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.