Agribusiness firm Macquarie Agricultural Funds Management (MAFM) has called for greater scrutiny over the financial situation of all of Australia’s agribusiness managed investment scheme (MIS) providers.
In a submission to the inquiry into agribusiness MIS, MAFM, a division of the Macquarie group of companies, has made a number of recommendations to help sustain the sector’s future.
“Agribusiness MIS providers should be required to annually certify to the regulator that they have financial capacity to support the financial obligations created by each agribusiness MIS,” MAFM chief Anthony Abraham said.
The submission also recommended that agribusiness MIS structures should also be changed.
“Agribusiness MIS structures should provide investors with land rights providing ongoing access to the land utilised for the agribusiness MIS for the life of the project. These rights should be capable of surviving in the event of a failure or a replacement of the responsible entity,” he said.
Abraham also called for the commission structure of MIS and the way commissions are disclosed to be reformed.
One alternative to the upfront commission structure may be to adopt a commission structure for agribusiness MIS that is aligned to the performance of the project and the returns to investors, he said.
“Product providers should be required to disclose their past performance results with respect to previous agribusiness MIS,” he said.
“Furthermore, where appropriate, ongoing inventory assessments should be a requirement for each agribusiness MIS project to provide investors with a guide as to the ongoing performance of their project.”
The inquiry into agribusiness MIS has so far received 48 industry submissions.
