Concepts for alternative investment and financing models to expand sheep production in Western Australia

Government of Western Australia - Department of Agriculture and Food

Type: PDF
Knowledge level: Intermediate

Farm Table says:

This report encourages a shift in mindset to be open to different ways you can own, finance and manage lamb enterprises. Are you ready to challenge the status quo? Highly recommend having a read of this one.

This report discusses a range of business and investment structures that could be applied in WA to take advantages of new trade routes, rising prices and demand for lamb.

Business models are discussed that could reduce risks and/or increase returns of sheep production in WA.

“Lack of capital is often touted as a reason for lack of investment or entry into sheep. This report summarises some capital raising options to rapidly expand the sheep business, which may or may not be complemented with bank finance. Some examples discussed in the report include joint ventures with an equity partner, sell and lease back land and increase hectares managed, livestock lease through a financier, or attract equity investment from Australian or international superannuation/pension funds, syndicated funds or private equity.”

The report is split into three key sections:

  • Section 1:  how to increase sheep production on-farm by adopting alternative financing and management structures.

Alternative strategies discussed include co-operative farming, contracting out sheep management, contracting with processors/customers, contract with breeders, leasing land from crop businesses, contract lamb production. The terms, benefits, advantages, costs and risks of each are outlined, along with a case study for each.

A summary of alternative finance structures to expand sheep production are summarised in the table below.

Image: DAFWA
  • Section 2: targeted producers looking to value-add to their product by partnering with investors to extract further value from feedlotting, processing or marketing lamb.

This section focuses on commercial feedlotting (ownership retained by producer), producer/investor partnership, creation of a niche marketing company, franchising a breeding and production systems, and developing a dedicated paddock to plate supply chain.

  • Section 3: structures on how capital can be sourced, pooled and invested across the supply chain to grow the sheep industry in Western Australia.

This section highlights examples include setting up an R&D company, options to elect to invest superannuation into an agricultural or regional development fund, establishing syndicates to pool funds from retail/wholesale investors, equity partnership with processor/company. Case studies from NZ are provided.

2015 - Australia - Government of Western Australia - Department of Agriculture and Food
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