Farm lotto

Conversations | 27th May 2024 | By Chris Lawlor

Independent Contributor

Last week I showed the effect of a 5% CAGR on land values over 10 years, as shown in this report the last 10 years has actually averaged 11.6%.

Statement from the ‘2024 Rural Bank Australian Farmland Values Report

“The Report shows the past 10 years have seen the national median price for Australian farmland triple, rising by 201 per cent at a compound annual growth rate (CAGR) of 11.6 per cent. This rate of growth is well ahead of the longer-term 20-year CAGR of 8.4%.”

This is nothing short of incredible (honestly it compares to winning Lotto)…..if you own a farm…..and a little depressing if you sold 3+ years ago. Most of these gains have come in the last 3 years although long term the average CAGR has exceeded 8%. 20 year CAGR’s of over 5% have been common across the developed world’s farmland, although most not as fast as Australia’s recent jump. NZ saw similar for the low end of the market briefly when for a recent period the ‘idealist government of the day’ allowed a flood of overseas investment into forestry in a failed attempt to intercept global warming.

But after a run of good commodity prices across the board, sheep and beef products are trading lower and closer to long term averages, Dairy and cropping are holding up, but costs have suffered inflationary effects and jumped 15-20%.

So, what happens now?…..with some farmers borrowing aggressively against their recent valuations, will the market hold and allow them to retain their new found equity?

In South-West Victoria, farms in the 500-600mm rainfall areas are now trading at $6,500 – $7,500/acre, down from $8,000 – $9,000/acre and occasionally above 1-2 years ago.

Some coastal areas with 800 – 1,000 mm rainfall are enjoying a ‘Forestry’ floor in the market with properties being sold for blue gums above $9,000/acre. This price has jumped from $6,000 -7,000/acre 2 years ago with carbon credits now adding $2,000/acre to the value. Dairies with good infrastructure are still trading at $10,000 – $11,000/acre and $2,000/acre more if partially irrigated.

The new ‘Forestry’ floor is certainly comforting for those in the wetter areas, however in the sub 600mm rainfall areas prices could slide a little further, but only in a spring selling market if supply outstrips demand, which will likely happen if the continuing low rainfall affects crop yields and pasture growth.

All areas in Victoria are subject to the ‘tightly held’ syndrome where long-term farming families with 70-80% plus equity can pay above valuation for nearby land due to good ‘borrowing power’. As has been in the media recently the North American Pension funds are highly active seeking superior quality properties of scale, in dairy generally having a strong preference for irrigation with reliable water, often the preference with their cropping and horticulture investments as well. The funds have coped a bit of flak in the media for paying inflated values, I have never heard of them paying over an independent bank valuation.

In conclusion it is only the dry-land farming areas with less than 600mm rainfall and in the not so ‘tightly held’ areas that risk dropping a further $500-1000/acre. The rest are likely to stay ‘flat’ at the current commodity prices, although flat means still rising at the level of inflation which is stubbornly holding around 4%…….not lotto, but not to be scoffed at on $10 million plus assets.


  • Farm Values
  • Land
  • Equity
  • Debt