Australia’s summer grain production broke records due to above-average rainfall, and with the Russia-Ukraine war driving up the price of grain, livestock, and canola, the agriculture sector has a promising future.
As previously indicated, the Department of Agriculture, Fisheries, and Forestry of the government said that Australia’s summer crop production for the 2021–2022 period reached a new record of 5.5 million tonnes. The value of the nation’s agricultural exports is anticipated to increase to AU$ 64.9 billion in 2022/2023, the highest level ever.
Australia’s agriculture industry makes a significant contribution to the nation’s GDP and is frequently regarded as a relatively safe business that may provide consistent returns over the long term. Let’s see how you can make a business investment in the agricultural sector in Australia.
Invest in bundle stocks
Purchasing units of exchange-traded funds (ETFs) with an agricultural concentration on the Australian Stock Exchange is one of the simplest ways for regular investors to invest in agriculture (ASX).
ETFs are essentially collections of stocks with a specific theme.
It could be difficult to locate an ETF that is specifically focused on wheat or cattle, but some are. A cheaper alternative to purchasing a farm was to invest in agriculture-focused ETFs.
Instead of the millions of dollars needed to start most farming enterprises, relatively small nominal investments, in the thousands or tens of thousands, can be made.
Invest in agriculture-focused stocks
There is, of course, another choice—and, given the current health of Australia’s agriculture sector, possibly the one worth considering—which is investing directly in agricultural enterprises listed on the ASX.
What has been happening over the past few months is the reason why GrainCorp is exploding.
It is also important to consider businesses that provide essential farm supplies like fertilizer, which is now in low supply.
Incitec Pivot (ASX: IPL), one of the two largest fertilizer firms listed on the ASX, has profited from the favorable market environment and rising fertilizer demand.
The corporation recorded its best H1 earnings to date in its most recent half-year report. In comparison to H1 2021, its fertilizer sales increased by 237 percent to AU$257 million.
Hydroponic farming
Hydroponic farming is a technique that uses water in its liquid form to grow plants. It is a method of growing plants without the need for soil. Hydroponic farming has many advantages over conventional farming and it is considered one of the most sustainable methods of food production.
Hydroponics can be done in urban environments, so it doesn’t require as much land as traditional farming does. This makes hydroponics more cost-effective than traditional farming, which needs large tracts of land to produce enough crops for people to eat.
The fact that hydroponics take up less space means that they are better suited for densely populated areas where land is scarce and expensive. Check some tips on how to find the best land surveyor.
Invest in wheat production
The amount of wheat expected to be produced will establish a new record at 36.6 million tonnes, up 1% from the previous record set last year. 13.4 million tonnes of barley are anticipated to be produced, which would rank fourth in history. With 7.3 million tonnes, canola production is anticipated to surpass its previous record set last year by 4%.
Nationally, 23.5 million hectares are expected to be planted for winter crops in 2022–203, a modest decrease from the record levels set the previous year. Due to unfavorable wet circumstances at the time of planting in southern Queensland and northern and central New South Wales, there has been a 10% decline in the area planted in New South Wales and a 9% decrease in Queensland.
All of this makes this sector interesting for investments.
As a bottom line, there are investment opportunities in agricultural commodities like wheat, hay, cotton, canola, hay, fruits and nuts, and vegetables in Australia. The production of beef, sheep, lamb, chicken, pigs, wool, milk, and eggs are other staple commodities. Commodity investing is more dependent on domestic and international demand for Australian agricultural products.
Futures, agricultural mutual funds, and exchange-traded funds (ETFs) are the investment vehicles available for commodities. The risks and rewards associated with any sort of commodity investing strategy should be researched and discussed with a financial advisor.
