Investors and industry leaders talk foreign investment in Australian agriculture
Written by Stephanie Price Journalist
Australia and New Zealand need more foreign investment into agriculture said investors and industry leaders at the Agriculture Investment Summit 2012 held in London.
There has been some agitation about foreigners buying Australian agricultural land, with land being predominantly family farmed until only around 15 years ago.
However the time has come where public sectors cannot fund agriculture and it needs outside private sector companies to fund it.
“New Zealand, similar to Australia, doesn’t have enough industry savings to support its growth aspirations,” Forbes Elworthy said, founder at Craigmore Sustainables.
“We need a billion dollars a year just to do water storage infrastructure – that’s capital of which some of it is going to need to come from abroad.
“The first reason to bring in capital from abroad is a need to equitize an industry that has got too much debt,” Mr Elworthy said.
TIAA-CREF, who manage a portfolio of over $3 billion in farmland, chose key markets in Australia.
“Some of the things we’ve been hearing at this conference is this idea that we need to increase productivity, and I think for that you need to attract a tremendous amount of capital. I think the TIAA-CREFS of the world are the right capital to attract as we’re very long term focused,” Jose Minaya, Head of Natural Resources and Infrastructure Investments at TIAA-CREF, said.
However there has been uncertainty among investors about Australia due to the risks involved with investing into a country prone to drought.
“What you’ll find in Australia is some of the best farmers in the world because they’ve had to deal with very severe issues, that breeds a higher quality, better productivity, a better infrastructure and methods that make us feel pretty comfortable from a long term point of view,” Mr Minaya said.
“When things start turning around and the moisture profile is good, that farmer, who knows how to deal with that volatility, is going to have some pretty out-sizing returns,” he said.
Another advantage Australia holds over other countries is its clear land title system, said John Paul Thwaytes of JPT Capital.
“In investing in Argentina you don’t actually know whether you own the land or not, also with Ukraine you’re not quite sure if you own it or who is in charge of it, and that is the major issue,” Mr Thwaytes said.
“We need foreign investment and sometimes foreign investors will take on risks that locals won’t,” said David Robinson, chairman of Australian Food and Fibre.