Growing capital in FBA

Food, beverage and agribusiness (FBA) is often spoken about as though it were a single sector. In reality, it is a long and uneven system made up of different businesses that just happen to be linked by what ends up on a plate.

A wheat farm, a cold-storage warehouse, a yoghurt factory and a seed genetics company all sit within FBA, yet earn money in fundamentally different ways, face different sources of volatility and attract very different kinds of investors.

Understanding where value sits in that system is less about deciding which activities matter most - because all of them matter - and more about understanding where returns can be repeated, defended and scaled over time.

In Australia, agriculture and related primary industries account for only around 2 to 3 per cent of gross domestic product, depending on the season. Yet the footprint of these industries is far larger than that suggests.

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Agriculture alone typically contributes more than 12 per cent of goods and services exports, supports a significant share of regional employment and drives heavy use of transport, storage, energy and water infrastructure. Add food and beverage manufacturing, fibre processing, forestry, fisheries, logistics and retail, and FBA becomes one of the country’s most strategically important industrial ecosystems, anchoring trade relationships and everyday consumption alike.

The weekly supermarket shop, the takeaway coffee on the commute and the carton of milk in the fridge all sit on top of that system.

That importance, however, does not mean capital is spread evenly across it. Some parts of FBA attract deep pools of institutional investment, while others - often productive, efficient and globally competitive - continue to rely more heavily on family ownership, bank debt or shorter-term funding. The difference is not how essential an activity is, but whether it can generate returns that are repeatable and resilient across cycles.

Predictable

Across food, beverage and fibre supply chains, capital - particularly capital new to the sector - tends to focus less on how strong margins can be in a good year and more on how predictable returns are across many years.

Grain, milk, timber, fishing and cotton production can all deliver excellent outcomes when seasons and prices align, but those outcomes arrive unevenly and are shaped by forces well beyond management control, including weather, disease, geopolitics and global markets.

Institutional capital does invest in primary production, especially where scale, land quality, water security or diversification help smooth results. At the farm gate returns still rise and fall with rainfall, yields and prices.

By contrast, capital tends to gravitate toward parts of the system that control how volume moves rather than how it is produced. That control might sit with customer access, quality specifications, throughput capacity, long term contracts or regulatory permissions. In these parts of the chain, earnings depend less on where commodity prices land and more on providing services that remain essential whether prices rise or fall.

The United States’  ‘food dollar’ makes this visible. Of every dollar Americans spent on food in 2024, farms received around 12 cents, with the rest flowing to processing, transport, wholesale, retail and food service. The farmer grows the wheat, but most of the money is earned by the mill, the baker, the distributor and the supermarket that makes sure the loaf is on the shelf every morning.

The beef supply chain is a clear example. A cow is grown over years, exposed to weather, feed costs, animal health and global prices. Once it reaches the processor, variation in weight, fat cover and carcass quality is absorbed and reorganised into consistent cuts that meet supermarket and export specifications.

Cold storage ensures steaks arrive fresh, burger patties fit the bun, and mince looks the same every week. Brands and retailers sell that product reliably, while genetics, feed additives and animal health inputs quietly shape performance behind the scenes. Every step matters, but each step earns money in a very different way, and capital pays close attention to where risk gives way to control.

Consistent magnets

Infrastructure is one of the most consistent magnets for capital across the FBA system because it sits at unavoidable junctions. Grain storage and export terminals, refrigerated warehouses, as well as logistics hubs linking road, rail and ports, bulk handling facilities and regulated ports all share a simple feature: food must pass through them.

These assets tend to earn money from use rather than price. Grain still must reach the port whether prices are high or low. Meat still must move from abattoir to retailer. For investors, that distinction matters because volumes tend to be more stable than prices, and replacement costs are high.

Temperature-controlled storage illustrates the point. Australia has roughly 0.4 cubic metres of refrigerated warehouse capacity per urban resident, compared with around 0.6 in the US and close to 0.9 in the Netherlands. That gap reflects capacity growth that has lagged the expansion of protein, dairy and fresh food trade.

It matters because an increasing share of food now relies on strict temperature control to meet retail, export and regulatory standards. A cold store rarely features in a consumer’s thinking, but it quietly earns its fee every night while food keeps moving.

Processing attracts capital because it sits between the unpredictability of farming and the relative predictability of retail and export demand. Processors are not paid for how a season turns out, but for turning uneven, variable supply into products customers can buy with reliability and confidence.

At the production end of the chain, milk quality shifts with seasons, livestock weights vary, and logs differ in size and grade. At the buying end, that variation is unwelcome. A supermarket buyer ordering yoghurt, or an export customer ordering timber panels expects the same shelf life and certification every time. Processing captures value by absorbing variation and delivering consistency.

This plays out across the system. Dairy processors push milk into specialised ingredients and nutritional powders. Meat processors extract value from the whole animal while meeting multiple customer and export protocols. A school lunch yoghurt tastes the same in March and September not because milk quality stands still, but because someone is paid to manage the swings behind the scenes.

If processing is about making raw supply usable, manufacturing is about creating products that earn shelf space. Once a product is embedded in retail or foodservice, orders are driven by repeat buying and replenishment rather than by seasonal production outcomes.

A processor may turn variable milk into a standard ingredient, but a manufacturer turns that ingredient into a specific yoghurt that sits in the same spot in the fridge every time a shopper walks past. Supermarkets, cafés and food-service distributors order because shelves must be stocked and menus must be filled, not because the season has been favourable. Value sits less in the commodity and more in formulation, packaging and route to market.

This helps explain why large food manufacturers, beverage bottlers and private label suppliers attract institutional capital. A bottling plant earns its returns by filling millions of identical cans every day, regardless of whether sugar prices move. Private label manufacturers grow by reliably supplying supermarkets with products that scan, stack and restock smoothly. The same logic applies in fibre-based packaging, where cartons and boxes are designed to fit filling lines, protect products and meet food safety requirements under multiyear contracts.

Some of the strongest investment positions in FBA sit out of sight of the consumer. Genetics, animal health products, crop inputs, formulations and traceability systems attract capital because they become embedded in how food is produced and manufactured and are not easily replaced once adopted.

A poultry producer does not casually swap genetics that determine growth rates and feed efficiency. A supply chain does not replace its traceability system without retraining staff and re-qualifying customers. These businesses earn returns because production continues largely regardless of prices or seasons. Animals are still bred, crops are still planted and products still need to be tracked.

A QR code on a salmon tray may seem trivial to a shopper, but once a retailer relies on that system to meet food safety, provenance and audit requirements, replacing it becomes costly and risky. That embedded dependence is where value sits.

Not a hierarchy but a menu

Seen as a whole, the FBA system is not a hierarchy but a menu. Different types of capital are drawn to different parts of the chain depending on their appetite for risk, volatility and resilience.

Some investors are comfortable backing farms or fisheries where returns rise and fall with seasons. Others prefer infrastructure where volumes keep flowing.

Processing attracts capital paid to organise volatility. Manufacturing and brands appeal to those seeking repeat demand. Inputs and IP suit investors looking for scalable platforms that earn money because the system keeps running.

It is all visible in a single supermarket visit. The lettuce depends on the weather. The cold room earns its fee overnight. The yoghurt tastes the same all year. The barcode still scans. Capital shows up at every step.

For those assessing the sector, the real decision is not whether to invest in food, beverage and agribusiness, but where along the chain best matches the risk, return and durability investors are looking for.

Sara McCluskey is Head of Diversified Industries at ANZ Institutional

This story is an edited excerpt from ANZ’s latest “Food for Thought” report, published Q2, 2026