Partnership crucial to ag strategy

Funds freed up from businesses crippled by fat cat execs could generate real excitement in ag ...

THE Australian government has some tough times ahead of it, with high profile businesses either downsizing or exiting our shores altogether.

The flow-on effects from the imminent end of the Australian motor industry and from the Alcoa closure are going to be tough for the government to keep a lid on, especially in areas such as Geelong in Victoria. However, it needs to view the business opportunities that can now be opened up.

The big multinationals held the Government to ransom in regards to funding packages, threatening to shut down shop on their big-employing businesses unless they received a swag of assistance.

In the end, as Treasurer Joe Hockey suggested in the case of Alcoa, which was the beneficiary of $40 million in aid from the former government just two years ago, it has basically proven to be money down the drain.

And yet, on the other hand, you look at examples of private – public partnerships in the agricultural sector and you see massive returns on investment.

Just last week in the Wimmera, Bayer launched its new breeding facility, in which it has invested $14 million and which will create 20 jobs. The State government has chipped in a relatively small, but crucial sum of $1.24 million to improve road access to the site and looks set to be handsomely rewarded for its investment.

This sort of model shows the huge potential in not only agriculture but in regional Victoria.

And rather than have all your eggs in the one basket, throwing vats of money at industries that are struggling to operate in a global market, why not help small to medium sized businesses in ag?

It’s a field where Australia is internationally renowned as being competitive in spite of high labour costs and a variable climate. Risk is spread and rather than just investing in businesses to keep people out of the dole queue, there is a real pathway to massive growth opportunities.

Across rural Australia there are scores of innovative operators with great ideas that will be highly competitive once they get up and running.

Only the crippling lack of capital that is afflicting the rural sector is stopping these businesses seizing the opportunities in front of us in the Asian century.

It seems to me that some of the funds freed up from propping up businesses crippled by fat cat executives and apathetic union bosses could easily generate some real excitement in agriculture.

The spin-off benefits are endless, once private investors can see the opportunities present perhaps they will overcome their aversion to ag’s earnings volatility and focus on the fantastic long term returns.

Jobs in rural areas will take the pressure off capital cities on the brink of infrastructure collapse and investment will also allow businesses to make sure they take the opportunities on our doorstep with both hands.

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StockLand
Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

Simon
21/02/2014 12:02:07 PM

Just a tiny little tweak from Joe Hockey could fix this. Scrap the quarterly profit reporting requirement on Super Funds investing in Agribusiness. This purely administrative requirement, in the face of longer periods to return profits from agribusiness, keeps Super money (Australian money) out of agribusiness.
Bushie Bill
21/02/2014 12:38:45 PM

Yeah, good idea Simon-one way to guarantee a trickle slows to a zero.
argis
21/02/2014 2:46:48 PM

Stick with your kind of attitude Simon and don't let the trolls put you off. All trolls can do is shoot down the thinkers and the ideas, but are useless or uninterested in being creative themselves. Must congratulate Gregor Heard also on having a go at the issues facing agriculture. If it was not obvious years ago, that giving handouts to manufacturers who just kept allowing Unions to suck them straight out and into unrealistic, inflated and uncompetitive worker benefits, it hopefully now is patently obvious. It has grown into a cancer on our nation.
wtf
22/02/2014 2:33:38 AM

I like the thinking of the writer, but how is Bayer and breeding technology small-medium business. I think a better startegy would be to direct assistance to non share holder owned companies. Aren't we told that small businesses are the engine room of the economy? Should they not be able to get assistance? Corp welfare is rife in this country and will not change under either side of politics. These big corps do not reinvest as shown by cca, they bleed it dry then expect the govt to help em whilst exporting their profits overseas
newbroom
24/02/2014 4:17:31 PM

thank you for an insightful article. Fat cats should become an endangered species, especially in the bureaucracy.
Mad Matt
24/02/2014 7:51:26 PM

Good article it is small innovators that make the difference. They need to be funded not the big corps with shareholders one an overpaid CEO.
Hydatid
21/03/2014 2:28:47 PM

Core issue....ever wondered why Canadian Pension funds seem to have an insatiable appetite for Aussie Ag investments? ....Liquidity and Defined Benefit. Most Canadian funds have much lower liquidity requirements because they are based on Def Ben schemes - much longer horizons than the typical aussie Accumulation Fund (where holders must get their money within 30 days). Australia wont ever go back to Def Ben but we could relax the APRA standards....worth looking at Joe Hockey and David Murray !!!
A matter of opinionA selection of editorials from around the Fairfax Agricultural Media group covering the issues of the week.

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