Value in reading foreign perspectives

Value in reading foreign perspectives

Opinion
Aa

FOR the past year or so, I have been receiving an international agricultural investment newsletter. I find the different topics they cover really interesting, compared with what we see on a weekly basis in Australia.

Aa

FOR the past year or so, I have been receiving an international agricultural investment newsletter.

I find the different topics they cover really interesting, compared with what we see on a weekly basis in Australia.

For example, one story was about the winner of the United States' National Corn Growers Association's 2019 National Corn Yield Contest.

The winner broke the barrier of 600 bushels per acre. This equates to slightly more than 40 tonnes a hectare - and it was a dryland crop.

In relative terms, not much corn is grown in Australia, so the raw data is not that comparable. But what I did find interesting was the attention to detail this grower put into the crop.

This part of the story could have quite easily applied to lots of cutting-edge Australian producers.

Precision cropping and cutting-edge technology were used, and the crop was constantly tested, with inputs topped up throughout the year.

Overseas funds quite happily invest in Australia, and have been doing so for many years.

It was all about pushing boundaries and learning. You could feel the passion the farmer had for farming leaping off the page. I know lots of farmers just as passionate about what they do.

The next story that piqued my interest was about the potential shortage of water in California.

The author stated that "The state of California is no stranger to calamity, as evidenced by the persistent droughts and devastating wildfires that have ravished the land in past years". Sound familiar?

The Californian economy comprises 14 per cent of the total US economy, and a lot of this is agricultural production. They have the same issues as we do, in regard to balancing production and environmental needs.

California's three largest crops are all irrigation reliant. In some ways we have it easier, as we have a large dryland component in our agricultural mix.

Another article I read was about investing in Australia. The headline was "Goldilocks type opportunities" - that gives a clear indication of what angle the article was taking.

According to the report, land in Australia is affordable, has low political and sovereign risk, low transport costs, and moderate climate risks. The comparison was with the US, Europe, Peru and Argentina. The report went on to say the land in Australia can be very productive in relation to its cost.

They also mentioned a lack of subsidies. This aspect was viewed as a positive, as it forces producers to maximise efficiency, and agribusinesses are not negatively impacted by the sudden withdrawal of subsidies.

Related reading: Ag's foreign investment boom favours big farmers

They also made a point about the lack of interest Australian superannuation funds seem to have in investing in Australian agriculture. Meanwhile, overseas funds quite happily invest in Australia, and have been doing so for many years.

It was interesting to read this to obtain another perspective.

Once you look at all the comparative data, you can understand why there is significant interest in Australian land from overseas sources.

They also see a void in capital requirements in Australian agriculture. They believe it gives them an opportunity to invest in a low-risk, relatively high producing country.

We are part of a global industry, and I am sure various groups are constantly analysing the opportunities here.

While Australian agriculture has its ups and downs, it seems to have a big tick of approval from external sources.

Aa

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