Australia: Windows of opportunity for Australian agribusiness investment

The recently published Innovation & Competitiveness Agenda sets out the Australian federal government's plans to make food and agribusiness a priority sector in Australia. The Agenda sends a positive message to foreign investors: it stresses the government's commitment to developing the agribusiness sector and making it easier for significant investments to proceed. This is important for Australia to attract the billions of dollars worth of capital needed to upgrade ageing silos, repair fragile rail networks and relieve rail and port bottlenecks. All of these reduce returns on agricultural production and inhibit industry expansion to meet the projected growth in Asian food demand.

In response to the release of the Agenda, Norton Rose Fulbright convened an industry roundtable in Melbourne. The meeting highlighted where many potential windows of opportunity within Australian agribusiness lie and indicated the following insights:

Investors will not forget about ADM's failed takeover of Graincorp Ltd any time soon and there are still uncertainties about current Foreign Investment Review Board requirements. At the same time, market commentators are not sensing any reduction in the level of interest in Australian agribusiness and port infrastructure. Foreign investment continues apace, as illustrated by recent reports of Chinese interests being close to sealing a deal to acquire 50 dairy farms in the south west part of the state of Victoria with plans to construct two processing plants to integrate with these acquisitions. While some believe that the risk in this area is overstated, clearer communication on the proposed application of the national interest test would help reduce the perceived risk for investors entering the Australian market, and would also be in line with the government's agenda to improve the speed and consistency of regulatory approvals (see Michael Wilton's article An update on Foreign Direct Investment in Australia for the latest developments in this area).

Private capital is finding new funding vehicles to address small farm undercapitalisation and intergenerational succession. Without such initiatives, the age profile of the rural sector threatens to remove a significant percentage of land from agricultural production within the next five to ten years. Investment funds instead hold out the prospect of continuing – and possibly even more efficient – production than is currently the case in Australia's subsidy-free farming sector. Norton Rose Fulbright is seeing (and advising on) the establishment of a number of new funds with capital sourced predominantly from offshore investors, typically from Europe and North America.

Further investment in infrastructure for the agricultural sector is sorely needed. Clients in the Australian food and agribusiness sectors have stated very clearly that the best thing the government can do for the industry will be to fix rail and port infrastructure impediments and access to markets.

Reversing the effect of long term underinvestment in rail is firmly in the camp of government, as is the kind of new water storage and irrigation investment flagged in an agricultural competitiveness government green paper released on October 20, 2015. A record A$10.8 billion investment in Victoria's freight network has been proposed, with particular attention to regional corridors to port from productive regions such as Mildura and Horsham. There is pressure on governments to move heavy traffic off roads, which will continue to incentivise rail rationalisation. This could deliver the kind of cost efficiencies that are enjoyed in Canada, where there is a reliable long distance rail service as well as a variety of elevation services providers at port. In Australia, by contrast, different gauge rail tracks still operate in the adjacent states of Victoria and New South Wales.

Prospective privatisation of stateowned port assets in the next 12 to 18 months could provide the revenue to enable state governments to finally address the 'big ticket' costs involved in an overhaul of rail infrastructure, particularly if there is co-funding from federal government.

It would be a significant win for Australia's agriculture sector if the public and private sectors align in a window of opportunity to address the challenges of a long legacy of poor infrastructure investment.

Take as a case study 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 use of port land and facilities that will benefit exporters. In isolation from each other, neither government initiatives nor the private sector would unlock the same value.

Another approach the Australian government could explore is a co-investment model, based on the US government's recent Rural Infrastructure Opportunity Fund. Under this model, the US Federal Government has established and seedfunded a rural infrastructure fund that is using sophisticated infrastructure advisors to match rural infrastructure opportunities with suitable investors, with public money deployed alongside private investment where appropriate. The Australian government could consider exploring a similar model with co-investment used to improve the return profile where required to stimulate the required investment.

Higher up the supply chain other investors are looking at country storage sites and their connectivity with transport links. Here there are opportunities for traders wishing to ensure they are able to acquire the season's best commodity and sell it at their preferred time. Furthermore, such facilities offer a means to manage and control the pipeline to port which currently exacts a higher cost per tonne in Australia than in almost any other country worldwide.

Climactic factors are never far from mind in Australia, but even the memory of double drought years, such as those that occurred in 2007 and 2008, does not seem to cool the current enthusiasm to acquire grain storage and handling assets. This may reflect the nature of the acquirers, multinational traders looking to diversify their supply sources and investors looking for long-term security of supply, and so accepting of some cyclical climatic risk.

On-farm silos continue to be built apace, as a means for growers to protect their crop and choose when to deliver it. For growers who are not served well by rail, or who are penalised by seasonal surges in the cost of trucking services, on-farm storage is the preferred choice. While this practice may not be optimal supplychain practice, large growers feel that they have no choice but to make these investments. Smaller growers are even forming cooperatives to build silos where they cannot finance construction themselves.

Ports in private operation are likely to benefit from having more than one grain elevation operator in their precincts, as this tends to drive high customer service standards and a robust revenue stream to the port owner. A spin off from the forthcoming wave of port sales could be to challenge the existing yield from land and facilities at ports as well as to promote changes designed to optimise it. If strategic investment value lies in controlling an entire supply chain from region to port, this could value certain advantageously located land and infrastructure at a premium.

Competition issues beset supply chain and port operations for bulk grain in Australia.

In reality the export grain season comes with a seasonal high demand peak of between two and four months, which is counter to the Northern hemisphere so that multinational traders' strategy is focussed on improved assurance that their ships will be loaded in that peak period.

It now seems clear that neither the current practice of auctioning vessel loading slots nor the much touted long-term 'take or pay' agreements between traders and port facilities hold out any real hope of reducing Australian port elevation costs in line with global benchmarks. Looking to the hard commodities sector for a comparison, the Hunter Valley Coal Chain introduced a form of cooperative management of the rail supply chain which revolutionised coal throughput at port. However such a model would be difficult to transfer to the soft commodities sector as it is likely to trigger concerns about preserving traders' commercial confidentiality. That said, some form of collective activity, perhaps with an intermediated operator (along the lines of the Quattro JV), could be the future of infrastructure ownership for the sector.

In the next issue of Cultivate we will analyse the effect of the Competition and Consumer (Industry Code-Port Terminal Access (Bulk Wheat)) Regulation 2014 (Code of Conduct) in force from September, 30 2014. The dynamics set up by the Code of Conduct are starkly different in the various regions of Australia, but the code has set the context Australiawide for what is likely to be a next wave of strategic joint ventures and acquisitions in the supply chain to port.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Shane Bilardi
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions