian buyer.
Others weren't so impressed.
"Right now there probably is expansion potential for KLK Farms Pty Ltd," Mr Wilding said.
"There are also some very strong family farming units out there who still want to expand and we should encourage that as well."
Earlier in the year KLK Farms Pty Ltd bought Jib Jib, Chilimony and Trevenson farms at Northampton for an undisclosed amount.
The three properties, two of them neighbouring and the other close by, comprised a total of 13,970ha of which 11,103ha was arable.
KLK Farms Pty Ltd also owns Erregulla Farm at Mingenew which has been in the company's holding for nearly 40 years.
Some 30 years ago the company also purchased a long-term holding at Williams which is still owned and operated today.
