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http://www.minterellison.com/articles/why-agribusiness-is-a-sector-to-watch

Why agribusiness is a sector to watch

2 minute read + PDF download  15.09.2020

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.”

Australia's top advantages in agribusiness

Our research identifies what respondents feel are Australia's top advantages in the long term:

  • Good infrastructure
  • Political and legal stability
  • Government support
  • Free Trade Agreements.

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.

What makes Australia attractive for investments into agribusiness?

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.

Agtech will shape the industry

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.

Which three innovations will have the greatest impact on Australian agribusiness in the next 12 months?

three innovations graph

North American investors led M&A trends

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.

A modest recovery in 2021 and 2022

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.

Find out more about the opportunities in agribusiness.

Ahead of the Harvest: 2020 – 2022, will be available immediately on submission of the below information

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http://www.minterellison.com/articles/why-agribusiness-is-a-sector-to-watch

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