AU regional development bank considers boosting ag super investment
Industry Super Australia’s discussion paper, “Driving Super Fund Investment in Agriculture” was released last week making six core policy suggestions.
It said super funds are actively looking for opportunities to invest in agriculture and agribusiness based on sound, commercial business cases.
But it conservatively estimated that, at the beginning of 2017, industry funds only held about $1.56 billion dollars in farm assets in Australia, or about 0.2 per cent of their funds under management.
“A previous study found that Australian superannuation funds had allocated around 0.3pc of holdings to Australian and international investments,” it said.
“While there is a general consensus that Australian super funds (both for-profit and not-for-profit funds) have tended to under invest in agriculture in Australia generally, this is less true of not-for-profit super funds, especially industry super funds, which have been among the vanguard of investors in this asset class.”
The report said agriculture remained “the last big sector” of the economy that superannuation funds haven’t entered en masse and agricultural investment “certainly poses significant challenges for investment committees in managed funds”.
The barriers include: lack of detailed knowledge of the sector by fund trustees, executives, let alone their asset managers; few asset managers with good long term record in the sector; and performance data either does not exist or is not comparable through time for decision makers.
It also cited difficulty achieving meaningful investment scale ($100m plus) and operational size for corporate farms with many operations being “too fragmented and too small”.
Read more at goodfruitandvegetables.com.au
