Ausgrow Agriculture have developed a unique corporate farm model, along with a suite of innovative investment structures which will enable financial investors to partner with farmers in a way that has not been possible before.

It is well understood that as you grow scale in farming, it is very difficult to gain economies or more importantly, reduce the increase in inefficiencies. This is one of the single biggest causes of reduced profitability of existing corporate farming models.

The Ausgrow model has been devised to access the profitability of the best practice farmer and reduce seasonal variability through geographical diversification. The ultimate result is a more productive and lower cost model for investors looking for agricultural exposure.

Ausgrow’s Participating Note provides investors with an opportunity to share in the capital growth and production income of farms by providing a convertible debt instrument to farmers.

Advantages to Farmer

• There is no change in ownership so there is no realised capital gains tax to be paid by the farmer.
• No stamp duty would be payable on the transaction.
• Farmer can payout the Note at any time.
• Investors sharing some of the risk with farmers, as the loan rate is dependent on the seasonal returns and the repayment value at expiry reverts to actual land value.
• This is available to a level that bank debt would not be available and would therefore provide funding that the farmer could not get elsewhere.
• Provides funding to the farmer to either expand operations or with a funding mechanism to enable succession.

Advantages to Investor

• No stamp duty would be payable on the transaction increasing first year returns by up to 5%.
• Investor’s exposure geographically spread across many farms reducing the volatility in seasonal returns.
• Investors receive annual returns as a share of grain production at expiry.
• Investors also receive capital growth in proportion to their percentage ownership.
• The strict investment process and unique structure of the equity loan enables investors to be partnered with high performing farmers enabling investor access to their skill and management expertise.
• Diversification from the financial markets as agricultural returns are negatively correlated.

SEE EQUITY LOAN FOR CASE STUDIES

Ausgrow Agriculture Pty Ltd’s (Ausgrow) role is to facilitate share farming between the investor and grower. The project’s aim is to get economies of scale of share farmed ha on a geographic spread across Western Australia and eventually nationally.

Ausgrow believes that family owned operations will continue to dominate Australian agriculture but they will operate on a larger corporate scale and utilise products like Ausgrow’s to expand their operations and diversify their risk.

Advantages to Farmer

• Viable means for business expansion
• Achieve greater economies of scale in operations
• Investment in plant & equipment can be more efficiently utilised over larger cropping programs.
• Improved stability in returns (contribution by investor for lease value is stable no matter the production)
• Farmer is sharing the agricultural risk on production with the investor (to the sharefarming %)
• Facilitate expansion opportunities or facilitate succession strategies
• Less risk capital required by the farmer as investors funding is non-recourse
• Less capital at risk so the ability to recover from bad seasons would be improved
• Potential to diversify into other areas

Advantages to Investor

• Potential for higher return on investment than other corporate farming.
• Farming with the growers who have been selected based on performance history.
• Aligns the interests and risks of both the investor and the farmer.
• Geographically diversified exposure to agricultural production returns
• Agricultural offers an excellent natural hedge against inflation.
• Asset diversification. Agricultural returns offer a low and even negative correlation to traditional investments in listed shares and property.

Key Documents for download

FARMER :

• Information Memorandum
• Share Farming Agreement
• Lease Agreement
• Crop Management Policy
• Seeding Declaration
• Harvest Declaration
• Regular Reporting Document template
• Monthly Report

INVESTOR :

• Information Memorandum
• Monthly Report

Ausgrow Land Fund provides investors with an opportunity to invest in large scale rural properties that produce a mix of produce including grain, livestock and wool. The land purchased by Ausgrow will be leased on a long term basis to experienced, professional farmers. Ausgrow Land Fund is structured so that the investors will be investing in the underlying land assets and receiving a return on those assets – not into the production business.

Ausgrow Land Fund has been designed to provide a sustainable investment structure that aligns the interest of investors with those of the professional farmers leasing the properties, ensuring a mutually beneficial outcome. A key to the success of the Fund is that the farmers (lessee) will retain a financial interest in the land, share in the potential capital growth with investors and have the option to buy the land into the future – in other words the farmer is more than just a lessee.

Structured as a sale and lease back the Fund will either purchase:

• Properties currently owned by farmers; or
• Properties that a farmer or current farm manager intends to purchase

Advantage to Farmer

• Farmers will continue to hold an interest in the land and the production outcomes from that land.
• Investor is purchasing up to 85% of the property and sharing in the risk with the farmer on land values.
• Investor funds will provide the farmer with the capacity for expansion, assist with succession planning or releasing debt pressure.
• Investor funds will also allow the farmer to invest in new technology and improve current equipment to assist in obtaining the best outcome from their farms.
• The farmer will have the option to purchase the property at the end of ten years. The farmer will have the potential to build up capital from their annual production during this period.

Advantage to Investor

• Farmers and investors are co-invested in the land creating natural alignment.
• Investor is purchasing up to 85% of the property and sharing in the risk with the farmer on land values.
• Investor’s exposure geographically spread across many farms reducing the volatility in seasonal returns.
• The strict investment process and unique structure of the Land Fund enables investors to be partnered with high performing farmers enabling investor access to their skill and management expertise.
• Diversification from the financial markets as agricultural returns are negatively correlated.

• Case Study: Acquisition