While regulatory reform impacting on agribusiness is
expected to occur its practical impact is, at this stage, not
expected to be significant.
I recently attended and presented at the Global Agribusiness
Forum held in late March 2014 in São Paulo, Brazil, one of
the largest agribusiness conferences in the world.
Bringing together significant global political, business and
industry leaders in the field of agribusiness, the forum focused on
sustainability and agricultural development as its key themes,
including the challenge of meeting the global demand for food and
the importance of modernisation.
Topics discussed at the forum included the growth of the middle
class, trade negotiations in agriculture, food security, safety and
traceability, climate change, increasing producer and production
value and, from a regulatory perspective, the foundations for
Regulatory foundations for agribusiness development –
The forum was an opportunity to highlight a uniquely Australian
perspective on the development of agribusiness, which has been a
prevalent political issue in Australia in the past few years, in
particular the areas of foreign investment regulation, increasing
agricultural competitiveness and positioning Australia as a food
bowl to Asia in the "Asian Century".
Australia relies significantly on foreign capital for growth and
there are moves at both a Federal and State level to develop
agricultural policy and drive regulatory change.
For example, public concern regarding foreign investment in
Australian agricultural land and agribusiness, together with
arguably outdated foreign investment regulation and lack of
transparency as to foreign ownership, has led to Federal proposals
to lower the foreign investment review thresholds for acquisitions
of agricultural land and agribusiness, and to the proposed
establishment of a national register of foreign ownership of real
property and businesses.
The Coalition Government in 2014 also released an agriculture
competitiveness issues paper, which is intended to lead to policy
reform to enhance profitability and boost agriculture, and a 2030
vision to develop northern Australia, including the development of
a food bowl to double Australia's agricultural output. Several
States have also been active in agribusiness development with
Queensland, New South Wales, Victoria and Western Australia all
active in developing policy.
Australia has shown itself to be in favour of capital flows and
is significantly active in bilateral and multilateral trade
agreements, with a number of free trade agreements in place
(including the recent Economic Partnership Agreement concluded with
Japan, a free trade agreement with South Korea and free trade
agreement negotiations underway with China), and a seat at the
Trans-Pacific Partnership Agreement negotiations which have
agribusiness as a key area of negotiation.
Australia has also shown itself to be adept at finding
innovative solutions to traditional difficulties faced by
agribusinesses, for example being structured as co-operatives,
having volatile cash flows or assets that are less easily converted
Several examples, such as shareholder funds, corporatisations,
joint ventures and aggregation funds have enable agribusinesses to
raise capital, realise value and, as a consequence, drive mergers
& acquisitions activity.
While regulatory reform impacting on agribusiness is expected to
occur its practical impact is, at this stage, not expected to be
significant. The prospect of a more stable Federal Government in
Australia and the Australian dollar coming off recent highs also
bode well for the future of agribusiness, particularly from a
foreign investment perspective. Australia remains open for
The vibrancy, scale and level of industry expertise and
discussion evident at the Global Agribusiness Forum also highlight
the critical nature of agribusiness as a cornerstone of global
social and economic development.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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