Food investments ‘ripe for picking’ by Chinese
Publication: The Australian
Author: Sue Neales
Chinese investors in Australia attending a Sino-Australasian entrepreneurs’ summit have been told that the food and agricultural sector is “ripe for the picking” with local superannuation funds remaining reluctant to invest.
Tom Robb, chief executive of The Robb Group and son of former federal trade minister Andrew Robb, described agriculture as a “fantastic” investment asset, which also tended to be counter-cyclical to other investment classes, and resilient in recessions.
He also advised potential Chinese investors at the summit that given the renewed warmth in the political relationship since new Prime Minister Scott Morrison replaced Malcolm Turnbull, “now is a very good time to start researching and considering a strategic investment in agribusiness”.
Mr Robb, whose business advises Chinese companies looking to invest in Australia, mainly in the food and agriculture sector, said recent deals where The Robb Group had assisted including procuring LNG exploration licences for a Chinese firm, and leading a multibillion-dollar live cattle “cross-border” negotiation.
Investment opportunities he is currently pursuing include seeking a Chinese partner for investment in the Queensland sugar industry — believed to be troubled processor Mackay Sugar — and capital to establish a new futures exchange in Sydney.
“Agriculture is often perceived as too risky, with too-high labour costs, illiquid assets and too weather-exposed. I just don’t agree,” Mr Robb told the mainly Chinese audience at the summit.
“There is a lack of agricultural education and understanding [among local super funds]. By last year they had only invested a total $1.5 billion in Australian agriculture of $2.3 trillion of funds they manage. To say that level of investment is disappointing is an understatement.
“But this provides an opportunity for entrepreneurs like yourselves; there are some very exciting projects in agriculture just waiting for investment capital to make them blossom.”
Opportunities identified by Mr Robb included digital disruption in the agricultural sector, including genomics, biomedicines, robotics and agtech online applications, which will further automate farming and help overcome the disadvantage of high labour costs.
Mr Robb said the agricultural sector was also becoming better managed, with better risk structures in place and greater operational transparencies.
Another opportunity identified by Mr Robb is the $2bn Sea Dragon prawn farming project planned at coastal Legune station on the border between the Northern Territory and the Kimberleys.
The project, which has hired Andrew Robb as a special adviser, is looking for Chinese investors to acquire part of the project in return for guaranteed prawn supply from the 120,000 tonne annual output, alongside its first Asian partner, Japanese seafood giant Nippon Suisan Kaisha (Nissui).
Herbert Smith Freehills partner Michael Ziegelaar advised the group that it was not necessary to buy 100 per cent of the company or farm.