THERE is demand for permanent cropping properties, notably avocado, citrus and nut orchards which has fuelled an 11.3 per cent jump in land values monitored by the Australian Farmland Index in 2017.
General enquiry for key broadacre grazing and cropping country and land for table grape production also contributed strongly to the climb in valuations.
They follow a solid 9pc rise the previous year.
Near historic highs in horticulture, wool and sheep markets are underpinning buoyant land values in productive farming areas where some of Australia’s big agricultural investors have put down roots.
However, 2017’s particularly hot, dry and patchy seasonal conditions eroded overall returns on investment performances recorded across the 60 investment sector properties assessed for the national index.
The barometer of leading farmland investment earnings showed total returns for the year to December 2017 grew 15.87pc.
A healthy result, but not enough to match 18pc-plus gains posted in 2016.
Income return for 2017 was 4.3pc, or about half that recorded the previous year (8.54pc).
Annual income was also down significantly from the result of 6.3pc recorded just three months earlier for the year to September 30.
Australian Farmland Index coordinator Frank Delahunty said, “this reflects the generally drier winter experienced in 2017”.
“On an annualised basis, the index experienced relatively lower, yet still strong returns, because of weaker growing conditions influenced by a number of climatic factors.”
Mr Delahunty noted 2017 was Australia’s third warmest year on record, with both minimum and maximum temperatures above average.
Although averaged rainfall was 8pc above the national average, the reality of dry weather across much of eastern Australia hit home for broadacre farmers and many livestock producers, especially in northern New South Wales and much of Queensland.
Across the Murray-Darling Basin, September 2017 made headlines as the driest ever recorded for that month.
Dry conditions in many parts of Australia pushed down livestock prices last year, but resilient sheep and wool values helped drive up broadacre property demand.
Livestock prices fell from June to October as herd and flock numbers were culled to cope with the dry conditions.
Then in October wetter conditions in eastern Australia “positively influenced seasonal outcomes” for southern winter crops and saw cattle prices firm slightly and stabilise.
Mr Delahunty said appreciating land values across the index, which charts a portfolio of properties worth almost $1.1 billion, was evident after strong demand for both developed assets and suitable greenfield planting sites in the horticultural sector.
Record export prices, coupled with strong demand fundamentals and supply shortages in local markets made avocado, citrus, table grape, almond and other nut property values particularly robust.
“The almond industry has seen significant demand for productive orchards and greenfield sites continue to put upward pressure on land prices and drive capital returns,” he said.
“Demand also remains strong for cotton properties in the NSW Riverina as that crop expands further southwards.”
Mr Delahunty said higher than average rainfall in parts of eastern Australia in the final quarter of 2017 had favoured cotton earnings prospects after a challenging dry and frost-affected start to the season.
While income opportunities for pastoral properties in western Queensland and the Gulf of Carpentaria had improved with wet season rain in recent months, the beef industry was facing more export market competition from the United States and Brazil.
