The key to boosting ag productivity in any market lies, at least partly, in ramping up infrastructure and technology investments. In the case of Australia, however, it also very much depends on replenishing another capital pool that insiders say is dwindling: talent.
“There is a need for our government to show some leadership in putting people through education, but also rebuild the extensive ag industry across all states. Education has been disbanded and forgotten over time,” said David Goodfellow, chief executive of AustOn Corporation, the agricultural arm of the Ontario Teachers’ Pension Plan, at Agri Investor’s Australia Forum in Melbourne today.
AustOn has had to hire electricians and recruit from other trades at its horticultural operations “because we can’t find the people we need,” he noted. “We used to have a big pool of people. Thirty years on, we can’t find that talent being available for us.”
That issue needs to be given more urgency, concurred Liz O’Leary, head of agriculture at Macquarie Infrastructure and Real Assets. “Human capital on the ground is being pushed into a second-order issue,” she said. “There is a notable absence of a new wave of talent coming through. We’re building our own but there needs to be a bigger industry push.”
Key to attracting more youth to the sector, she argued, would be efforts to explain how much agriculture has changed over the past decades. “A role in middle management in agriculture today looks very different from when I was a kid. We need to paint it the right way – there is a huge R&D, data story to tell.”
Troy Setter, chief executive of the Consolidated Pastoral Company, said the cattle giant today spends more on developing leadership skills than technical ones with its staff. “We’ve done some work with the military,” he said, explaining the merits that such training can have in bringing about a sturdy work ethic.
‘Less apologetic about building scale’
Availability of talent is emerging as a crucial topic at a time when more large-scale assets – typically worth more than A$60 million ($44 million; €38 million) – are coming on the block “than in many years,” said Danny Thomas, a regional director at CBRE. He believes there was probably another “A$2 billion-plus” of assets set to become available in the coming years. “Last year we transacted A$750 million. This year we’re setting out for A$1.1 billion to A$1.2 billion.”
Brent Snow, an associate portfolio manager at First State Super, which manages more than A$84 billion, said A$50 million was the minimum size for an asset to emerge on their radar – “if it has room to grow,” that is.
“We do need to see an executable pipeline to grow the asset to A$200m over time. But we’re seeing more opportunities now in that size spectrum.”
Faced with a relative scarcity of assets of that scale, however, asset managers needed to assume more frankly their role as aggregators, argued O’Leary. “This sector needs to be less apologetic about the impact of moving smaller holdings and sub-scale operations into large-scale operations through aggregation and land transformation, including capex investment in the first couple of years.”
“There is an optimal scale within farming which drives efficiency. And scale across the entire portfolio is also needed to make meaningful contributions to overall fund returns.”