Western Australia’s non-pastoral agricultural area lies in the state's south-west, stretching between Geraldton and Esperance. This section of land, known as the South West Land Division (SWLD), spans 30 million hectares, approximately 12% of Western Australia’s total land area.
Agricultural Areas of South-Western Australia
Source: Ministry of Education, Western Australia
The SWLD is a diverse region that includes the intensive agricultural ‘South West’ with its very high rainfall and the ‘Wheatbelt’ (also referred to as the ‘Wheat and Sheep’ zone), comprising low, medium, and high rainfall zones.
Rainfall Zones of South-Western Australia
Source: Government of Western Australia (DPIRD)
The Wheatbelt, with its unique combination of variable rainfall and infertile soils, presents distinct challenges for agriculture. The average rainfall ranges from 250 mm per annum in the low-rainfall regions to 750 mm per annum in the high-rainfall areas near the western and southern coastlines. This variability in rainfall, coupled with the relatively infertile soils primarily composed of sandy materials, results in lower average yields compared with other agricultural regions in Australia.
Australian Wheat Yields by State
Source: CSIRO
Soil Composition and Regional Variations
Soils in the Wheatbelt vary significantly, from coarse sands in the coastal plains around Geraldton, which lack water and nutrient-holding capacity, to red clays in the Eastern Wheatbelt, which tend to seal over during dry periods causing runoff. The Eastern Whealtbelt is characterised by flat to lightly undulating terrain, with poor drainage leading to the formation of large salt lakes. Vegetation in these low/variable rainfall areas is typically stunted, with mallee and heath scrub on sandplains and Wodjil (Acacia) on low pH soils. Medium rainfall zones support taller timbers, including York gum and Salmon gum on red-brown sandy clay and loam soils.
West of the Eastern Wheatbelt, the terrain becomes hillier with more gravel and exposed granites, while land north of Gingin comprises large areas of yellow sandplain soils, often gravelly on elevated areas, supporting Wandoo timbers. The lower slopes usually provide fertile red/brown loams, supportive of timbers such as York gum and jam and the valley floors with heavier red clay loams are characterised by Salmon gum and gimlet timbers.
The south coast region stretches from the Stirling Ranges in the west to the east of Esperance. The soils are predominantly grey sandy duplexes along the coastal stretches, improving to loamy duplex soils throughout the Jerramungup plain and red-brown clay loams north of the Esperance coastal plain. This region's reliable medium and high rainfall, combined with light to gently undulating terrain and loamy soils, makes the south coast region some of the most productive agricultural land in Western Australia.
Economic Trends and Market Dynamics
Since 2015, Western Australia’s farmland has been increasingly recognised for its value compared to the higher yielding and significantly higher value of eastern states' growing regions of Australia. Broadacre farmland in Western Australia increased by some 301% between 2015 and 2023, while national farmland values increased by just 172% over the same eight-year period.
Western Australia and Australian Broadacre Farmland Values
Source: ABARES, Farmland Price Index
Corporate and Institutional Farming
Western Australian farmland saw increased activity throughout this period from corporate and institutional farmers purchasing rural land to form large-scale aggregations that provided sufficient scale efficiencies. By 2020, several large-scale aggregations had been formed, allowing institutional and corporate farmers to transact among themselves. Notable transactions include the Lawson Grains portfolio, which sold for over $500 million in 2021, comprising ten aggregations throughout Australia, six located in Western Australia’s medium rainfall zones. EDL Farms followed this sale for $28 million in 2022, comprising three separate farms acquired throughout 2021 for $17 million. More recently, Cheriton Farms in Kojonup sold for circa $100 million, and Varley Farms sold for around $50 million to corporate and institutional buyers.
Value in Well-Managed Farms
These transactions highlight the recognition by institutional and corporate buyers of the additional value in purchasing well-managed farms with a good history of fertiliser application and soil amelioration, which helps overcome some of the limitations of Western Australia’s low soil fertility.
Regional Market Variations
Despite the increase in high-value transactions within the medium and high-rainfall southern regions, large-scale aggregations located in the eastern and northern sections of the Wheatbelt have not been met with the same market depth in recent years. Most notably, the Southern Agri Fiduciary portfolio comprising 13 farms in the northeastern Wheatbelt failed to find a buyer. Instead, it was sold to existing lessees and local landowners through several separate transactions. Farming in these regions typically involves low inputs. It requires discipline to leave large sections of land fallow, as often as every second season, to overcome the limitations of low soil fertility. In conjunction with low rainfall risk, the impact on annual returns from farming as little as 50% of the croppable area reduces the reliability of return on investment. The allure of low land values relative to the more reliable rainfall regions is often quickly met with a realisation that these regions are dominated by well-established generational farmers with a deep understanding of the land, learned over extended periods.