Rural investor PrimeAg Australia says it has received strong interest in its proposal to sell its farms and water rights.

PrimeAg said in August 2012 that it planned to return capital to shareholders through a privatisation process.

Consideration would be given primarily to proposals for the acquisition of the whole of the PrimeAg business.

PrimeAg said it had decided to embark upon this course because of the share market’s “inadequate” recognition of the value of the company’s assets, and also because operating returns were well below expectations.

PrimeAg chairman Roger Corbett said on Monday that considerable preparation for the sale process has been conducted, with the collation of a comprehensive due diligence data room, preparation of an information memorandum, distribution of an information flyer, and meetings with prospective parties both from Australia and overseas.

PrimeAg anticipated final proposals by December, with settlement, subject to receipt of an acceptable proposal, by the end of the first quarter of the 2013 calendar year.

“Whilst there is no certainty of an acceptable sale being consummated or execution within the proposed timetable, the board has been pleased with the strong level of interest received to date,” Mr Corbett told shareholders at the company’s annual general meeting in Sydney.

“Should the sale process not result in the valuation expectations of the board being met, PrimeAg will commence an orderly divestment of properties over a longer period.”

Mr Corbett said global interest in agricultural land and water assets remained strong, and PrimeAg’s portfolio provided direct exposure to increasing global demand for soft commodities.

PrimeAg also said on Monday that given the levels of irrigation water available at this point in the season and strong moisture profiles at all locations, the production outlook was positive.

On the production outlook for 2013, PrimeAg chief executive Peter Corish said the company had 6,100 hectares of winter crops nearing harvest.

Yields were anticipated to be near budget despite challenging conditions, and prices were attractive.

PrimeAg said it had also fully completed the planting of 7,000 hectares of irrigated cotton and completed 70 per cent of the planting of 4,500 hectares of dryland cotton.

The company said recent drops in cotton prices would put returns under pressure if they were sustained into 2013.

Shares in PrimeAg were one cent lower at $1.11 at 1246 AEDT on Monday.