Capital investment required to reach $100 billion target
- By: "Prime" Ag News
- Agribusiness News
- Mar 05, 2021
- 59 views
Australian agriculture needs an additional $7.5 billion of capital investment per year in order to reach the National Farmers’ Federation’s target of farm gate output worth $100 billion by 2030.
That’s according to a new report commissioned by AgriFutures Australia. The study revealed that Australia’s agriculture, fisheries and forestry industries need $8.7 billion of annual investment for the next nine years to meet the NFF’s 2030 target.
Currently, the industry attracts around $1.2 billion of investment per year, with farm gate output valued at $63 billion. Data modelled in the report shows that current investment in agriculture could limit the growth of the industry to just $84 billion in farm gate value by 2030.
The report written by Natural Capital Economics warns that without a significant increase in private sector and government investment, agriculture would fall well short of its potential economic value.
John Harvey, AgriFutures Australia Managing Director, said that attracting sufficient capital is critical for fuelling growth.
“From purchasing machinery, to expanding production, to adopting new farming practices and innovating – access to capital is critical,” he stated.
Mr Harvey said that while Australia is regarded as a global leader in agtech research and innovation, farmers needed better access to capital in order to deploy technology at a paddock level.
“The use of precision agriculture technologies, sensor-based applications and IoT are fundamental to fuelling sector growth. All these innovations require capital.”
“We know agriculture offers investors, like superannuation funds, an attractive ‘point of difference’ to add to their portfolios to create a more diverse and balanced investment profile.”
The report outlines a roadmap for the industry to adopt including exploring alternative farm ownership models and facilitating access to overseas capital.
Mr Jim Binney, Director of Natural Capital Economics and an author of the report states that if the roadmap is implemented, “this should see farmers’ options for sources of investment capital broadening from the current reliance on loans and their own equity to also include investment from other sources.”
In addition to attracting investment at a farm gate level, Mr Binney highlighted the need for the relevant sectors and industries to make opportunities available to investors.
“The best way to attract more capital investment into the sector is to have bankable projects. Like all businesses, farmers should always be seeking new opportunities.”
The report concluded that Australia needs new investment models and equity partnerships with less reliance on traditional debt and equity finance to continue to drive the sector forward.
“We need to continue to innovate, attract large transformative projects and think differently about how we attract investment. This is not just the realm of big business, it is something that everyone in agriculture needs to be aware of, and act now,” Mr Harvey.
Capital requirements of Australia’s agriculture, fisheries and forestry sector was commissioned by AgriFutures Australia to quantify the capital required to grow the value of agriculture to $100 billion by 2030.
Download the report here.