AUSTRALIA has a trillion dollars worth of superannuation funds under management but less than 0.01 per cent is invested in Australian agriculture, a report shows.

International pension funds have recognised the local value proposition and invested well over $1.5 billion (about three times the local total) into Australian agriculture, the Australian Agribusiness Group (AAG) report says. 

If Australian superannuation funds had invested in Australian agriculture, their members would have been buffered from the super slaughter of the global financial crisis, agribusiness researcher AAG's executive chairman, Marcus Elgin, said.
 
"The GFC has wiped out 27 per cent of Australians superannuation contributions," he said.

"If some of the money managed by superannuation funds was invested in the top 25 per cent of agriculture, then those funds would not have suffered as much a loss of value. 

"It is proof of the simplest idea of reducing risk through diversification."
  
Most Australian superannuation funds have yet to acknowledge that the top 25 per cent of Australian agriculture is a viable investment option, despite providing 11.2 per cent returns in the past 12 years but with only one third of the volatility of the All Ords, according to the AAG paper, Does Agriculture Improve Portfolio Performance.

In financial year 2009, AAG sister company AAG Investment Management had seen no reduction in the capital value of its nationwide $300m plus portfolio under management, Mr Elgin said.
 
"Superannuation funds should acknowledge agriculture acts as a 'shock absorber' during difficult times because of its negative correlation to major asset classes such as Australian and  international shares, low volatility and it's slower investment cycle," he said.
 
The AAG report provided the evidence for Australian superannuation funds to question why they only have a negligible allocation to agriculture, and to change that position now, Mr Elgin said.

 "Agriculture is a stable, low volatility, tangible asset," he said.

"Australia is a globally competitive agricultural player, in a context where the fundamentals of the need for an increasing food supply are unquestionable. Remember - if you don't eat, you die. 
 
"From 1992, Australian's have compulsorily been contributing to their superannuation.

"We are sure that they would rather be investing in something real, something tangible, something Australian, and something that Australia does really well in . . . Something not volatile and something which has a demonstrable, long term track record of 10 per cent plus compound annual growth.

"That 'something' is the top 25 per cent of agriculture. 

"Superannuation investment strategies should be about securing the future - clearly, much of the investments made over the last few years are not doing that."