Trump rhetoric no barrier to global interest in agribusiness

Donald Trump might be trying to “de-woke the world” on issues like climate change, but a key ag leader says he’s unlikely to halt investment into Australian regenerative farming.

ImpactAg Australia CEO Hugh Killen.

Donald Trump might be trying to “de-woke the world” on issues like climate change, but the American president is unlikely to halt the flow of global investment into Australia’s regenerative farming sector, according to agribusiness leader Hugh Killen.

The CEO of the specialist investment, farm management and advisory company ImpactAg Australia said while the “narrative out of the US” might undermine confidence to some extent, investors recognised they had a once-in-a-generation chance to invest in natural capital assets.

“Fifty-five per cent of the world’s GDP is directly dependent on nature in one way or another,” he told The Australian. “While the political rhetoric will go round and round, the reality is that investors are quietly starting to think about what is the exogenous risk to the economy (in the long term).

“What we might see is that US capital, which might have been more outbound, might become more inbound into the US markets. There’ll be a bit of a wash through. There’ll be lots of headlines, but smart investors will still come.

“If you think about European money, money that’s coming from the rest of the world, it’s looking for good regulatory regimes, stable government. They are thinking about water, they are thinking about natural capital.”

Mr Killen said while there had been no decline in interest from overseas funders in recent months, ImpactAg Australia was keen to “re-enlighten” Australian investors about the potential of assets that ranged beyond food production, to areas such as water management, sustainable forestry and carbon and biodiversity credits.

On Tuesday, Mr Killen will host more than 50 representatives from local banks and super funds at a closed-door investment day at a Wilmot Cattle Co property, 80 km from Armidale in NSW.

Mr Killen was formerly CEO of AACo. Picture: Nick Cubbin

The session is part of this week’s Wilmot field days, sponsored by ImpactAg and the Macdoch Ag Group led by Alasdair MacLeod. Wilmot showcases land management practices designed to improve climate resilience, enhance carbon sequestration and lift farm productivity.

Mr Killen said while Canadian pension funds were heavily invested in Australian farms, local super funds were under invested.

“For us, it’s about building that capability and understanding to get them back into investing in Australia,” he said.

“Ultimately, there’s going to be fundamental repricing of natural capital globally as physical risks around nature continue to escalate. So why wouldn’t Australian money be looking to invest in its own country to actually deal with some of that and also get a return for its investors?

“What we’re trying to show to Australian capital is, ‘hey, there’s something in your backyard that you can invest in’. In the future, farms are not just going to be measured on discounted cash flows and comparable sales next door. There is this huge shift that’s happening around repricing and creating new balance sheets around natural capital, and the time to invest is now.”

He said Australia was well set up to take institutional capital.

“We have a great framework for coming in, we have good government to support it, we have ownership in terms of title,” he said. “We have the best carbon/biodiversity markets on the face of the planet, and we have the scale.”

As well, the relatively weak Australian dollar was an attraction for investors, he said.

Even so, there remains room for governments to make it easier for people to invest. An example of a barrier to overseas investors was Queensland’s foreign ownership tax of 3 per cent, added to its 2 per cent land tax.

“That actually means that money that would look at Queensland will go to NSW,” he said. “We have capital lined up to come into Australia, but we can’t get into Queensland … because of the foreign ownership tax.”

Originally published as Trump rhetoric no barrier to global interest in agribusiness