Thanks for the clarification on food crops and tax. You have a...

Thanks for the clarification on food crops and tax. You have a good knowledge base there.

This model will work with food crops but only if:

1. Given investors like the perceived 'safehaven' of irrigated crops (I say perceived because there are many on the Murray who are far from guaranteed in their water needs), you'll need the security of cheap and reliable water. They need to look north. Ord River catchment.

2. Choice of crop - nut crops make sense (they are a staple and the food boom will benefit staples first) but there aren't many such crops suited to the north. Maybe cashews but you need cheap labour. Being so close to Asia you could import that labour I guess. Oil palms also but you are competing with cheap labour in Asian plantations and of course gross margins will look increasingly healthy if oil prices continue to leg up. Sugarcane could be an option but refer to point 3.

3. But you always have weather risk and the further north you go the more chance of a cyclone and general extremes.

4. Or they could go dryland and target the world's cheapest land resource. Accept lower production potential but choose crops that also have lower cost profiles, hence lower risk. You can't lose what you never applied (ie if you didn't apply fertilizer and irrigation). Sandalwood nuts are perfect - www.australianuts.com. But this dryland oilseed crop is not on the radar of the majors ... yet! The future of food lies in reducing risk. In other words:
(a) Reducing input use - legume base to negate the need for nitrogen. Forecasts for nitrogen prices to hyperinflate in the coming years (they already took one nasty leg up with fossil fuel price rises), as the majority of the world's arable land looks to ramp up cereal production. Cereal yields need big licks of nitrogen. Also concern over phosphate and potash prices to hyperinflate also based on sheer demand and likely capacity constraints. Agriculture has been in the dumps for so long, everyone moved their money out of infrastructure for input supply.
(b) Perennial crop - long lived, cheap establishment cost. Benefit of sandalwood is you have a profitable exit strategy should you need it. The timber is highly valued by the essential oil markets.
(c) Becoming a net energy producer as opposed to a net energy consumer. Agriculture is currently the world's third largest consumer of energy.