A $600 billion problem needs to be solved. Here's how you can benefit

Just when you thought Australia could not get any more dry, an El Nino has just been declared by the Bureau of Meteorology. The move into a drier weather pattern means reduced rainfall, warmer temperatures, a shift in temperature extremes and increased fire danger all across the continent. A drier weather period also tends to mark the start of a boon time for some insurers and a down period for the ASX agriculture stocks.

But what about the plight of the assets that sit at the farm gate? After all, investing in stocks exposed to the changing climate are one thing but actually investing in the farmlands, rural properties, and agricultural assets which grow and harvest the produce is a whole other opportunity set. 

Enter Garry Edwards, founder and managing director of AAM Investment Group. AAM, based in Brisbane, runs agricultural investment funds designed to find long-term investment opportunities in the agriculture space. The funds invest in a range of assets across four states (New South Wales, Queensland, South Australia, and the Northern Territory) with exposures ranging from water rights to rural properties and even cattle. 

Recently, I sat down with Edwards for a conversation about the opportunities in agricultural investments as part of Livewire's annual Alternatives in Focus series. Listen for his views around why the fund is in an "accumulation" phase, how weather is impacting the team's opportunity set, and how foreign buyer interest is influencing valuations in the space. 

Time stamps

• 0:00 - Intro
• 0:50 - Where does your passion for agriculture investing come from?
• 1:28 - What are the most important drivers of rural property returns?
• 2:12 - How does the recently declared El Niño affect your opportunity set?
• 3:05 - What is the main challenge for fund managers in this asset class?
• 4:02 - What impact does foreign competition have on potential investments?
• 5:01 - Why is the fund in an “accumulation” phase despite economic headwinds?
• 5:43 - How does the fund recycle capital - and does it mean you have to pay up for assets?
• 7:08 - Does ESG pose a headwind or tailwind for your investing style?
• 7:49 - Tell us about the return profiles of AAM’s various funds.

Building scale and access in Australian agriculture

As one of the country's leading agri specialists, AAM Investment Group manages over $1 billion invested in beef cattle, lamb and wool sheep, cropping, poultry, and sustainably-sourced timber supply chains across 32 Australian sites.

Find out more about their vision, processes and assets by visiting their website.