Reasons why super funds are wary of ag
INVESTING in agriculture is “not a natural move” for Australian superannuation funds, with governments failing to provide an environment in which agribusiness can grow.
That’s among the raft of reasons superannuation funds have given a federal parliamentary inquiry as to why they are not investing in local agriculture.
Submissions to the House of Representatives agriculture committee inquiry also say a lack of investment is due to farming’s unpredictable nature and a need for agribusinesses to become more competitive globally.
While foreign pension funds are increasingly turning their attention to Australian agriculture, homegrown funds are still reluctant to invest much of the $2.6 trillion they hold towards the estimated
$600 billion in capital the sector needs to boost production by 2050.
Industry Super Australia – whose funds have invested about $1.6 billion in agriculture-related assets – said Australia lacked a “proper national strategic policy” aimed at making its agribusinesses globally competitive.
Industry Super Australia, in its inquiry submission, said deregulation had undermined domestic producers’ ability to grow and instead let foreign players dominate supply chains and value-adding, pointing to meat processors Teys and JBS and dairy processors Fonterra and Saputo as examples.
“The lack of strategic foresight has resulted in lost opportunities for Australian producers and fund managers, and urgent reform is needed to shift away from ideologically driven policies that have constrained the sector from reaching its full potential,” ISA wrote.
ISA said Australia’s farming conditions were generally tough and less predictable than other countries, making investments riskier.