Suitors rejected at farm gate
With foreign suitors eyeing businesses such as Warrnambool Cheese & Butter and GrainCorp, Dr Saxena said the intense competition for Australian agricultural assets was partly due to the difficulty in getting new projects off the ground.
"I can laugh now but I used to cry," Dr Saxena said of his experience in investing more than $150 million in an oil-seed crushing and refining facility at Wagga Wagga in NSW.
He blamed red tape at a state and federal level as well as a "silo mentality" among planning authorities as among the biggest hurdles in getting projects done on time and on budget.
"There is a lot of focus on the process and no focus on the outcome," he said. "There is no integration [in approval process] and there is no single window of clearance, no real cohesiveness and everybody works in silos."
Dr Saxena said Australia could learn a lot from countries such as China and Singapore about facilitating investment. The Singaporean government for example appointed project officers to clear hurdles for investors.
"They sit on your side of table and get things done for you," Dr Saxena told BusinessDay.
His Riverina Oils and Bio Energy was repeatedly delayed due to demands from planning authorities to modify the project. The delays cost him an extra $50 million.
"They changed the scope of my entire project," he said.
Australia's high labour cost was also mentioned as one of the factors behind the budget overrun.
"I had to pay $250,000 a year for a gas fitter and some of the unions behaved like Mafia," he said.
Local bankers were also cool on providing financing for the $150 million oil-seed project, forcing Dr Saxena to turn to lenders from India and China.
"I have no respect for Australian bankers," he said. "I don't think they are comfortable with greenfield projects. Australian bankers are more maintenance oriented than developing new projects."
Despite the setbacks in getting the project up, Dr Saxena was very optimistic about the future of the Australian agricultural sector.
"If these challenges could be addressed, can you imagine what the opportunity spectrum is like?"
Dr Saxena said Australian farmers and businesses should invest more in "value-added" activities rather than focusing on trade in bulk soft commodities. "Our mentality is trading focused ... we just dig it up and ship it away and we don't add value," he said.
Frequently Asked Questions about this Article…
Australia is seen as a challenging environment for new agribusiness projects due to extensive red tape at both state and federal levels, as well as a 'silo mentality' among planning authorities. This results in delays and increased costs for investors.
Investors in Australian agribusiness face challenges such as bureaucratic red tape, high labor costs, and a lack of support from local banks. These factors contribute to project delays and budget overruns.
Foreign investors are highly interested in Australian agricultural assets due to the difficulty of starting new projects, which makes existing assets more attractive. This has led to intense competition for businesses like Warrnambool Cheese & Butter and GrainCorp.
Australia could learn from countries like China and Singapore, which facilitate investment by appointing project officers to help clear hurdles for investors, ensuring a smoother and more cohesive approval process.
Dr. Deepak Saxena faced difficulties securing financing from local Australian banks, which led him to seek lenders from India and China to fund his $150 million oil-seed project.
High labor costs in Australia contribute to budget overruns for agribusiness projects. For example, Dr. Saxena had to pay $250,000 a year for a gas fitter, which significantly increased his project's expenses.
Despite the challenges, Dr. Saxena remains optimistic about the future of the Australian agricultural sector. He believes that addressing these challenges could unlock significant opportunities for growth and development.
Dr. Saxena advises Australian farmers and businesses to focus more on 'value-added' activities rather than just trading in bulk soft commodities. He suggests that adding value to products can enhance profitability and competitiveness.
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