Agribusiness investment firm head says a collapse in the land price has begun

goFarm managing director Liam Lenaghan told the Melbourne breakfast he believed land prices were "completely overinflated" and prices were already starting to drop.

goFARM's website says the agricultural investor, developer and manager has 70,000 hectares of prime agricultural land and associated water entitlements.

Mr Lenaghan was speaking at the Rural Press Club of Victoria Progress on Ag's 2030 Roadmap breakfast.

"I don't think prices are going to plateau, I think they are going to collapse, in terms of land prices, they are completely overinflated," Mr Lenaghan said.

"We are seeing it already.

"In the last year or 18 months ago, in the glorified region of the western district, farmland was $12-$15,000 an acre, with very little optionality - you could grow wheat, canola, or run sheep.'

"And now, you talk to agents and valuers down there, and they say it's got to be a cracking joint to make eight or nine thousand bucks."

It was a huge correction, he said.

"We all pretend it's not there, and carry on until someone has to sell," he said.

"I think it's going to happen, it's got to happen, there's been too much cheap money and people do silly things," he said.

Hardship was coming, for some farming enterprises, he said.

There would be businesses resilient enough to "stomach it" and others who would be "caught short."

But Mr Lenaghan said tougher conditions ahead could be positive - as record prices and seasons had seen "even bad farmers become profitable.

"It's a competitive industry, like all asset classes - it's not about holding hands and singing down the road together."

"I think some tougher conditions are positive."

There were currently "trapped assets" sitting in the hands of businesses, which would be better off being held by other, more productive owners.

"Every road and lane you drive up in rural Australia there is a farm, or paddock, that is underutilised - and I see that as a trapped asset and a lost opportunity for that family, community and Australia," he said.

"The businesses that have prepared and planned and set aside and managed risk and done all those things are the ones that are going to survive, longer term, and they are the ones that should," he said.

He said industry needed to find the opportunities to put scarce and precious resource to the highest use, he said.

"That, for us, means scouring the landscape looking for underutilised, undercapitalised assets that we can transform with the application of a plan, good people and capital," he said.

"We are looking for those opportunities in the agricultural sector where one plus one equals something more than two.

"There is so much inherent potential in the industry, how do we unlock it?"

The latest quarterly Australian Farmland Index results compiled from a $2 billion basket of big scale investor-owned properties showed farm income contributions generated returns of 6.3pc for the year to June 30.

But Mr Lenaghan said there was still reluctance, among Australian investors, to put money into agricultural enterprises.

"We have had a litany of stuff going on, managed investment schemes cast a long shadow, and there are a lot of scars amongst institutional and retail investors, harking back to that era.

"The agribusiness stocks on the ASX have, by and large, underwhelmed.

'They've then been been privatised and then done well again, after being recapitalised and seen changes of management and plans."

Mr Lenaghan said Australia and America were really the only countries in the world where foreign investment was safe or allowed by the government.

"There are very few places in the world you can invest, if you are serious - you can't get into New Zealand, the government has you locked out," he said.

"You are not going to Russia or Ukraine or Poland or Romania - you are not going to South America if you have any consideration about environmental, social and governance issues (ESG) particularly governance or the rule of law.

"You can't go to Canada, so it's the US or Australia - Australia is a big producer, we are export focussed, we have the infrastructure, trade agreements -, we have the market at our doorstep.

"Your destination, if you are a serious investor in natural capital and agriculture is north America or Australia."