Agribusiness Australia: ‘Winds of change’ sweep through ag sector

Tim Burrow, head of the trade association Agribusiness Australia, tells Agri Investor that despite a disappointing level of investment from superannuation funds into the local agriculture sector, the situation is slowly improving. He also offered his interpretation of AgCap’s decision to sell SAF and what it means for the sector, as well as what he believes is needed for agri to keep growing.

Given the calls for increased investment in Australia’s agricultural sector, what is your interpretation of AgCap’s decision last month to sell the Sustainable Agriculture Fund?

This is a case, in my opinion, where early “adopters/investors” are now reaping the rewards of their investment. It’s a good example of just how good agribusiness investments can be. Investing in ag is long-term but it’s not necessarily a “life sentence.”

There’s absolutely no doubt that the sector needs significant and mammoth amounts of investment. Our competitors are really other countries and they’re investing in infrastructure. In our opinion, it’s not just investing in the farming aspect of the sector that’s needed, but investment in everything from research to logistics to trade to education in order to make the whole agribusiness sector work well.

Do you think Australian investors are realizing this?

Yes, there is a significant change in the wind over the last one to three years, where investors are taking a lot more interest in the agribusiness sector. One example is First State Super, which in 2015 invested A$150 million in almond producer Select Harvests.

We too have been disappointed over the past decades that Australian funds in general have not been more active in the agribusiness sector, but I also think that the farming community has done itself some disservice by being perhaps a little too negative about it and saying how difficult it is to be agriculturally-orientated, when in reality it is like many businesses that have a set of uncontrollable factors.

Can you discuss your organization’s efforts in supporting the sector?

We’re a membership organization and we have members from research universities for example, right through to exporters. Our role is to facilitate discussion of the issues and opportunities for the agribusiness sector so we don’t specifically promote individual companies or individual issues or opportunities. But we do have a basic policy on investment and openness to foreign trade.

Australia has never been self-sufficient from a funding point of view in the last 200 odd years, so we need international investment to realize the opportunities that are out there. That hasn’t changed.

But one would think that with challenges such as food scarcity/food security the agricultural sector would be increasingly important.

It will be. Remembering that Australia currently only produces about one percent of the world’s food, and to keep pace with the growing population, which if the pundits are right and we’re going to end up with nearly 10 billion people on the planet, Australia will need to double its food production just to maintain that one percent status. But we won’t have more land, more water or more sunshine, so we will need to do it significantly more efficiently.

We’ve done it before in the ‘50s and ‘60s “the green revolution” when we doubled production. And in fact, over the last two decades, we’ve actually reduced the amount of arable land we’re using by over 10 percent, while increasing production volumes by about 40 percent over that same time.

As an agribusiness industry, we continue to produce more from less; we use less land, and we use less water each year to produce more. Obviously, there are ups and downs because of the nature of the business, but if you look at the long-term trend it’s very positive.

The other thing I’d like to stress is that agribusiness in Australia is run by some really smart people – from research through farmers through traders. The opportunity to increase our productivity is huge but we need investment. It doesn’t matter to us where it comes from, but the reality is that a significant amount will come from overseas, at least in the short-term.