Australia’s National Farmers’ Federation (NFF) and boutique investment firm, Spar Capital Partners, have announced the launch of Berkeley Calga Agribusiness Fund (Berkeley Calga) – a 10-year, A$500 million vehicle that will focus on a broad range of agricultural categories from broad acre farming, processing, and protein production.
The fund, which will be managed by Spar Partners, with Chris West appointed as chief executive, and chief investment officer, was also launched with the mission of attracting the capital needed to fund the country’s agricultural sector’s growth to achieve its full potential value of $100 billion by 2030.
“For our industry to continue to grow and to be a formidable competitor on the world stage, we need investment,” said Fiona Simson, the first female president of the NFF in the federation’s 37-year history. “Investment in capital, infrastructure and new technologies. And we need to think outside the box when determining how to fund this investment.”
Global macro trends are presenting a widening world stage for growth in Australia’s agricultural value chains. Rising standards of living, urbanization, and growing middle classes, in China and India in particular, are estimated to drive a 60 percent increase in food demand by 2060, reports Australian Financial Review. The majority of this demand will simply not be able to be met by increasing acreage under cultivation; rather, 85 percent of the growth will need to be met through increased yields and shifts in production efficiencies. This need is estimated to driving the value of the global agtech sector between 2013 and 2022 to $189 billion.
Simson expands upon these facts, stating that Australia is well positioned to capitalize upon these trends.
“Now is the time for Australian farming to seize the day. For the first time, agriculture is forecast to achieve a production value of more than $60 billion in 2016-2017,” she said. “By 2040, the sector is estimated to be worth $1.2 trillion.”
“Each dollar of additional investment in our sector further cements the industry’s place as a leading driver of the domestic economy and its potential to vastly increase this contribution. However, it all hinges on the capital and infrastructure it needs to achieve this growth.”
Robb Rallies
Only days ago, Australia’s former federal trade minister, Andrew Robb, stated that the country is unable to capitalize on the demand potential in Asian markets without foreign capital investment, when speaking at the Northern Territory Cattlemen’s Association (NTCA) conference in Darwin on April 1, reports Beef Central.
“We have thin capital markets, we need foreign capital,” he said. “…We have three trillion in super funds, but hardly a cent of that is coming into agriculture.”
It is this funding gap that vehicles such as Berkeley Calga can leverage to realize return on capital.
Robb points out that Australia has $49 billion invested in Germany and another $600 billion is invested in blue chip stocks in the U.S. – however, it is Australian projects using Australian technology, such as the $2 billion Seafarms Group prawn aquaculture project in the Northern Territory, that will enable the country to create growth.
Initial Investments
Initial investments made through Berkeley Calga include A$28 million invested in UAG Mariculture, a prawn production operation in Queensland; A$18 million committed to Macadamia Farms, a New South Wales-based nut producer; A$5 million invested in Phillips River, a phosphate fertilizer producer; A$5 million invested in Infinite Water, an agri waste water treatment tech and services company; and A$10 million invested in Agri Leasing, a stand alone investor in lease residuals in the agribusiness sectorA$3 million invested in AgResources, a digital HR platform initiative with the NFF, and A$52 million for the development of Nectar Farms Group – an $80 million hydroponic cucumber farm in western Victoria.
Typically a gold mining town, Stawell, Victoria, is the site chosen by Sydney-based Nectar Farms Pty Ltd to begin construction of the hydroponic project, which will be built in four phases over the next four years, reports ABC.
The establishment of the infrastructure will take approximately 12 months, and although the site will be able to produce a range of vegetables, the 10-hectare semi-closed glass house will mainly focus on cucumbers.
The fund plans to invest as a passive owner with third party managers and operators, and is targeting IRR in excess of 20 percent over the life of the fund based on expansion and business strategies that incorporate value addition. It is also targeting synergy between assets, technology innovation, natural portfolio and seasonal risk mitigation between ag sectors, and simplifying the supply chain.
-Lynda Kiernan
Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.