The Australian Farmland Property Index debuted Friday, November 11, at the Australian Farm Institute Roundtable Conference in Brisbane. Frank Delahunty, Australian Farmland Index Coordinator and the architect of the index, took some time to talk with GAI News about the launch, which has been three and a half years in the making.

While the index has been in development for the past few years, Delahunty got the idea for the project decades ago. His career as a professional investment manager in the agriculture industry, however, didn’t leave much time. Once he stepped away from the “daily grind,” he was able to get the process started for the index.

The new index reflects the performance on a quarterly basis of income and capital appreciation of Australian farms. In the first six months of 2016, the index generated returns of 23.9 percent, including 8.3 percent and 14.6 percent for income and capital appreciation, respectively

The index is comprised of six anonymous qualifying property managers who oversee a combined 48 individual properties worth (AUD)$827 million and who contribute performance data to the index. The farms are tied to horticulture and irrigated cropping. There are also seven paid data subscribers.

By comparison, the National Council of Real Estate Investment Fiduciaries (NCREIF) Farmland Index, which surfaced in 1990, is comprised of seven property managers across 729 U.S. properties worth $7.8 billion, according to data provided by Dan Dierking, Chief Information Officer at NCREIF. At about the time the NCREIF Farmland Index commenced, there were 81 properties represented.

“We’re starting at a lower level than we hoped to; but once we get started we hope more people will lodge data and get subscriptions and it will grow from that point,” says Delahunty.

Indeed, it will be the NCREIF that will be marketing the new Australian Farmland Property Index while Delahunty will be coordinating the index effort. “What we’re doing is using the NCREIF platform. The collection and processing of the data will be done by NCREIF in the United States,” Delahunty explains. Subscribers to the new Australian index will also gain access to the NCREIF’s Farmland Index.

Meanwhile, the frequency of the publication of the index provides a greater level of transparency to Australian agriculture that until now has been lacking.

“We’ve got only a loose reporting system in Australia that’s done once every 12 months,” Delahunty tells GAI, pointing to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). The ABARES survey is comprised of about 2,000 farms that are polled on a rotating basis. As a result, the same farms aren’t represented year in and year out.

“The data survey model doesn’t have the robustness that indices have,” says Delahunty, adding that the ABARES survey has a nine-month lag time while the new index exhibits performance on a quarter-by-quarter basis.

As the result of greater transparency, institutional investors, including pensions, local and overseas banks and high net worth investors, for instance, gain access to an institutional grade analytical tool for agriculture investments, which could lead to more allocations. “It’s my belief and experience that the index is part of the toolset investors will need. All other major asset classes have indices and can compare managers against an index. The index is a prompt, regular toolset for institutions to use to get involved and diversify investments into agriculture,” says Delahunty.

Indeed Australia has a growing population coupled with decreasing land water resources. “Agriculture is a good place to invest. But there’s been no measure of performance for how you perform compared to others in the industry. Now there will be,” Delahunty says.

Delahunty chose to form the index because of the value he believes it will provide to participants and potential participants in agriculture.

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Gerelyn Terzo