Rich list newbies reveal a primary trend
Friday, May 30, 2008/
The boys from the bush are back. This year’s Rich 200 highlights the resurgence of the agribusiness sector. JAMES THOMSON reveals why investors and entrepreneurs are re-examining rural industries.
By James Thomson
The boys from the bush are back. This year’s Rich 200 highlights the resurgence of the agribusiness sector. It is little wonder investors and entrepreneurs are re-examining rural industries.
The most exciting part of scouring BRW’s Rich 200 edition is looking for the new names on the list. Not only do these debutants have great stories, but often their inclusion on the list reveals interesting business trends for investors and business people alike.
Two trends stand out from this year’s list of 35 newcomers and re-entries. Not surprisingly, the resources boom has underwritten many of these new fortunes, with 11 debutants from this sector. Leading the pack is the joint listing of Travers Duncan and Brian Flannery from Felix Resources, with $991 million.
But the rise of the resources sector is hardly new. No, to find the other big trend we need to look at Australia’s other traditional economic powerhouse – agriculture.
After a few years struggling with drought, Australian farmers are cashing in on booming global food demand, soaring soft commodity prices and strong land values.
There are four new names from the rural sector on this year’s list, led by grazier Sterling Buntine from the Western Australian town of Bedford Downs, who joins the list with a fortune of $338 million. Buntine runs more than 100,000 head of cattle on stations spanning more than two million hectares throughout the north of Australia. Buntine, who is aged just 40, inherited part of his empire from his father Noel. But he added to his spread in March by buying the giant Alroy cattle station in the Northern Territory.
Cattle baron brothers Evan and Graeme Acton have returned to the list for the first time since 1992, with a joint fortune of $211 million. The family – which has been involved in cattle for 140 years – runs around 180,000 head over 1.5 million hectares and exports about 60% of their produce. The McDonald family, which has been building its beef empire since 1827, also rejoins the list after a prolonged absence.
Also returning to the list is Roger Fletcher (listed with a $218 million fortune), the owner of Australia’s biggest sheep meat producer, Fletcher International Exports. The company ships to more than 90 countries.
Most of the existing Rich 200 members from the agribusiness sector have done well in the last 12 months. The fortune of the Menegazzo family, which orchestrated the acquisition of the Stanbroke Pastoral Company from AMP a few years ago, has almost doubled to $722 million. Two more beef barons, John Kahlbetzer and Janet Holmes a Court, have also enjoyed strong increases in their wealth.
Doug Rathbone, chief executive of listed agricultural chemicals company Nufarm, was one of the few sharemarket investors to enjoy a good year – his fortune grew from $421 million to $615 million.
Talk of global food shortages and soaring food prices has investors and entrepreneurs poring over the agribusiness sector for opportunities. The resurgence of rural industry veterans on this year’s Rich 200 indicates that the big players have used the drought to quietly enlarge their empires and establish dominant market positions at the producer end.
But that does mean there won’t be opportunities. With global demand running hot, any company that can help drive improvements in farm efficiency or production – through, for example, genetically modified crops and new farming technology – will find customers around the globe hungry for its products and services.
And as with the mining boom, companies providing services to the big agricultural players – such as accommodation providers, infrastructure players and engineering firms involved in big water projects – should do well.
Finally, a word on Alan Bond’s return to the list after stint in jail for fraud.
The team at BRW have made a brave decision to include Bond, and say their extensive research has resulted in an extremely conservative valuation. It will be fascinating to see Bond’s progress in the next few years. As pointed out in the magazine, the African oil and diamond deposits Bond owns shares in remain unproven, and some are still some time away from production. If he can prove the resources, surging commodity prices will make him very rich. If the projects fall over, Bond could be worth next to nothing.
With Bondy, nothing would surprise.
James Thomson is a former editor of the Rich 200.
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