INFRASTRUCTURE is the highest priority and the message came through loud and clear in the agriculture white paper, according to one central Queensland cotton grower.
Cowal Agriculture managing director Hamish Millar said there was nothing in the paper that was negative, but it was a matter of drilling down into to the detail to see what would make a positive impact on central Queensland.
“I think we have an advantage in our region – there are fewer bottlenecks – but we can improve efficiencies around rail and containerisation,” he said.
Cowal Agriculture operates 5000 hectares of cultivation, irrigated by the Fairburn Dam, producing cotton, mungbeans, sorghum, chickpeas and wheat for export to Asia.
“Just containerising some of our key exports, like these niche markets around mungbeans and chickpeas, could be better coordinated," he said.
“Unfortunately we have a negative freight disadvantage. At the moment, our mungbeans are trucked to the Darling Downs and then to Brisbane, where it’s put on a vessel that goes past our local port destined for our important customer, Asia.”
Attracting investment partners was needed for infrastructure, to build dams and rail, Mr Millar said.
“We need to cut red tape.”
The white paper acknowledged the need for capital investment into agriculture, noting that the existing use of debt finance – mainly through banks – was not enough for future investment.
It noted ANZ estimated that $1 trillion in on-farm and supply chain investment was needed by the sector over the period to 2050 to increase its productivity, competitiveness and profitability.
“Attracting other investment into family farms will require agriculture to make itself visible as an alternative asset,” it stated.
The Cowal Agriculture story is an example of how a family-owned irrigation enterprise linked up with an investment fund to accommodate succession planning and further capital to grow the business.
Like the white paper, Mr Millar believed agriculture needed external capital as bank debt would only go so far.
“We need new capital players that want to invest in agriculture and the supply chain, but unfortunately I don’t think Australia’s appetite for that is strong enough for that, judging by own superannuation funds, which is a shame.
“So the foreign superannuation funds are in that space now.”
The white paper also highlighted this, stating only 0.3 per cent of MySuper products were invested in agriculture.
A key issue limiting this investment was the way domestic superannuation funds were assessed and benchmarked, which disadvantage investments that required longer-term horizons, like agriculture.
For Mr Millar, moving from a family farm business to an investment structure with a board sympathetic to agriculture meant moving from a situation where funds were always reasonably tight to employing capital with a realistic horizon and - importantly - return.
Professionally, it was also a big step up, moving from an annual review with the bank manager to reporting monthly, quarterly, annually, and being audited by one of the big four.
“You have to ask the question do you really want to do it,” Mr Millar said.
In a family farm, the destiny was in your hands, but once you brought in equity partners or investors, they were pretty much driving the direction of the business - with your leadership, he added.
“The destiny is really in their hands at the end of the day, so that is what you give up a little bit.
“It’s a partnership, the investors have access to capital and the farmers have the most important attribute, skills and knowledge to make it all work. “
However, if a family enterprise was happy to take that path and align themselves with that, it was a great opportunity for family farms in central Queensland.
“I think we don’t promote ourselves that well,” Mr Millar said in regards to investment dollars hitting countries like New Zealand.
“I think we are a highly successful agricultural growing area in central Queensland, I think we have a lot to offer, the diversity and all the resources that make up successful agriculture.
“We just need to be a bit more mindful of promoting ourselves to the global community about investing in agriculture and infrastructure.”
It was a matter of industry partnering with government to enable this to happen, he said.
