IT’S a precious time right now in terms of international capital finding its way into agriculture but Australia is at genuine risk of being left behind.
This is what emerged from a panel session featuring experienced agribusiness finance people at Beef Australia, where concerns were raised in regards to Australian agriculture being in a position to capitalise on the current wave of investor interest.
Corporate executive David Goodfellow, who now heads up pension fund AustOn Corporation after several years running the agricultural business of China’s Zhejiang Rifa Holding Group, said there was no “great exponential curve of continuous improvement” occurring in the beef industry but rather disruption, or change, was quite cyclical.
It is about every 30 years we see the sort of phenomenon that is happening right now, he explained.
In the 1920s, it came in the form of country being opened up and developed; 30 years later it was profound investment from the English and Scots and that opened up new markets into Europe along with significant investment into the use of superphosphate.
Then the last wave, in the 1980s, involved the Japanese bringing money in.
“It didn’t take them long to realise not every Australia farm has the capacity to produce high quality beef every month of the year so rather than sell, they invested heavily into the feedlot industry,” he said.
“By 1991, the Japanese economy turned bad and a lot of that investment was returned to Japan but we were left with the legacy and have benefited for two decades.”
If you consider the background against which that wave of investment and improvement occurred in the 1980s, things were vastly different to what they are now, Mr Goodfellow argued.
“At that point in time, every state had three or four ag colleagues,” he said.
“They were overflowing with people who had been educated to embrace change.
“Department of ag and DPIs (departments of primary industry) were bustling with district beef officers and agronomists and there was a great culture of innovation and willingness to learn.
“What I am seeing in other countries is they are building new ag universities and filling them on day one - their ability to embrace this wave of change is ahead of ours.”
Massive investments into agriculture in the likes of South America and Eastern Europe were delivering increases in productivity, which was leading to an increase in supply.
There should be concern about about making sure Australia gets a share of the capital moving around the world at the moment, Mr Goodfellow said.
What is that capital being used for?
It was more generic than in past ‘waves’, according to Mr Goodfellow.
It’s going into technology, most significantly information technology, and it’s facilitating more accurate decision making regarding production.
He used horticulture as an example of what livestock might embrace.
“It wasn’t that long ago we’d walk into an avocado orchard and say gee, the trees might need a bit of a water today,” he said.
“Today, we have moisture probes in the soil, fertility probes measuring different levels of NPK and S and we have atmospheric monitors measuring air temperature, wind direction and speed and all of the data is being used to make decisions.
“Algorithms turning irrigators off and on three times a day have taken the guesswork out.”
To put some perspective around the effect of this technology, Mr Goodfellow said farms using this technology were consistently delivering more than double the national yield average.
“That comes simply by getting the decision making around the application of the science so much more accurate,” he said.