Farmland values in Western Australia's Geraldton port zone have grown strongly over the past five years, underpinned by wheat yields, but are now entering a period of more moderate growth, according to new research from Rabobank.
In its newly-released report Deep Dive: What drives Western Australian grain-producing farmland values, the bank's RaboResearch division found the median price of arable dryland areas saw strong growth in all Western Australian port zones after successful harvests and strong grain prices from 2020 to 2024.
Cropping land values in the Geraldton port zone (where wheat dominates), however, while recording healthy growth, lagged other parts of the state. And this highlights a "structural link between revenue potential and asset value", says report author, RaboResearch senior grains and oilseeds analyst Vitor Pistóia.
"Farmland prices in the Geraldton region in particular have closely reflected wheat yield potential and seasonal gross margins, with higher-yielding paddocks commanding significant premiums," he said.
"With the Geraldton region's comparatively small share of canola and lower yield potential, its capacity to generate income remains structurally attached to wheat's financial performance. This results in farmland values that are lower and lag broader trends in Western Australia, where more diversified cropping programs dominate."
The report said analysis of farmland transactions in Geraldton's port zone revealed a strong positive correlation between wheat yield potential (or gross margin) and land value.
"This relationship underscores the market's emphasis on agronomic performance and also indicates that incremental improvements in productivity translate into substantial increases in land valuation, reinforcing the importance of revenue potential in capital investment decisions," Mr Pistóia said.
And the Geraldton port zone offered valuable insights that could be applied across other Australian agricultural zones and sectors, he said.
"It highlights the critical role of yield potential, crop selection and gross margin management in driving farmland value," Mr Pistóia said. "And these principles hold true nationwide to a greater extent, albeit with adjustments for rainfall, soil and cropping intensity difference."
Beyond income potential, other key drivers of farmland value included proximity to ports and regional towns, the report said. "These factors reduce freight costs and improve access to essential services, thereby enhancing operational efficiency and lifestyle appeal, both of which contribute to land value premiums," Mr Pistóia said.
Looking forward, the report says, as grain prices ease from the highs of the 2021 to 2023 period and input costs remain elevated, the strong double-digit growth in farmland values is expected to moderate, but retain the positive trend it has seen since 2021.
"A promising harvest outlook for 2025 and anticipated official cash rate cuts in late 2025 and early 2026 may boost buyer confidence and support an active farmland market," Mr Pistóia said.
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