Frank Barillaro: Brad, food security continues to be a global trend. What are some of the underlying factors that you think are contributing to this and how do you think the food and agriculture industry in Australia is responding to it?
Brad Mytton: Yeah, so I think the opportunity is a massive one for Australia with such a big exportable surplus of food products. And we produce some products as cheaply and as efficiently as anywhere in the world and can do that at a very large scale. So I think the opportunities there.
There's geopolitical factors that are obviously driving food security. Think Middle East at the moment, for example, so it's a big driver of some of this. Increasingly, sovereign wealth funds and related entities have a very specific mandate around food security or investing in food supply chains. Not necessarily directly, ok we're going to get the product, but just being in that ecosystem has proven to be very helpful for some of these groups.
I think some of the things that are driving it, cost inflation has been a big part of it and affordability of food. So I think about the Australian context, the price of many products on the shelf has gone up significantly over the last few years. And it's maintained some of those higher levels. So the consumers facing an increased, increased weekly grocery spend been a big, big part of that change.
So, for us, how do we work with our companies to be a part of that? We're working with management teams and businesses around what are we doing around our operating costs, how we managing our overheads, what are we doing around our sale price, how are we keeping the retailers honest around their margins, right? So some of those factors all play into what we're doing around with the companies to position these companies better from a food security point of view.
Ultimately, we try and produce more with less. More produce, better availability, better margins, more attractive businesses, that international groups want.
So that's one area, the other area is just getting to scale, right. So when we think about what's relevant to a large sovereign wealth fund is scale was part of it. They don't want to be doing the boots on the ground, aggregating individual assets and creating companies. That's part of where we play to bring those individual farming assets or individual food producing assets, bring them together, get the management team up and running and running well, get the board and governance structures in place. Get those earnings up to thirty, sixty, ninety million dollars and create an enterprise that’s got genuine scale and relevance to some of these large groups.
Bringing those things together to create food producers that have got scale and got the ability for an incoming investors come in, purchase shares and hold co. They don't need an investment manager in the middle anymore. The business is all set up ready to run, got the governance structures in place and then they can just get on with it.
