Up to $11 billion on Australian ag’s doorstep

North American investors are lining up to invest in Australian agriculture, with a new Queensland tax to see capital directed to southern states.

Institutional investors from North America are lining up on Australia’s doorstep to pour in billions upon billions of dollars to the nation’s agriculture sector - but a new tax could drive potential buyers toward the southern states.

Speaking at The Australian’s 2024 Global Food Forum in Brisbane on Wednesday, LAWD senior director Danny Thomas said North America was home to a suite of investors wanting to buy into Australian agriculture.

“There is about $9, $10, up to $11 billion worth of capital with aspirations to come into the market,” Mr Thomas said.

“There is a raft of investors who want to invest directly and own their own assets of size and infrastructure, including family offices who want to do their own thing.”

Danny Thomas, Senior Director, LAWD. Picture: Nikki Short

However, recent changes to additional duty and land tax for foreign land owners in Queensland could drive investors into the southern states.

From July 1 this year the Queensland Government has applied a 1 per cent increase in both the AFAD (additional foreign acquirer duty), from 7 to 8 per cent, and the Foreign Land Tax Surcharge from 2 to 3 per cent - an increased cost the founder and managing director of prominent US-backed Laguna Bay Agricultural Fund Tim McGavin is not willing to bear.

“It has absolutely reached a tipping point. And I don’t know what it means, but I know it’s not positive,” Mr McGavin said.

“The Queensland Government has put a land tax here on foreign investors which has ruled us out of the state. We will go elsewhere.

Managing director of prominent US-backed Laguna Bay Agricultural Fund, Tim McGavin.

“We have one particular asset in Queensland, where we are completing the first trials of a canola variety for sustainable aviation fuel, but that will go south now.

“There is this rhetoric about the transition and someone is going to make a lot of money out of that, but it’s not going to be Queensland because the capital will go where it is wanted.”

Mr Thomas said the new tax would prohibit future foreign-backed agricultural investment in the state.

“It is a real shame because Queensland has some of the best natural assets in the country, hence it actually requires more of that institutional capital to maximise its natural resources to get to this $100 billion production target,” he said.

“We’d like to see people have a hard look at the cost-benefit of that (the tax) because it is costing this state a lot of investment.”