HSBC says asset hungry Chinese businesses are lining up to invest in Australian agriculture because of food production quality and tariff reductions under the free trade agreement between the two countries.
The global banking giant is expanding its operations in Australia to play a much bigger role in the sector and to strengthen its connection to China and other key markets.
It also wants to tap into the trend for big Australian producers to value-add through brand development and forging direct ties with overseas customers.
HSBC Australia head of commercial banking Steve Hughes said there were foreign investment opportunities across agriculture’s vast supply chains as well as in export-focused businesses.
“A number of Asian and Chinese corporates are looking at Australia and looking to invest in this market either in their own right or in partnership with other corporates,” he said.
Chinese customers also see value in direct ties with producers and exporters as consumer demand for wool, beef, wine and fruit and vegetables expands.
HSBC has just appointed former NAB and Rabobank executive Mitchell Adermann as its first head of agribusiness in Australia, which has been identified as a priority market.
“What we have identified is that there is much more to do here,” Mr Hughes said.
Mr Adermann said free trade agreements had created opportunities in China and other Asian markets with a rapidly growing middle classes to increase the size and value of exports.
As a former horticulturalist, who once grew avocados and macadamias, he said it exciting to see the export growth in citrus, table grapes, berries and nuts along with a China-fuelled revival in the wine industry.
Mr Aldermann said that despite the recent tightening of rules around foreign investment in agriculture and the “media noise” such investments attracted, Australia provided opportunities other countries didn’t.
“As soon as they scratch the surface, they (investors) see that firstly Australia was built on foreign investment and secondly that the number of FIRB (Foreign Investment Review Board) rejections is very low,” he said.
“It is an attractive and easy country to invest in compared to many nations which are making it very difficult for, or have closed the door to, foreign investment.”
HSBC expects the trend of consolidation in Australian farming to continue and for big producers to bypass aggregation businesses to deal directly with overseas customers.