In its 2021 report, supported by Digital Agriculture Services (DAS), Rabobank outlines a "base-case forecast" for Australia's heated agricultural land market to continue on a growth trajectory, fuelled by a booming agricultural economy and limited available land for purchase.

The report states ‘not in the last 30 years have the macro settings been so supportive of agricultural land price growth' with prices of most major agricultural commodities either at, or near, record levels.

This - together with favourable seasonal conditions in the majority of Australia seeing widespread rainfall supporting production - has driven farm revenues to record levels, says report author, Rabobank senior analyst, Wes Lefroy.

"Strong production years and high commodity prices, alongside record low interest rates, have boosted farmers' purchasing power," Lefroy said.

"Nationally, our research is showing that farmer purchasing intentions are at the highest point in at least the past five years, with nine per cent of Australian farmers reporting that they intend to buy land within 12 months," he said.

Lack of supply is also playing a role in squeezing agricultural land prices higher, with 45 per cent fewer sales recorded in 2020 compared with 2019.

Median price growth Agricultural land prices across the country accelerated again in 2020, the report says, with double digit growth recorded in median prices in four out of six states.

The median price of agricultural land in Tasmania grew by a whopping 28.3 per cent between 2019 to 2020, in Victoria by 15.8 per cent, Queensland by 15 per cent and Western Australia by 14.1 per cent.

Growth in New South Wales and South Australia was lower, with these states recording year-on-year median price growth of 6.1 per cent and one per cent respectively.

Nationally, the median price for agricultural land in Australia grew by six per cent in the year to 2020.

A recent example of a sale on the South Australian Yorke Peninsula was a 119ha block of broadacre cropping land, sold by Nutrien Harcourts for $24,292/ha. The 119ha block has no dwelling and was reportedly purchased by a local looking to expand their current landholdings.

The Rabobank report says the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) expects the value of farm production to reach A$73 billion in 2021/22, an impressive eight per cent above last year's A$68 billion record and 17 per cent above the five-year average.

For the first time, this year's report includes an assessment of land price against annual rainfall, revealing that the relationship between price and annual rainfall is not consistent in some regions.

"Seeking out purchases in regions where land price values more closely reflect annual
rainfall - and therefore productive capacity - rather than inflated by other factors can
provide farmers with more value," Lefroy said.