There is more work to be done if we are to drive greater
investment in agribusiness, a priority sector under the Federal
Government's Innovation Agenda, write partners Hazel Brasington
and Shane Bilardi in The Australian Financial Review.
The federal government's recently released innovation and
competitiveness agenda sends a positive message to foreign
investors interested in agribusiness and food in Australia by
making these sectors a focus of development efforts, while
committing to making it easier for significant investment to
It is an important message if Australia is to attract the
billions of dollars of capital needed to upgrade ageing silos,
repair fragile rail networks and relieve port bottlenecks that
reduce returns on agricultural production and stand in the way of
meeting projected future Asian food demand.
No wonder then that the Abbott government has selected food and
agribusiness as among five priority industry sectors. But if the
government is serious about attracting more foreign capital into
these sectors, there is still more to be done.
Uncertainty about how the requirements may be applied, along with
suspicion about potential changes in the future, are contributing
to a widespread impression that investing in Australian
agricultural assets is a risky business.
Guidance on national interest test
Clearer guidance on how the national interest test will be
applied would not only help reduce the perceived risk for investors
entering the Australian market, but would also be in line with the
government's agenda to improve the communication and
consistency of regulatory approvals. This would not involve
changing the national interest test, or adopting a mindset against
evolution of the national interest.
Our local and international clients in the Australian
agribusiness and food sectors have also told us very clearly that
the best thing the government can do for the industry will be to
fix infrastructure impediments and to facilitate access to local
and international markets.
There are signs that private capital is finding a variety of new
funding vehicles to address small farm undercapitalisation and
inter-generational succession. This will keep land in agricultural
production – probably even more efficiently than is currently
the case. However, reversing the effect of long-term
underinvestment in rail and port infrastructure is firmly in the
government's court, as is the new water-storage investment
referred to in the agricultural competitiveness green paper.
Window of opportunity
It might be that the sale of state assets, together with the
kind of strong investment interest that has fuelled recent
acquisitions in Australia's agricultural sector, have aligned
to yield a unique window of opportunity to address these
The Quattro port terminal joint venture at Port Kembla, which
leverages private investment together with government-led rail
network improvements to deliver choice, competition and better
utilisation of port land and facilities that will benefit
exporters, is an example.
In isolation, neither government nor the private sector would
unlock the same value. If the prospective privatisation of
state-owned ports presents similar opportunities, the best could be
yet to come.
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