LAUNCHING a large scale agricultural property investment fund in the midst of a roaring drought might have presented a few challenges, but Macquarie Bank's Paraway Pastoral division is showing no signs of regretting the move these days.
The Sydney-based global investment powerhouse, with its reputation for some exceptional wealth creation achievements for its investors and executives, acknowledges that making money from farming takes time, focus and a lot of specialist skills.
"The first decade of this century was challenging climatically, but the past few years have delivered consistent seasons and strong commodity prices," said newly appointed Macquarie Pastoral Fund chief executive officer Jock Whittle.
Mr Whittle joined Macquarie Bank four years ago shortly after it launched its $200 million-plus pastoral fund with the high profile 2007 purchase of the big Riverina Merino stud property "Pooginook" near Coleambally, and later "The Bulls Run" at Wagga Wagga.
Established as a wholesale fund to draw in large scale investors with a minimum stake of $5m to $10m, Macquarie Pastoral has rapidly built a diverse sheep and cattle portfolio spread over 30 properties now aggregated into 18 pastoral businesses.
Its Paraway Pastoral Company is now one of Australia's biggest farmland owner/operators with more than 3.5m hectares, carrying about 200,000 sheep and 220,000 cattle.
"We have an outstanding resource in the experience of our managers and we work hard with them to drive future performance for our investors," said Mr Whittle, who grew up on a Wellington farm in central NSW.
Still a part-owner of his family's mixed cropping and grazing enterprise back in the Central West, Mr Whittle was heavily involved in developing operating systems as the pastoral business grew, as Paraway's operations manager, and worked closely with station managers and Sydney head office to put them into practice.
"We're working hard to build systems that are resilient but flexible enough to manage the inherent volatility in agriculture," he said.
However, Paraway – which last year bought a portfolio of three Queensland properties from Northern Territory cattle entrepreneur Sterling Buntine, and three more NSW holdings – was no longer actively expanding its property portfolio.
Rather, it had centred its attention on "getting the very best out of the stations we have acquired", Mr Whittle said.
The focus was on running a big scale portfolio of sheep and cattle properties to capitalise on growing world demand for protein.
"Success in farming comes from selecting one enterprise and executing it really well, rather than trying to run many.
"We're focused on delivering returns for investors by building a strong culture of performance among our teams."
Paraway holdings now stretch from the NT and Queensland's Gulf to a range of climatic zones in NSW.
The Top End cattle business is based on a 200,000-strong Brahman herd, with the NSW properties running predominantly Angus cattle and the Merino-based sheep flock.
Parraway also grows irrigated and dryland crops.
Mr Whittle's farming roots and experience in agribusiness banking and as operations manager with the big Clyde Agriculture pastoral business provided ideal credentials for his work at Macquarie.
"I've always been passionate about agribusiness - particularly how farm performance can be lifted by improving farm business skills," he said.
"I saw Macquarie Pastoral as having great potential in bringing together farming expertise with business expertise, and providing institutional investors with exposure to farming assets."
Mr Whittle's former boss at Clyde, David Boyd, said his attention to farm management detail was honed in the hard drought years early last decade when Clyde drought fed much of its sheep flock, rather than destocking.
"We had lots of sheep to feed - I'm sure we ran through the numbers five or 10 times a day to be sure we weren't over extending ourselves," Mr Boyd said.
"Hindsight showed we were right - sheep have been worth a lot of money, and Jock has proven himself to be a very capable fellow."
Mr Whittle, a University of Sydney agricultural science graduate, first worked as an agricultural consultant with Wellington-based Richard Ivey and Associates for four years.
Apart from several years at Clyde he was also an agribusiness banker Westpac and later National Australia Bank before switching to investment banking.
He said while current global economic conditions created a lot of hurdles for institutions trying to raise capital for investment projects, interest in agriculture was growing locally and from foreign sources.
"Most investors are still learning about the sector," he said pointing out Macquarie emphasised that agriculture required a long term investment focus to reap rewards.
"Our investors recognise and are comfortable with that.
"The outlook for agriculture is strong.
"The recent combination of more consistent seasons and strong prices, particularly in livestock, creates an environment for returns.
"But returns are only delivered through good management - and delivering that performance across scale is our challenge."
