01 May 2014

Report from Global Agribusiness Forum 2014, Sao Paulo, Brazil

by Esteban Gomez

While regulatory reform impacting on agribusiness is expected to occur its practical impact is, at this stage, not expected to be significant.

I recently attended and presented at the Global Agribusiness Forum held in late March 2014 in São Paulo, Brazil, one of the largest agribusiness conferences in the world.

Bringing together significant global political, business and industry leaders in the field of agribusiness, the forum focused on sustainability and agricultural development as its key themes, including the challenge of meeting the global demand for food and the importance of modernisation.

Topics discussed at the forum included the growth of the middle class, trade negotiations in agriculture, food security, safety and traceability, climate change, increasing producer and production value and, from a regulatory perspective, the foundations for agribusiness development.

 Regulatory foundations for agribusiness development – Australia

The forum was an opportunity to highlight a uniquely Australian perspective on the development of agribusiness, which has been a prevalent political issue in Australia in the past few years, in particular the areas of foreign investment regulation, increasing agricultural competitiveness and positioning Australia as a food bowl to Asia in the "Asian Century".

Australia relies significantly on foreign capital for growth and there are moves at both a Federal and State level to develop agricultural policy and drive regulatory change.

For example, public concern regarding foreign investment in Australian agricultural land and agribusiness, together with arguably outdated foreign investment regulation and lack of transparency as to foreign ownership, has led to Federal proposals to lower the foreign investment review thresholds for acquisitions of agricultural land and agribusiness, and to the proposed establishment of a national register of foreign ownership of real property and businesses.

The Coalition Government in 2014 also released an agriculture competitiveness issues paper, which is intended to lead to policy reform to enhance profitability and boost agriculture, and a 2030 vision to develop northern Australia, including the development of a food bowl to double Australia's agricultural output. Several States have also been active in agribusiness development with Queensland, New South Wales, Victoria and Western Australia all active in developing policy.

Australia has shown itself to be in favour of capital flows and is significantly active in bilateral and multilateral trade agreements, with a number of free trade agreements in place (including the recent Economic Partnership Agreement concluded with Japan, a free trade agreement with South Korea and free trade agreement negotiations underway with China), and a seat at the Trans-Pacific Partnership Agreement negotiations which have agribusiness as a key area of negotiation.

Australia has also shown itself to be adept at finding innovative solutions to traditional difficulties faced by agribusinesses, for example being structured as co-operatives, having volatile cash flows or assets that are less easily converted to cash.

Several examples, such as shareholder funds, corporatisations, joint ventures and aggregation funds have enable agribusinesses to raise capital, realise value and, as a consequence, drive mergers & acquisitions activity.

Key takeaways

While regulatory reform impacting on agribusiness is expected to occur its practical impact is, at this stage, not expected to be significant. The prospect of a more stable Federal Government in Australia and the Australian dollar coming off recent highs also bode well for the future of agribusiness, particularly from a foreign investment perspective. Australia remains open for business.

The vibrancy, scale and level of industry expertise and discussion evident at the Global Agribusiness Forum also highlight the critical nature of agribusiness as a cornerstone of global social and economic development.

 

You might also be interested in...

Related Knowledge

Get in Touch

Get in touch information is loading

Disclaimer

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.