Australia's agribusinesses are in a perfect position; free trade agreements are presenting huge opportunities for Australian agribusiness to produce and export more and they are fortuitously placed at the seat of the Asian food bowl. In order to capitalise on these near neighbour export opportunities they need to think big.
With an additional 1.3 billion people expected to attain at least middle-income levels by 2030 – projected to reach 2.6 billion by 2050 – producers of premium Australian produce "need to look beyond our borders", says HSBC's Rohit Garg, head of global trading and receivables finance in Australia.
"At the end of the day, we are a population of 24 million to 25 million people and domestic consumption can only be so much," Garg says.
"Investors in Australia have the potential to acquire land, plant more crops, ship more, breed more cattle, ship more cattle, do more of all these things with a supply of customers at the doorstep in India and China alone that is 100 times our population base."
Garg says: "The message about scaling up really needs to get through. Australian agribusinesses could be looking at providing the same produce to significantly more customers."
One investor who has taken the scaling-up message to heart is former Macquarie investment banker turned ag-tech entrepreneur Miles Sterrick.
Six years ago, he started thinking about ways to capitalise on what he viewed as the hugely favourable macro-drivers in global food demand and supply, particularly in Asia, eventually leaving his banking career in 2014 to found Nectar Farms.
His vision for the company is to become the largest operator of high-tech glasshouses in Australia. It is an industry he regards as still in its infancy here despite the mammoth opportunity presented by the "preposterous population sitting above us looking for product".
The venture, he explains, is a "finance and technology" play on an emerging ag-tech industry which is "very, very tiny here" compared with parts of Europe, particularly Holland, which he rates as the standard-bearer for hyper-efficient, industrial-scale glasshouse production.
"In Holland, they've got 11,000 hectares of industrial-scale glasshouses, half of which is fruit and veg. In Australia, we have 150 hectares. Compare that to Holland where they have 1050 hectares devoted just to capsicums."
The technology contained within Nectar's glasshouses – controlling everything from light, heat, humidity and carbon dioxide levels – has been pioneered by the Dutch.
Their methods have achieved a level of hyper-efficiency, he says, partly to offset the high cost of real estate on which the glasshouses are built.
One square metre of land within one of Nectar's 7½-high glasshouse can produce between 75 and 100 kilograms of tomatoes whereas the same land in a field produces closer to six or seven kilograms. The locations have been chosen within 2½ hours of distribution centres in major cities in an attempt to simplify the supply chain, he says.
"Once we build our first 80 hectares of glasshouse we will have about one-third of the entire market. We see that as just the start. Fast forward a little bit and we see the potential to have hundreds of hectares."
Nectar is targeting 80 hectares of greenhouses to be operational by mid-2019, producing cucumbers, tomatoes, capsicums and eggplants at its two glasshouse sites.
First planting will be June 2017, with the first produce ready by September the same year. Initially, the produce will be sold domestically before export markets are targeted, Sterrick says.
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Source: afr.com