Researcher cheers lack of agribusiness ‘Top 10’

By Zoe Fielding

AustralianAgribusiness Group (AAG) has welcomed this year’s lack of a widely publicised ‘top 10 list’ of agribusiness tax effective projects.

Tax time puts agribusiness tax effective projects on the radar for some investors, and in the past this has prompted researchers and media to produce lists ranking the tax effectiveness and performance of agribusinesses.

This year, AAG research manager, Tim Lee, said his group hasn’t seen any lists yet.

AAG does not support such lists because according to Lee, “they send the wrong message”, implying the selected ventures will meet the needs of all investors.

Lee said the absence of such lists could be a reflection of the industry’s progression and maturity with investors beginning to consider agribusiness projects for investment benefits throughout the year and not just at tax time.

He said agribusiness tax effective projects were typically of a higher standard, and more closely regulated by ASIC and other organisations than they were in the past. He added that scrutiny from research groups and the media had also helped.

Horticulture and viticulture projects, which typically begin yielding annuities in around three years, were gaining popularity with grape, mango and almond ventures leading the way, Lee said.

AAG has expressed concerns that top 10 lists are unnecessarily harsh on some of the projects that have future merit.

“Some research groups release lists saying they’ve researched 70 projects and only two or three are good,” Lee said.

Developing businesses in their early stages, and those working hard to improve their performance are especially at risk of being overlooked as a result of low rankings or exclusion from such lists.

AAG produces guidelines to assist investors in assessing the quality of investment in agribusinesses. Lee said the most important factor was the quality of management.

“Have they got the people on the ground who know how to manage, grow the product and sell the product at harvest?” he said.

The business should have contracts established, or at least an established supply chain through which the product can be sold.

He said agribusiness was a sector with the potential to attract a large amount of capital, but warned investments are typically illiquid, with money committed for at least seven years and up to 25 years in many cases.