Australia Financial Advisory
Agribusiness Bulletin 11 October 2013 Australian agribusiness a key ingredient in a $250 billion potential windfall to the Australian economy As one of the five super-growth industry sectors worth an extra $250 billion to the national economy over the next 20 years, agribusiness holds the key to Australia’s future prosperity, according to our new report, Positioning for Prosperity? Catching the next wave. As the mining wave continues to deliver prosperity for Australia, albeit at a declining rate, our analysis shows there is vast potential to be tapped in five additional super-growth waves of agribusiness, gas, tourism, international education and wealth management. Global population growth of 60 million per year will increase food demand, with Asia’s growing middle classes set to boost their protein intake. As a result, the size of the opportunity is huge for Australian agriculture. The sector is in the enviable position of having the strongest Australian natural advantage matched by a one of the highest global growth opportunities.
Although, the diverse nature of the sector is a positive it also poses a threat to our ability to translate the many parts into one wave of sustainable growth. However, all of the segments share a common barrier to success which could make the difference between success and failure, a lack of capital. New capital is required to overcome challenges such as funding the succession of an ageing workforce and addressing the infrastructure deficit that leads to supply inefficiencies. Capital is also much in demand to feed and drive the commercialisation of new systems, processes and technology to ensure Australian agribusiness can lead not follow the global innovation agenda. As the current wave of mining subsides, the flow of capital must follow the emerging super sectors including agribusiness. This includes investment by both the private and public sector as well as continuing education with the investment community on the idiosyncrasies of agribusiness investment and the longer term value proposition. The other thorny issue is foreign investment, something that requires a balanced and mature debate; quite simply there isn’t currently enough home grown capital to support the sector’s potential growth. We risk missing our window of opportunity if we make it too difficult for overseas investors to back us. As a delegate with the recent Queensland Government Trade and Investment Mission to China with the Honourable Dr John McVeigh, MP Minister for Agriculture, Fisheries and Forestry, I was fortunate to see many of these factors in play first hand. Of particular interest was the importance of food safety for the Chinese. While the size of the prize is dazzling; the requirement to meet this growing demand not only through scale but also quality cannot be underestimated as well as understanding and working with their supply chain constituents. For a full copy of our “Positioning for Prosperity? Catching the next wave” report please click here. For a recent article published by the ABC covering the report including a full audio interview please click here. For further information please do not hesitate to contact me directly. I do hope you enjoy the article and I would welcome any feedback or comments you may have. Rob McConnel National Industry Leader | Agribusiness
Corporate news Wilmar Sugar has reportedly spent $700 million on maintenance and upgrades in the last five years across its eight sugar mills. The company sees this investment as a key enabler to processing this year’s bumper crop. Sunshine Sugar Mill was awarded the top prize in the food and beverage section of the PACE (Process and Control Engineering) Zenith Awards for its innovative, energy-saving “centrifugal drive system”. The awards recognise ingenuity and innovation in Australian manufacturing. Eastern Australia Agriculture is offering its cotton portfolio, based near St George (Qld), to the market. The 37,000 hectares and 67,000 megalitres in irrigation entitleme