Whilst the Federal Budget provided some assistance to the Agribusiness, Food & Beverage industry, it failed to adequately address the opportunities for mid-size businesses within the sector.
From July 2016, farmers will be able to claim an immediate, total deduction for any spending on fencing and water infrastructure. They will also be able to claim depreciation on fodder storage over three years.
While the Federal Government is yet to release its White Paper on Developing Northern Australia, it has promised to help private developers and state governments secure concessional loans of up to $5 billion, for infrastructure like dams, pipelines and power plants - providing more efficient channels to export and local markets.
The new $100 million Northern Australia Beef Roads Fund will make targeted upgrades to key roads necessary for transporting cattle in northern Australia and provide further efficiencies to market for mid-size operators looking to optimise export opportunities.
The $24.6 million to promote Australian products in markets where free trade agreements have recently been signed (including China, Korea and Japan), is a step in the right direction.
However more could have been done.
Mid-size businesses, namely the vast majority of businesses in the Agribusiness, Food & Beverage industry, contribute substantially to the total tax revenue generated in our country. In this sense, our desires are aligned with that of the Australian Government.
We want Agribusiness, food & beverage businesses to increase exports and expand manufacturing in Australia.
If Australia is to truly capitalise on the export potential in the Agribusiness, Food & Beverage industry, the Government must provide real export incentives to the sector.
Currently the Export Market Development Grant (EMDG) ceases to be available at that crucial moment a business hits the $50 million threshold. We would like to see this threshold lifted to $250 million, enabling mid-size businesses to reach their export potential and continue to operate in this exciting sector of the economy.
Government action needs to be bold.
While small business emerged as the big winner of this year’s budget, we would like to see meaningful tax incentives for mid-size businesses in this sector with aspiring export earnings real incentives, such as reducing company tax rates for mid-size businesses in the Agribusiness, Food & Beverage industry and food and beverage exporters, would truly encourage these companies to focus on export opportunities; especially the growing Asian market.
Company tax reductions for the sector must be linked to exports. This could be done by granting reductions in company tax on export income to those food producers with turnovers of less than $250 million; which achieve export revenues of up to $100 million.
These measures would undoubtedly encourage a real export focus and growth for the sector.