However, consolidation among food producers – and growing offshore interest –highlight the opportunities for ag companies including AACo, Ruralco and Ridley.
PrimeAg shareholders are expected to support the board's plan to liquidate the company's rural land and water portfolio at the general meeting on Monday.
Shareholders are also likely to approve two capital returns and the sale of around 60 per cent of the company's portfolio to US fund TIAA-CREF, reflecting the fact that the listed rural landholder almost never traded above the book value of its assets.
"The land plays haven't set the market alight. They're quite capital intensive and don't seem to produce a lot of cash. It's a real asset play," Perpetual head of equities Matt Williams said.
"The experience hasn't been great and hasn't made investors keen to put more money in that part of the market. Because it's a long-term land play, these things are much more suited to a sovereign wealth fund or a super fund that has long-term liabilities."
PrimeAg's demise has sparked rumblings that listed beef company AACo, which has traded below its asset value for a long time, may look to privatise.
Equity investors' wariness of agriculture stocks has not been confined to landholders. Commodity price risk, and production at the mercy of the weather, has made the sector too uncertain for many fund managers. The swath of recent profit warnings has highlighted the risks.
In March, feedstock and rendering business Ridley Corp released a woeful trading update that sent its shares tumbling 18 per cent, prompting Commonwealth Bank analyst Jordan Rogers to cut his 2013 earnings forecasts by 27 per cent.
Last week, rural services provider Ruralco warned that profits could plunge by up to 70 per cent, smashing the share price by about 15 per cent over two days, while rival Elders announced material downgrades to its rural services division in March.
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