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Despite a perfect storm of challenges during 2020, Australia’s agribusiness sector continues to grow. Our new report, Ahead of the Harvest: 2020 – 2022, explores why, and where the greatest investment opportunities lie.
Our recent research into agribusiness investors, conducted in partnership with Acuris, pointed to the strength and opportunity in Australia's AU$60 billion agribusiness sector.
COVID-19 highlights the promise of this sector even further, as the global demand for high quality produce increases. A focus on national food security in the wake of short-term product shortages as a result of 'panic buying' has driven a higher demand for Australia's agricultural products – which are perceived by respondents as having sound food and safety standards, and clean and green initiatives.
“The Australian Department of Agriculture, Water and the Environment projects that the Australian agribusiness sector will grow to AU$100 billion by 2030.”
Our research identifies what respondents feel are Australia's top advantages in the long term:
On top of this, in its commitment to fast-track infrastructure projects through the AU$1 billion Relief and Recovery Fund, the federal government identified agriculture as an important sector to support.
Medical cannabis is identified as the top opportunity sector in our research, with 85% of respondents saying it presented the greatest potential and lowest risk as an investment by sub-sector.
68% of respondents in our report say that agtech will be the second-greatest opportunity shaping the industry. Technology is key to Australian farmers' ability to make do with scarce resources.
In 2019, North American investors completed five deals valued at AU$1.8 billion. Of these, almost AU$1.2 billion of Australian agribusiness deals were made by Canadian pension funds. Our report indicates that while the economic recovery from the impacts of COVID-19 will be multi-paced based on jurisdiction, the historically stronger investors – like Canadian pension funds – are likely to come back first.
There is no doubt that COVID-19 paused the world’s focus on new M&A transactions. While it’s clear there will be significantly-reduced volumes of activity for the remainder of 2020, our expectation is that there will be a modest recovery in 2021 and 2022.
COVID-19 has highlighted the strength of the industry and the global demand for high quality produce, both domestically and internationally. These factors lead us to conclude that the agribusiness opportunity - whether investors choose to participate or not, will continue to grow.
Ahead of the Harvest: 2020 – 2022, will be available immediately on submission of the below information
A partner in the firm’s finance group, Matt specialises in corporate finance, real estate, property and construction finance, agribusiness finance and acquisition finance.
© 2020 MinterEllison
