Farmland delivered a 46.3% return over the 2021 financial year according to the June quarter update of the Australian Farmland Index. The index tracks the performance of a $1.2bn portfolio of agricultural properties that are owned and managed by institutional investors. Annual capital growth in cropping farmland and grazing country was 32.8% with income yield of 10.9% for the period. Permanent crops which account for the majority of the properties in the index delivered a 7.9% total return over the year.

According to institutional investor Argyle Capital Partners whose properties are part of the index, excellent farmgate prices for commodities and a surge in production following a break in drought conditions contributed to the widespread growth in Australian farm incomes. Excellent growing conditions, a relatively benign impact of COVID-19 for the farming sector and very strong demand for Australian farmland and agribusinesses has made for a profitable year. Australian winter crop production is expected to exceed 54mt, which is 32% above the last 10-year average and the second consecutive year of more than 50mt production.