The road to riches: driving investment in Western Australian agriculture

Page last updated: Wednesday, 25 October 2017 - 10:30am

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The department has released a report outlining how Western Australian farm businesses can adapt and become investment-ready to grow the agri-food sector into a premium supplier to Asian food markets. The department commissioned KPMG to produce The road to riches: driving investment in Western Australian agriculture report which is now available to industry for discussion.

Western Australia (WA) has experienced what some commentators believe to have been a once in a generation boom linked to mining investment. It would be easy for Western Australians to rest comfortably in the knowledge that our future prosperity is linked to the production phases of these enormous investments. However there is another view, one that proposes to use the skill sets, infrastructure and supply chains to our Asian customers established during the mining investment boom and to connect them more effectively to our smaller, yet no less determined agricultural producers.

In order to take advantage of this potential opportunity Western Australian agribusinesses needs to overcome numerous challenges that cumulatively conspire to cause concern among non-traditional investors.

In this report, we have outlined critical factors that need resolution to enhance investment potential of WA agriculture, namely:

  • farming enterprises to become investment ready to attract financing from all available sources
  • optimising the use of financing already deployed in the sector
  • development of the market for external equity structures to facilitate financing from alternative sources
  • direct measures to enhance Australia’s competitiveness for agricultural investment capital, particularly for retail and institutional investors.

Agriculture often requires investors with patient capital and a long term vision. If we are to secure investment in agriculture we need to act with resolve and in haste in order to capitalise on an opportunity that will otherwise be embraced by our competitors. This also depends on a stable policy environment to give investors confidence that their investment will not be placed at risk by arbitrary policy changes. If we are successful, we may set the scene for the 'second once-in-a-generation boom' for Western Australia, but this time in our agricultural sector with benefits spread more evenly to all of the regions across the state.

Key findings

The Road to riches: driving investment in Western Australian agriculture report:

  • recommends adopting best practice business management procedures, already employed in the corporate sector, to encourage external funders to engage with agriculture
  • indicates that joint venture or equity partnership business structures have the potential to expand the pool of investors in WA agriculture and to introduce additional external equity sources, such as pension funds
  • encourages a change in focus for farm business training packages to encourage investment preparedness and a review of documentation associated with leasing and share-farming to promote these forms of investment
  • finds the important drivers of external investment are a stable regulatory environment, including land ownership reforms, risk management and an index of agricultural investment performance.

To provide feedback on this report, please email John Connell at john.connell@agric.wa.gov.au