Other competing agricultural nations have experienced the same record lift in the price of farmland as Australia.
For overseas investors to continue backing Australian agriculture, it is important we stay out in front in value terms.
This is one finding from a comparison of the farm sale results between the USA and Australia made by Elders Real Estate.
Since 2020, US farmland values have risen by 20 per cent compared with Australian farmland at 35.4pc.
Year-on-year, US farmland values rose 12.4pc against 14.6pc in Australia.
The US Agriculture Department's annual land values report shows an average value per acre of $US3800 across the country.
That converts to $5386 per acre in Australian dollars.
The most recent deep dive by Elders into national farm sales showed the national median price per hectare today is $8109 per hectare.
MORE READING: US investors have cashed in
That equates to $3282 per acre, or $US2316 per acre.
Elders general manager (farmland agency and agribusiness Investments) Mark Barber said Australia's farm value rise over the last 3-4 years has been supported by an improvement in seasonal and trading conditions and low interest rates.
The US agricultural sector has also been experiencing strong growth over the same period.
Mr Barber said like Australia, there were some outstanding regional rates of appreciation contributing to the US national result.
The US farmland performance is attributed to strong trading conditions, like those experienced by Australian farmers.
MORE READING: Land held back from sale while farmers cash in
Higher commodity prices also fuelled record farm profits.
It is forecast US farm cash incomes in 2022 will be the highest since the mid 1970's and will be the sixth consecutive year of growth.
Mr Barber said there were several reasons why trends in US farmland values are important for Australian farms.
"One of the most important is that Australian agriculture competes for capital," he said.
"If Australian farmland values fall behind US growth rates, investment will flow out of Australia to the US and vice versa.
"Whilst Australian farmers remain the dominant owners of Australian agricultural land, foreign capital makes up approximately 14pc of the market and is a competitor in many transactions, particularly larger ones."
One of the big drivers in the record prices being achieved for farm sales around Australia has been the demand from neighbours to increase their farm's size while times were good and interest rates were low.
Corporate and overseas investors have been squeezed out by the deep pockets of neighbours fighting to win the farm sale, at all costs.
Those investors are tipped to return in strength when the competition eases.
"Ultimately, strength in Australian farmland values relative to those in our trading competitors means our sector is performing well and our exports are in demand," Mr Barber said.
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Chris McLennan
ACM national rural property writer based in Bacchus Marsh, Victoria. Career journalist. Multi award winner.
ACM national rural property writer based in Bacchus Marsh, Victoria. Career journalist. Multi award winner.
