Moon Lake Investments have given guarantees that all current VDL employees will be offered ongoing employment with Moon Lake on terms no less favourable than their current employment arrangements, Morrison said.
“Moon Lake has also committed to undertake a number of investment projects in the VDL farms, which will provide additional economic activity to the Tasmanian economy, and based upon Moon Lake’s estimates will result in a near doubling of employment at VDL.
“This will guarantee more than 140 local jobs, generate an intended additional investment of over $100 million and an expected additional 95 jobs.”
Moon Lake advised that it intends to continue to supply the milk produced at VDL under the same contractual terms are currently in place, Morrison said.
“This provides assurance that there will not be an impact on the supply of milk and milk products in Australia. Indeed, the investment that Moon Lake proposes to undertake may result in an increased supply.”
The land on which VDL operates has important cultural and natural heritage considerations and Moon Lake committed to honour the terms of all environmental and cultural agreements entered into by VDL, including with the local Aboriginal community, Morrison added.
Given these considerations, Morrison was satisfied that the Moon Lake proposal to purchase TLC is not contrary to the national interest.
“It will ensure increased employment and investment in an important industry sector in Tasmania, while the safeguards we have put in place will ensure they pay their tax.
“Australia continues to welcome and support foreign investment that is not contrary to our national interests. Ongoing foreign investment remains a key part of growing Australia’s output and employment and, through this, our standard of living.”
Looking ahead: the agribusiness sector
“We still see a buoyant sector with significant activity for the year ahead, with Australian assets still seen as world class and much sought after,” Cane says.
“One challenge in the sector for large investors is finding enough agribusiness operations of a significant size to match the demand for large scale operations from local institutional investors and foreign investors,” Swift adds.
“Local sellers may need to think how they market their operations for sale and whether packaging their business with other sellers to achieve sufficient scale may have a mutually beneficial result for all parties.”
Swift and Cane’s positive outlook for the sector was reiterated in research released by both Colliers International and Rabobank, which showed brighter predictions for agriculture sector generally in 2016.
Commercial real estate firm Colliers International says Australia’s rural and agribusiness sector is undergoing a revolution as investors begin to recognise the industry’s long-term potential.
The rural and agribusiness sector is now included in investors’ long term strategies as the sector develops higher grade assets, Colliers’ latest Rural and Agribusiness Research and Forecast Report says.
Colliers’ national director of transaction services Shane McIntyre says the falling Australian dollar, free trade agreements with major Asian partners and good food security had a discernible impact on the Australian market, with a number of rural regions and sectors beginning to experience growth in land values.
“Investors are drawn to rural and agribusiness assets in pursuit of stronger yields, as the market becomes short of opportunities in traditional asset classes,” Mr McIntyre says.
“The spotlight this year is on beef, cotton and water sectors.”
In its Agribusiness Outlook 2016 research report, Rabobank predicted further depreciation of the Australian dollar will act as a “tail wind” for Australian agriculture, while low oil prices will help ease input cost pressures but are also likely to weigh on agricultural commodity prices.
“Further depreciation of the Australian dollar, which is expected to drop to 64US cents by the end of the year, will be a boon for producers – particularly for those commodities at historically low levels in US dollar terms - such as grains and oilseeds,” Rabobank Australia national manager country banking Todd Charteris says.
Rabobank general manager Food & Agribusiness Research Tim Hunt adds there had been significant devaluation in the currencies of Australia’s key global competitors, which had muted market signals by encouraging production of agricultural commodities in some regions despite high global stocks and falling USD prices.
“For example, the Russian ruble has depreciated by around 50 per cent against the US dollar since the beginning of 2014, compared to a 20 per cent depreciation in the Australian dollar over the same period,” he said.
“This has helped to underpin returns for Russian wheat producers despite US prices remaining under pressure. And we’ve seen a similar dynamic in the Brazilian sugar sector.”