EUROPEAN superannuation funds are being encouraged to buy Australian dairy farms and then lease them back to Murray Goulburn Co-operative, an industry group owned by farmers.
The co-operative has been involved in the sale of 11 farms for about $25 million to superannuation funds that are receiving returns of about 5 per cent per annum plus capital growth.
Robert Poole, general manager of shareholder relations, said a pipeline of additional farms is being built to meet growing interest from yield-hungry superannuation funds attracted by the sector's stability and potential growth, particularly into increasingly affluent Asian markets.
Mr Poole said it is also attempting to attract interest from cashed-up Australian superannuation funds, which have been reluctant to increase low exposure to the farming sector because of previous low returns.
"Farmers approach us about properties they are interested in purchasing," said Mr Poole.
"It is also the farmers who are driving the style of investment," he said.
Australia's mandated superannuation system has created a $1.5 trillion pool of assets seeking above-inflation returns and capital growth. Ageing farmers
The co-operative is attempting to manage problems of falling production and an ageing farming community.
The average dairy farmer is now aged in the mid-50s and likely to begin retiring over the next decade.
Production has fallen about 20 per cent from industry highs.
The co-operative's strategy involves helping with the financial barriers to entry for the next generation, which have been created by comparatively low wages for farmers and the high cost of land and stock. The superannuation funds are passive investors allowing existing farm owners to expand their holdings.
This month, the co-operative also launched investment rebates for young farmers, farming families and new entrants.
