AFG Venture Group Dispatches

Corporate advisory and consultancy in Australia, South East Asia and India.

Australian Agribusiness Needs to Prepare for a Big Increase in Overseas Demand – David Duckett, Managing Director, Structured Finance and Head of Agribusiness Practice, AFG Venture Group

To the outside world Australia is often viewed as a mine, a farm or a beach to which could be added in recent times a school.

These critical areas of Australia’s economy, particularly from a foreign exchange earnings point of view, are characterised by very different structures as far as their industry bodies are concerned.

The Minerals Council of Australia is cohesive in representing its industry sector. Tourism Australia coordinates international marketing and relates efficiently with the State Tourism authorities. Education, primarily the responsibility of the States, is of a size which can be managed relatively efficiently.  Agribusiness however faces special challenges, both on the domestic and export front, and is characterised by a plethora of organisations who protect their overseas markets and interests without necessarily sharing experiences and intelligence with other agribusiness sectors.

Overlying all sectors are State and Federal government departments which can often further complicate the efficient achieving of goals in overseas markets.

The point is that overseas buyers of Australian agribusiness products are often confused as to who they are dealing with and this is detracting from the overall export effort. As Australia is increasingly being viewed as a food bowl for Asia and beyond, there is an urgent need to streamline and make more effective the structures under which agribusiness operates, especially in the sharing of market intelligence and particularly considering that some 80% of agribusiness production is exported.

Focus also needs to be on cost efficiency, especially given the prospect that the Australian dollar may be a strong currency for some time and in any event is likely to be volatile as far as our major trading partners are concerned. Layers of bureaucracy need to be peeled away to achieve cost efficiencies not just to enhance our competitive export position but also to combat cheap imports particularly of retail food products.

This should not mean additional government bureaucracy. A non-political peak industry council similar to the Minerals Council of Australia could be set up, perhaps initially with Federal government support, but later with financial support from sub-sector organisations. Ideally all agribusiness sub-sectors would be affiliated. The main agribusiness sectors such a council may apply to would be:

Approx % of Australian Exports
Meat 32
Grains 21
Wine 12
Diary 10
Sugar 7
Seafood 7
Horticulture 3

The Agribusiness Association of Australia provides useful representation on an industry wide basis.  However sub-sector organisations are not affiliated with it.

It would be the role of a peak body to promote the high quality and service relating to Australian agribusiness similar to the Australian Tourism Commission and to lift its international profile whilst at the same time allowing its sub-sector affiliates to deal with detailed representation in specific markets. This organisation would also be a cohesive, powerful force in policy development for governments, especially in the areas of:

  • Foreign acquisition of Australian agribusinesses – e.g. FIRB recognising the sensitivity of the national interest.
  • Taxation policy review as it relates to farmers, wine-growers and other primary producers.
  • Bilateral trade negotiations.
  • R&D and brand recognition and protection.
  • Value added initiatives.
  • Quarantine controls.
  • Trade representation – e.g., Austrade.
  • Inter-government relations – e.g., primary industry, DFAT, etc.
  • Bio energy and the use of available productive land capacity.

The time has arrived for Australian agribusiness to prepare itself for the demands. Investment and other challenges that will be placed on it by a world which will increasingly struggle to feed itself.

About the author

David Duckett is Managing Director, Structured Finance and Head of Agribusiness Practice for AFG Venture Group and a Fellow of the Institute of Chartered Accountants in Australia. He spent over 10 years with Andersens during which he was involved with clients in Indonesia, Singapore and Malaysia as well as in Europe, Australia and New Zealand.

In 1975, David commenced an 18 year involvement in the international food industry, including 7 years with Goodman Fielder. During this period he was Head of Taxation and later Head of Strategic Planning, both global roles.

Throughout his career David has had extensive involvement in Mergers & Acquisitions as well as capital raisings, structured finance and other areas of corporate advisory activities.