Visionary projects need more than government grants
I read an article recently about a young farmer in NSW who is successfully breeding crickets (yes, insects) from which he makes protein powder for smoothies, protein balls, pasta, corn chips and other trending food products.
He currently breeds about 25,000 crickets per cycle, but according to the article, there are farms in Europe and Canada that are similar in scale to poultry farms with millions of crickets being produced for human consumption.
The article made me think about all those photos of empty supermarket shelves due to pandemic and Ukraine conflict supply chain disruptions and the ever-increasing value of the world’s major food producers and exporters, including Australia.
According to just one Australian state, the NSW Government, the agribusiness and food sector in Regional NSW alone contributes A$17.2 billion per annum to the state economy and employs 76,000 people.
Crickets have not yet made it to the NSW Government’s list of major agribusiness product categories but, perhaps, in time, they might.
Multiply those numbers across the major established and emerging food-growing areas of the world and it is clear how much money, and manpower, is required to feed hungry humans. We are talking about a critical and large-scale industry, very much removed from the romantic notion of small-scale farming families growing and delivering from farm gate to plate.
Large-scale agriculture requires large-scale funding which is mostly beyond the capacity of the individual farmer. The level of funding to undertake the innovation, automation and vision required to keep up with demand and keep costs low is also beyond the capacity of most government assistance.
Using an example from another Australian state, this time the South Australian State Government’s AgTech Growth Fund, which offers a total of $3.35M for the whole state for farmers to work with technology experts, seems woefully inadequate for the level of innovation and the scale needed to be successful in the sector.
That’s where agricultural producers need to find alternative sources of finance for land acquisitions and project management. However, even major banks can be risk-averse when it comes to financing primary production.
Food production may be an essential service with guaranteed levels of demand, at least for staples (if not yet for crickets), but banks will often expect higher LVRs and load up the number of other hoops they require a borrower to jump through. The amount of capital a bank is prepared to put on the line for an agricultural project can also be much lower than the borrower needs.
The good news is that the sources of finance available may be broader and deeper than you think. If you have a major agricultural project you need funding for, Acuity Funding has the expertise and the funding channels available to steer you in the right direction so let’s have a chat.