Super funds trail in agriculture field

27 Apr, 2015 06:10 AM
Comments
4
 
The understanding of what agriculture can actually do is probably not as precise as it should be

AUSTRALIA'S superannuation funds invest on average just 0.3 per cent in the agriculture sector.

A new survey of 114 superannuation funds highlights how far corporate Australia has fallen behind in agricultural investment in an environment where an increasingly large percentage of foreign pension fund managers are buying up farmland and farming businesses.

The survey, commissioned by accounting group BDO and conducted by the University of Queensland Business School's commercial arm UniQuest, reveals that 7.4 per cent of super fund investments in agriculture were made directly, while the remainder were indirect or through listed vehicles.

BDO national leader for agribusiness David Krause said the survey was a crucial start to firing up the debate about Australia's institutional investment in agriculture.

"There has been a lot of talk about why superannuation funds don't invest in agriculture, but there really hasn't been lot of facts about it," Mr Krause said.

'This is a starting point."

"I think this report shows that a lot more work needs to be done to entice super funds. At the moment there is a lack of products available."

Respondents in the BDO-commissioned survey represented $274 billion in superannuation assets which represents a sample of 22 per cent of products approved by the Australian Prudential Regulation Authority.

Earlier this month Federal Agriculture Minister Barnaby Joyce accused Australian superannuation and investment funds of failing to understand the agricultural sector.

"With attracting investment from super funds, I find some of the biggest arguments is trying to get the asset managers to understand the fundamentals of agriculture," he told The Australian's Global Food Forum.

"They seem to understand how to wear RM Williams boots and they like photos of horses, but the understanding of what agriculture can actually do is probably not as precise as it should be." However, the super funds have hit back.

The Association of Superannuation Funds of Australia's chief executive Pauline Vamos said agriculture had a difficult investment history.

"Australian super funds are very well aware of the difficult history of some agricultural vehicles, particularly under managed investment schemes," she said.

"The highly unpredictable nature of returns in this sector has not necessarily aligned well with the goals of super funds which are looking for less volatile income streams. However, these investments may suit sovereign wealth funds whose goals are better aligned."

One agricultural investment vehicle set up in recent times that won significant backing from super funds was the Sustainable Agriculture Fund.

The co-founder of the fund, Arthur Apted, said agriculture was unlike any other asset class, but the sector was also a bit "smug".

"For us it took 37 months to get superannuation in the door and in the end we raised $145 million from six major superannuation funds. It was very difficult and there was great scepticism about the merit of the sector."

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READER COMMENTS

Bushfire Blonde
27/04/2015 7:39:29 AM

If Agriculture has such a difficult history as stated by Ms Vamos of the ASFA, how come RaboBank has been performing OK for decades? - it does not invest in anything else but Agriculture.
X AG Socialist
27/04/2015 7:55:34 AM

114 Super Funds surveyed thousands of self managed super funds ignored ,
harold
28/04/2015 1:01:50 PM

maybe the super funds don't feel the commodity markets are honest enough to make good returns, in conjunction with a unpredictable climate.
Bushie Bill
29/04/2015 8:43:08 PM

Banks are lenders of money, secured on assets. Superannuation funds are owners of part of the equity. Equity holders take far more risks than lenders. Equity holders take risks in return for higher rewards, which is exactly what members of superannuation fund expect their Funds to do for them. Got it now, Bushie Blonde?

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