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US instos eye Australian agribusiness
Agriculture is benefiting from a global trend of institutions increasing investment in alternative assets, according to audit-tax and advisory firm BDO.
BDO executive director Margaux Beauchamp said funds allocating to alternative assets were growing at a rate seven times that of traditional asset classes.
"Institutions currently have very strong positive investment sentiments towards agriculture, which is no surprise given global demand for agricultural products is expected to increase 60 per cent by 2050," she said.
A shift to an absolute return type of investment framework — to better measure performance by aligning investment outcomes with objectives — was also driving demand for agriculture, according to Beauchamp.
She said agriculture measured up on a risk-return basis and could deliver significant wealth over the long term.
Australian agriculture could benefit from increased investment through being able to fund expansion and innovation, she said, but agribusinesses needed to structure investment proposals strategically.
"Australia could really make the most of its strong competitive advantage in agriculture and demand for its products to ensure we play a role in global agriculture institutional investment portfolios," Beauchamp said.
"If Australian agribusinesses can demonstrate their value, there is great potential for them to tap into a wealth of funding simply not available from other sources.
"As with any funding process, not all proposals will attract institutional capital," she explained.
US institutions were expressing interest in Australian agribusinesses, Beauchamp said. Australian Pastoral Fund had attracted $180 million in investments from Michigan Municipal Employees' Retirement System, while BDO had been approached by other institutional businesses, it said.
BDO partner David Krause said institutional investment in agriculture could help meet government industry targets.
"Attracting further institutional investment in agriculture will be vital in ensuring we can keep up with international demand and meet local production targets, such as those set by the Queensland Government in its draft Agriculture Strategy," Krause said.
"Put simply, we can't rely on the traditional investment sources alone to fund the development of agricultural land and innovation in growing, harvesting and production processes that we need," he said.
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