THE investment sector’s frequently frigid interest in agricultural business opportunities looks to have thawed considerably in the past year, a prominent agribusiness board director and former agri-banker said.
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Victorian beef producer and former National Australia Bank agribusiness head Mike Carroll said superannuation and investment groups had been prodded into action by increasing overseas investment activity in Australian farm sector ventures.
“I think we reached a tipping point in 2016 when investors finally woke up and started paying attention to what agriculture had to offer,” he said.
But he warns the sector needs to open up to better off-farm management guidance to grow and stay relevant to investors.
“There’s already been enormous interest in investing in Australian agriculture from a range of overseas institutions, private wealth funds and individuals,” he said. “It now seems Australian investors, including big fund names like QIC, Telstra, First State Super and VicSuper, have recognised there are opportunities in ag that weren’t well explored before.”
The $78 billion investment manager QIC made headlines in May when it bought an 80 per cent stake in the North Australian Pastoral Company.
First State Super, which bought almond plantations from Select Harvests a year ago, has also flagged its wants more farmland assets.
Plenty of other North American, European and Asian investors were also consciously adding agribusiness to their portfolios, partly to insulate their funds against economic volatility and inflation.
“They have to make money for their fund members and shareholders and they’re doing it in Australia,” Mr Carroll said.
However, Mr Carroll is worried too many Australian farm sector businesses are underprepared to manage in the complex and capital-hungry growth era now opening up for agriculture.
Farm sector co-operatives, despite their capacity to develop markets and protect farmer interests, often struggled to raise the capital they badly needed to respond rapidly to growth opportunities. And too many agribusinesses lacked the breadth and depth of skills required at board and management level. He believed they must put more trust in off-farm professionals.
“There’s a lot to ask farmer directors to understand, particularly when it comes to knowing what questions need to be asked about the business and how it should be running,” he said.