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Food sector fertile ground for investment

Food sector fertile ground for investment

The food sector is continuing to court investment, with recent Chinese acquisitions signalling foreign interest in Australian agribusiness remains strong.

Having experienced strong growth buoyed by global investment, the Australian sector remains a good opportunity, according to investment manager Terra Capital. 

“The food-related sector continues to attract investor intention and for good reason,” portfolio manager Matthew Langsford said.

“World population is growing at 1.2 per cent per annum, with Asia a particular growth hot spot. There are issues around availability of fresh water, pest and disease problems, which add to the existing woes of decreasing arable land availability and bigger issues with declining productivity and salinity problems,” Mr Langsford said.

“There is general agreement that farmland as an asset or companies with an ability to improve the use of arable land are likely to outperform most other assets over time.”

With a key position in the region, Australian agribusiness is well situated to capitalise on the budding Asian market.

China has a growing economy and a rapidly expanding middle class, and Chinese investment continues to flow into the sector. Recently, Chinese company Fuyuan acquired a 79 per cent share in Victorian dairy processor Burra Foods.

Austrade senior investment specialist David Watson said foreign investment in the food sector provides real opportunities for Australian businesses.

“International shareholders bring more than just equity for business expansion. They also bring distribution strength in Japan and China, which will significantly strengthen Burra Foods’ supply chain and growth potential,” Mr Watson said.

Aided by growing regional markets, investment is only expected to grow in well-placed Australian agribusiness, Austrade said in a report.

“Leveraging established connections with Asia, Australia provides investors with unparalleled opportunities to capitalise on the demand from fast-growing consumer markets for healthy, premium and convenient food products,” it said.

Food sector fertile ground for investment
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