A combination of expected rainfall and stored soil moisture is likely to be sufficient to support well above-average crop and pasture production across most of Australia. The Australian agriculture industry is targeted to exceed $100 billion in farm gate output by 2030.
Australia's agriculture sector is essential to the country's social, economic, and environmental sustainability. The fact that Australia's primary agricultural products are two very different crops—wheat and barley, which are typical of colder countries, and sugar cane, which is typical of tropical countries—shows how important agriculture is to the nation.
Australia has a long history of agricultural and food research and development, which has cultivated advanced farming methods and technology as well as sophisticated biotechnology applications. With its substantial recent growth, Australia's agricultural sector—which accounts for 2.8% of the world's food trade—contributes significantly to the country's economy.
The Australian government has made major efforts to support the resilience, growth, and competitiveness of the country's agriculture industry.
(Source: National Farmers’ Federation).
Let's examine a few of the ASX agricultural stocks that make major economic contributions to Australia. The top ASX stocks to keep an eye on are listed below:
[Note]: The market cap and the share price of the selected ASX companies below are mentioned as of 12 January 2024.
Costa Group Holdings Limited (ASX: CGC)
Market Cap: $1.46 billion
CMP: $3.15
• The company is actively expanding its global genetic licencing network, with a focus on substantial growth. They have ambitious expectations, aiming for an impressive 28.1% compound annual growth rate (CAGR) between CY23 and CY25 and projecting royalty income to increase from $11 billion in CY23 to $18 billion by CY25.
• In CY23, the anticipated full-year capital expenditure (capex) stands at $110 million, falling below the previously guided $125 million. Despite a buildup in working capital, there has been a positive improvement in net debt compared to the prior corresponding period (PCP).
Ridley Corporation Limited (ASX: RIC)
Market Cap: $833.80 million
CMP: $2.64
• The company is strategically positioning itself for future growth by implementing several initiatives. This includes restructuring the customer service model to enhance responsiveness and drive growth opportunities in both the monogastric and ruminant segments. Additionally, investments are being made to increase capacity in feed mills, driven by customer demand.
• The company is also expanding its reach through Ridley Direct, targeting new customers beyond its traditional mill footprint. To support growth in packaged and aqua products, the business is integrating its operations and investing in new packing capabilities.
Select Harvests Limited (ASX: SHV)
Market Cap: $334.12 million
CMP: $2.76
• The company will focus on farming excellence, planning to increase orchard yield and quality, secure water needs, and optimise costs at the foundation level. Capacity expansion is the most important area to be paid attention to to increase the profitability of the company. The company has a target to increase value through diversification, increased presence, and the right allocation of funds.
• SHV anticipates a better market for farming in 2024 and good crops to generate significant cash flows. The data analysis of prior weather-related crops is expected to add value and return strong 2024 yields.
Lynch Group Holdings Limited (ASX: LGL)
Market Cap: $202.63 million
CMP: $1.66
The Group kept improving its new merchandising system, which reduces in-store waste, boosts merchandiser productivity, and enables the company to seize more sales opportunities. With one of Australia's biggest independent merchandising teams, the Group gets about 40% of its revenue from Sale or Return (SOR) stores. Working with the company's supermarket customers, the Group has a significant impact on the in-store assortment, volumes, and presentation of these stores.
Graincorp Limited (ASX: GNC)
Market Cap: $1.65 billion
CMP: $7.34
The GNC has been looking forward to continuing engagement with federal and state governments, leading research bodies, and industry partners to promote a more sustainable agriculture industry.
The company’s ECA business has strong flexibility and adaptability, which enables it to leverage labour and equipment from the northern growing regions to provide operational assistance in the south. The Australian Bureau of Agricultural and Resource Economics (ABARES) anticipate an ECA winter crop of 20.8 mm for 2023 and 2024, with dry northern conditions offsetting favourable conditions in southern regions. In international business, the company’s adopting a strategy of multi-origination and a strong focus on new customer relationships in emerging markets will further develop opportunities in end markets.
Reference: - *All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters
Frequently Asked Questions (F.A.Q)
What are the top ASX agriculture stocks?
• Costa Group Holdings Limited (ASX: CGC)
• Select Harvests Limited (ASX: SHV)
• Ridley Corporation Limited (ASX: RIC)
• Lynch Group Holdings Limited (ASX: LGL)
How can one invest in agriculture in Australia?
Generally speaking, the best way to gain exposure to the burgeoning agriculture sector is to purchase shares of companies. This can include businesses that produce commodities directly, like grains, livestock, potash, and phosphate, as well as businesses that supply the industry with other goods, like land and fertilizer.
Which five agricultural products are the most popular in Australia?
Leading the world in wool and wine production, Australia is also a major supplier of grains, meat, sugar, dairy products, and fruit.
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