We’re joined by Meredith Paynter and Scott Bouvier who are Partners and Sector Leaders of the Agribusiness group at King & Wood Mallesons and join us from Sydney. Meredith and Scott thank you for joining us on BRR Media.
MP: Thank you.
SB: Thank you Kate.
Now food security is a growing concern particularly for developing nations such as China, and with the Australian Government having released its National Food Plan for consultation, Scott I might start with you, do you think this is a good time to be involved in agribusiness in Australia?
I think it’s a great time to be involved. As you pointed out, I mean there is a growing recognition of masses and increasing demands of food that we face, there’s not just the food security issue but there’s also really the growing opportunity presented by the increase in Asia’s middle class. So you know we’ve seen a great deal of work over the last few years in terms of agribusiness, and I think you know we can only see that growing. You know there’s obviously a lot of talk about the big global focus on agricultural investment by companies in Australia, part of that’s about securing sources of supply, but also a part of that is just recognising it’s a really good investment. So you know we think it’s a great time, we’ve done a fair bit of work over the last year say in JVs and some private equity investments and also not just at the M&A level but you know advising on environment, water, all sorts of things, so we think that you know with the activity in the sector and also the interest in the sector and it’s all highlighted in the – as you said in the National Food Plan paper, I think there’s going to be lot of work and also really interesting work.
Well Meredith I’d like to bring you in here and looking at the development of the agribusiness sector in Australia, how important is investment structure to this and are there any current trends that you’re seeing in terms of investment structure?
Yeah interesting issue. Investment structure’s incredibly important at a general level the agriculture sector is facing a number of converging issues and opportunities at the moment, particularly in light of factors such as generational change and the need to manage succession issues. And also the extreme needs at the moment for capital investment to drive productivity develop infrastructure and take advantage of the opportunities presented as mentioned by Scott. So we’re expecting there’ll be increasing levels of aggregation both horizontally as farmers and producers aggregate their holdings and investments to achieve better scale and capacity, and also vertically as producers are seeking to value add along the supply chain and to get better access to markets and consumers. In terms of trends what we’re seeing is an increase interest in the investment structures that are appropriate to agricultural investments and some of the factors that are driving those sort of issues relate to the nature and size of the assets that are available for investment, issues relating to diversification as well come into play. Issues regarding preferred management structure, the investment objectives of the investors, and the old issues of tax and stamp duty, making sure that it’s an effective structure. Certainly there’s a lot of increased interest in joint venture and private equity investments, and considerations to other factors to ensure that there’s appropriate investment structures that are suitable for the sector going forward.
And Scott I’d like to bring you back in here, we’ve talked about the opportunities that are in the sector, are there any current challenges that we’re seeing being faced?
Thankfully not the drought, or at least at the moment, but there are plenty of other challenges, how long do we have? No. Very briefly you know there’s a number of – quite a number of challenges and that’s where I think experience in the sector and looking across it’s really important, but to begin with you know firstly in many of the sectors, and there’s a lot of different sectors across agriculture, there’s going to be this need to create some large enough vehicles for people to invest in, so there’s going to be a lot of consolidation as Meredith mentioned, so you know pulling that together somebody’s going to have to work out you know make sure they pay the right price, get the right people to manage the assets, and also work out a supply path so that you avoid stranded assets so there’s a real challenge with that. There’s obviously a lot of talk about foreign investment in Australia and whether you know that’s a good thing or a bad thing and obviously we need to get that balance right. But equally we also need to work out and get our better access to international markets, but you know that’s obviously a big international challenge, but then on the flipside of that again is you know getting access to other people’s markets involves increasing our and keeping up the access to our markets and you know Australia is one of the purist places in the world, and so that’s why the Federal Government in the last budget put a lot more money into biosecurity, because the last thing we want is for our agriculturally threatened by a biosecurity risk. So then across this and probably closest to my heart, as I do quite a bit of work for CSIRO is really we’ve got to innovate more, we’ve got to get more for less, we’ve got to get better yields, we’ve got to use less water, less fertiliser, and you know we need to have greater R&D in the sector and you know I’m told by Professor Mark Adams, who’s a Dean of Agriculture at the University of Sydney, we just don’t actually have enough people studying agricultural science at the moment so we’ve got a potential skills shortage. So just rounding off you know haven’t even got to talking about land use conflicts, they’ve taken up a lot of media this year in terms of coal seam gas, and there’s a really big emerging issue in relation to biofuels and then you know we’ve got to build the infrastructure and we’ve got generational change so you know there’s a lot of challenges and a lot of really interesting things and you know that’s what I think makes it you know really interesting to be involved from a legal point of view.
Yes certainly and lots of issues that seem that they’re not likely to be easily answered there. Meredith what kind of developments can you see over the medium term?
Well when you put together all the opportunities and the challenges it’s going to be a busy time. Overall it’s incredibly exciting time to be involved in agribusiness and all signs are pointing to positive and solid growth. I think the key question and challenge posed by the National Food Plan paper is can Australia make the most of its current position with its strong safe, stable food system and our high level of food security. We’re uniquely positioned in this part of the world to strongly participate in growing food market globally and it’s really up to us I think as a nation to make sure we make the most of it, facing the challenges that Scott described and positioning ourselves for having a dynamic and exciting food industry.
I certainly do hope that we do meet the challenges the agribusiness sector and see it grow. Scott and Meredith thank you so much for joining me and giving me your insights.
MP: That’s our pleasure thanks very much.
SB: You’re welcome, thank you.
That was Scott Bouvier and Meredith Paynter, both Partners and also Sector Leaders of the Agribusiness Group at King & Wood Mallesons. Now listeners if you have any questions for either Scott or Meredith, please send them through using the panel that appears on your screen or otherwise via email to firstname.lastname@example.org.