Grains Research and Development

Date: 04.05.2015

Call to lift farm finance skills

Author: Brad Collis

Western Australian agriculture needs $600 billion in new investment by 2050 to achieve its export potential, a new report has concluded.

The report, The Road to Riches: Driving investment in Western Australian agriculture, was produced by KPMG for the Department of Agriculture and Food, WA (DAFWA). It was released at the WA Agribusiness Crop Updates in Perth in February.

The report found that potential existed for exports, particularly of premium food products to South-East Asia, to reach $1.7 trillion in the next 35 years – potentially outperforming the state’s mining sector.

The obstacle, however, is said to be limited access to the capital needed to fund productivity increases – a factor common to agriculture across the country. One of the report’s authors, KPMG’s Nicole Lockwood, said there needed to be a move away from the current reliance on bank debt and internal (family) equity and a shift instead to more external equity.

This could include “high-net-worth individuals” and self-managed super funds, as well as institutional superannuation and pension funds. These are currently holding about $1.8 trillion in Australia.

However, the report said most Australian farm businesses were not ‘investment ready’ and this was a considerable obstacle to attracting external equity. It said external investors required more professional management structures with higher levels of financial, risk-management and planning acumen than the current general situation on Australian farms.

The report recommended a series of policy innovations aimed at lifting best-practice farm management through higher levels of business training, governance and reporting to improve overall financial performance.

It also urges industry and government to work together to develop new frameworks for leasing, share-farming and equity partnerships.

More information:

John Connell

DAFWA
john.connell@agric.wa.gov.au

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