Australian agribusiness is a billion dollar export industry impacting economic factors such as regional employment, trade relations and economic growth. Investment in agribusiness can have many rewarding aspects. It is recognized as a tax effective investment particularly valuable for individuals paying the highest marginal tax rate and it also allows the investor to diversify their investment portfolio. Agribusiness is favored as an alternative asset class due to its performance being less influenced by the share market, property market or the current level of interest rates. The most notable contributing factor of the industry’s progress is the increased security and guarantee provided by the Australian Taxation Office (ATO) with the introduction of the ATO Product Ruling system in 1998 which provides tax conviction on the availability of tax deductions for investing in agribusiness projects. Other major benefits of agribusiness investment include: * Portfolio diversification * Tax effectiveness as outlined by the relevant ATO product ruling with the investor usually receiving an upfront tax deduction for some or all of the initial and ongoing cost of their investment. * Good expected investment returns over the long term. Agribusiness investments are best apposite to investors looking for greater diversification, attractive long-term returns and tax efficiency. Compared with returns from shares and property the probable returns from some of the longer-term projects are fairly attractive. Significantly the risks concerned with these projects are very different from typical investment risks and this enhances portfolio diversification. Agribusiness investments are considered to be 'true alternatives'. That is, their risk and return characteristics are quite unrelated to those of the traditional asset classes. For example the return from a long-rotation timber project will be driven by a quite different set of risk factors when compared with those of the traditional asset classes of shares, bonds and property. Additionally, the agricultural division plays a vital role in the subject of given that large scale employment to people. In the majority of the countries of the world, agriculture still remains and will remain the biggest division responsible for the employing and feeding a large percentage of the population.
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