Super fund cautious on ag

22 Sep, 2015 02:00 AM
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6
 
As a nation we need to start investing in the longer term

THE chief executive of the $2.5 billion Prime Super, Lachlan Baird, says the superannuation fund is unlikely to invest in agriculture or rural land again unless the government assists in bringing more professional and bigger-scale investment opportunities to the market.

Prime Super, which has 130,000 members and was originally set up to service the farming sector and other primary industries, now only has $23 million in agricultural assets under management, or roughly 0.90 per cent of its entire portfolio.

The fund's exposure had once been higher than $70 million but the assets did not perform well for various reasons, including drought.

Mr Baird said the super fund was now unlikely to invest in agriculture because of the risks and the lack of available investment vehicles. He is calling on governments to help fund the pooling of smaller private farms, turning them into proper large-scale agricultural investments.

"As a super fund we can't go out and do that ourselves - there is too much risk involved," Mr Baird said. "I can't get past the point that government must be involved. As a nation we need to start investing in the longer term."

He said there had been quite a few funds that had attempted to pool assets. "A lot of work still needs to be done to create such vehicles."

BDO's national leader for food and agribusiness, Anne Lockwood, said a minimum size of $100 million would be needed to make such vehicles worthwhile for super fund investment.

"There is a lot of scaling up that needs to happen, " Ms Lockwood said. "The government needs to provide assistance for grant funding to allow business plans and projects to create such scale and remove the gap between farms and super fund investment."

National Farmers Federation chief executive Simon Talbot said Australia did not have a good narrative for helping farmers to scale up.

"I am cautious about getting government to come into private sector investment, but we do need a narrative to help farmers scale up and if we had that it would help super funds invest."

Australia's superannuation funds invest on average just 0.3 per cent of their portfolios in the agriculture sector.

Mr Baird said the best opportunity for superannuation funds to invest in the agriculture sector was in infrastructure.

AFR
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READER COMMENTS

X
22/09/2015 4:40:29 AM

Market forces without Gov. Intervention always give the best outcome.
chops
22/09/2015 7:14:32 AM

The big funds don't have the patience or the risk appetite to be invested directly in farming. No big deal to aggregate three or four 30 million dollar operations with a sensible mix of geography and commodity.Plenty of good ag management groups that can do that for them. They simply cannot handle good averaged returns over say a ten year time frame. These people are geared for annual certainty and, sorry, but regardless of the size of the operation you cannot provide certainty year on year. The vagaries of weather, market and knee jerk policy will trump the best of forecasts.
hft
22/09/2015 7:49:57 AM

Dont u mean the certainty of rigged markets via algorithmic trading chops?
Deregul8
22/09/2015 9:25:30 AM

I'll take the weather over government any day of the week. The smart money is coming for agriculture. Australia's unpayable debt will ensure that
angry australian
22/09/2015 11:40:51 AM

Gotta roll on the floor laughing.....an industry super fund,the one set up to take funds off farm employees, with an AWU and NFF nominee on their board doesn't consider ag to be a safe place to invest UNLESS "the government assists in bringing more professional and bigger-scale investment opportunities to the market."Will bigger scale operations necessarily be better investments... think Cubbie,Macquarie etc Do they want a handout? Perhaps the government might listen to a super fund about the lack of profitability, they sure don't listen to farmers.
Mark2
23/09/2015 4:23:43 PM

I think you are right on the money Angry. It's pretty typical of big business really, look at most of the international corporates operating here, they don't invest to create wealthy more so to grab it, offload liabilities and transfer the assets to their balance sheets. One of the problems the institutional shareholders caused for the corporatised AWB was the lack of understanding of weather impact etc, there is no long term vision really. To take a swipe af family farms and their size is a fairly cheap shot, most people take a long view and a realistic one

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