Agriculture investment strategies are undergoing significant changes as investors move beyond farmland to target entire supply chains. The shift comes amid rising costs, slower land price growth, and increased attention to yield, climate resilience, and environmental, social and governance (ESG) performance.
The latest ANZ Food for Thought Spring 2025 report examines these developments. It notes that what began as a niche allocation has now become part of mainstream real asset strategies.
Following the 2008 food crisis, agriculture became a strategic asset class. Over the past decade, capital from pension funds and sovereign wealth entities flowed into farmland, water entitlements, and protein supply chains. Australia experienced notable growth in this sector, with land values increasing by more than 220% between 2010 and 2022.
However, by 2024 conditions shifted. Commodity prices softened while input costs remained high and land appreciation slowed. Investors are responding by broadening their focus to include not only yield but also climate resilience and ESG-linked income streams.
Estimates suggest that global institutional exposure to agriculture—including land, water resources, infrastructure, and natural capital—could surpass $500 billion by 2030. This expansion reflects a broader definition of agricultural assets that now includes investments across supply chains as well as environmental markets.
James Dunnett, ANZ Director for Food, Beverage and Agribusiness said: “Agriculture portfolios are diversifying. Investments now include storage, logistics, processing, and carbon and biodiversity projects. Investors are increasingly focused on yield and are exploring natural capital – such as carbon and biodiversity projects – as new revenue streams alongside traditional farm income.
“Despite strong global interest, Australian super funds remain cautious, citing liquidity and scale challenges, as well as the need for highly specialised management to run complex Agri portfolios. New models – such as co-investment partnerships and natural capital strategies – may unlock domestic capital.
“Agri portfolios are now broader. For many funds, the play is no longer just land, it is the whole system. Storage infrastructure, processing plants, cold chain logistics and water entitlements are now common in institutional portfolios.
“Agri investing has matured. The future lies in building systems that deliver stable returns, adapt to climate risk, and support global food security,” concluded Mr Dunnett.
Further information is available in the Spring 2025 edition of ANZ’s Food for Thought report.