Super funds have staggering' opportunity with farming

Industry superannuation funds should be enticed to substantially increase their stake in Australian agriculture, a new report has argued.

The Industry Super Australia (ISA) discussion paper claimed that with the right expertise and policy settings, industry funds would raise their $1.6 billion stake in Australian agriculture.

ISA chief economist Stephen Anthony, who wrote the discussion paper, said there are real opportunities to be had in Australian farming – but the groundwork must first be laid.

“Into the future, the potential Australia has to position itself as the food bowl for Asia’s burgeoning middle class is really quite staggering,” he said.

“Australian superannuation funds could help take agriculture to the next level in global competitiveness. But to start, the funds will need reliable, independent data; agriculture-specific expertise; and revised national policy settings.”

Recommendations from the report

The discussion paper is a response to calls for the $2 trillion superannuation sector to invest in local agriculture and support regional development. Its recommendations include:

• Establishing an independent survey of farm performance to measure rates of return across various crop and livestock producers
• Undertaking an infrastructure audit of each of the major commodity supply chains to ensure the adequacy of transport, processing and storage facilities across regions
• Establishing regulatory arrangements to achieve effective price discovery in wholesale agricultural markets to neutralise big supermarket impacts
• Encouraging domestic operators to form consortiums with local and foreign processors and distribution networks to reduce agricultural sales risk
• Asking the federal government to take a more strategic approach to foreign investment rules
• Establishing a regional development bank to provide advisory services to rural producers and arrange long-term finance to more efficiently intensify operations

Follow the money

Global investors are rapidly accumulating strategic stakes in local agricultural holdings, with Canadian and American pension funds investing over $1 billion in Australia since 2007, according to the discussion paper.

“That global investors with big reputations think they can make a go of farming in Australia, and are prepared to invest significant amounts for the long haul, is encouraging,” Dr Anthony said.

“Australia is receiving ready access to foreign capital and expertise, but our agricultural industry is being cherry-picked, with quality assets falling into the hands of external investors.”

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