August 26, 2024

By Gerelyn Terzo, Global AgInvesting Media

Japanese brokerage giant Daiwa Securities Group has set its sights on investment and lending opportunities in Australia’s agriculture industry. According to a Bloomberg report, the Japanese bank is considering Australian ag as part of a broader expansion push into the country’s property and renewable energy sectors. Daiwa is targeting value-add produce growers through whom the value of commodities can be improved while also looking to issue loans to Australia’s middle-market property developers.

Daiwa CEO Akihiko Ogino previously revealed his desire to expand the firm’s income streams beyond national borders by approximately 40 percent in the coming years. So far, Daiwa broke new ground as the maiden Japanese investor in Australian VC fund Main Sequence, which specializes in “pioneering new frontiers in biotechnology and…co-founding new companies at the bleeding edge of exciting advances in food and fibers.”

Japan is facing a farmer worker shortage of epic proportions, fueling the rise of an industrialized ag industry — technological enhancements that can serve as a framework for Australian growers to emulate. Daiwa would either make direct investments into or extend loans to these operations.

Daiwa’s Yoshida told Bloomberg, “If they grow and if we can bring them to Japan, that would be wonderful. [They can] collaborate with Japanese companies and grow further.” Previously, Daiwa Chairman Seiji Nakata revealed to the publication that the brokerage was interested in capitalizing on Australia’s massive A$3.5 trillion (US$2.4 trillion) retirement savings pool coupled with attractive demographics.

A trend has been unfolding in which Japan investment firms have been flocking to Australian ag. In July, Sumitomo Mitsui Trust Bank (SMTB) revealed its plans to invest in Laguna Bay Fund 2, overseen by Australian fund manager Laguna Bay Group. SMTB’s investment came on the heels the Development Bank of Japan, the first Japanese firm to invest in the Laguna Bay fund.

Australia’s agriculture export market has been booming, rising to a record A$80 (US$54.3) billion in the 2022-23 stretch, an A$12.5 billion (US$8.5 billion) increase year-over-year and fueled by strong gains in products such as cotton, sugar and beef. At $6.3 billion (US$4.2 billion), Japan remains Australia’s No. 2 most valuable market for exports, surpassed by Japan and followed by the United States.

“Increased beef production helped drive a rise of A$726 million (US$493 million) in the value of cattle industry exports and sugar exports also added a further A$650 million (US$441 million) or 32 percent on top of the strong rise recorded in 2021/22,” stated Rural Bank Head of Agribusiness Development Andrew Smith.  

*The content put forth by Global AgInvesting News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. Global AgInvesting and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.