A world of opportunity

How is China reshaping Australia’s agricultural business landscape? How are timberland investment strategies in the Americas changing? New Agri Investor editor Clare Pennington highlights some of the key topics we will focus on in the months ahead.

Four years ago, a work colleague in China with a young child asked me to bring back baby milk powder from a trip to the UK. Milk products were in high demand, while a series of food safety scandals left Chinese consumers with a deep distrust of their native brands. But how that has changed. Today, Bellamy’s Australia is in the news because Chinese consumers have left Australians short of baby milk.

As a Chinese speaker I began my reporting career in Beijing, so it’s natural that in my first few days at Agri Investor my thoughts have turned to China. And as the world’s most populous nation with a changing economy, China is going to have deeply-felt effects on the health of our global agricultural industries.

Chinese firms are queuing up to invest in Australian land, meat production and export facilities to help fill their country’s growing hunger for protein. Bindaree Beef just sold a 45 percent stake in itself to Chinese food giant Shanghai Delisi. A PricewaterhouseCoopers report estimated that in the next ten years, annual meat consumption per person in China would grow to 74 kilograms. This means that the gap to meat-eaters in the OECD countries is narrowing: Americans, whose meat consumption until recently has been decreasing, are set to eat slightly more meat than they do now, consuming nearly 97 kilograms each by 2021 according to the United States Department of Agriculture.

Australian exports can now enter China on lower tariffs, and Australia is cultivating a taste for beef in its Asian trade partner, where pork has traditionally been king. There are also opportunities for private equity to invest in a growing consumer market as well as good divestments to be made in a competitive seller’s market.

But it’s not only Asia where companies and investors are finding new regional opportunities and redefining investment strategies. Investment in agricultural land is also changing in other parts of the world. In the Americas timberland companies, particularly real estate investment trusts (REITs), are looking at new ways to diversify and leverage profits from the industry. The recently-announced Plum Creek and Weyerhaeuser merger means that the combined REIT’s timberlands cover lands in Canada and Uruguay, as well as the good old United States. In Romania, Cibus Farmland Club chief executive Peter Beerents says that as land appreciation for buy-and-lease owners starts to die down, investors are focusing more on investing in agricultural operations rather than relying only on growing land values. And environmental, social and governance demands now mean that investors are increasingly having to consider the long-term impact of their decisions, in Europe as much as Africa.

Joining Agri Investor as editor is an exciting opportunity to report on an industry that is finding and consolidating its identity in the private equity world. And with a growing demand for food, be it protein in America and China or basic food security in Africa, there is a real demand for investment, be it in land, new technologies or Australian cattle.

Send your thoughts on how the space is changing to me at clare.p@peimedia.com