Foreign capital an important part of agricultural landscape

By JOANNE GRAINGER, QFF President

THE concern about foreign investors buying Australian agricultural assets has accelerated over the last 12 months, exacerbated by a series of prominent company takeovers, land purchases by foreign resources companies, and a Senate Inquiry into the issue.

The nightly current affairs programs have also taken a liking to the concerns about foreign investment and have broadcast reports that imply that we are under invasion from foreigners.

However, the matter is not that simple, as ABARES explained last week in a report into foreign investment in Australian agriculture, as did the Federal Government in its policy response.

ABARES highlighted that foreign investment is a very important part of the farming landscape because it drives investment and potentially increases technological advances. In addition, the level of foreign investment is currently comparable to the early 1980s.

A December 2010 survey showed that about one precent of Australia’s 135,600 agricultural businesses were wholly or partly foreign owned.

A higher ratio of foreign ownership in the Northern Territory and some other large cattle stations and companies in the mix saw the overall percentage of agricultural land as about 11pc foreign owned, or about 44 million hectares.

The report authors made the important observation that, with the recent expansion of the mining industry, some of the current concern is based on land use rather than land ownership.

In addition, the opening statement of the policy response from the Federal Government would seem to indicate it is taking a rational approach: “Australia is a capital hungry country that has always relied on foreign investment as a driver of employment and prosperity, including in our agricultural sector. Foreign investment plays an important role in maximising food production and supporting Australia’s position as a major net exporter of agricultural produce, by financing investment, and delivering productivity gains and technological innovations.”

The reality is that whether a farm is privately Australian owned, or foreign owned, or owned by a publicly listed company, it is operating in the same markets as everyone else.

So it must be remembered that food produced on an Australian farm could end up on a plate in Europe or Asia, just as food produced on a Chinese-owned Australian farm could end up on a dinner plate in Toowoomba.

Perhaps the real concerns about food security should therefore be about making sure that our farmers are paid a decent price for their hard work, and that they are not overburdened with regulation to the extent that it affects their profitability.

Furthermore we need to make sure that with the increasing foreign ownership of processing companies that these companies are treating farmers fairly, and that Australia isn’t surrendering its ability to process agricultural products into food.

We also need to increase awareness among Australians that agriculture is a very good investment; if foreigners can see that, then hopefully investors in Australia can see the same value and then act on it.

The government does not appear to be planning changes to the threshold at which the Foreign Investment Review Board is notified of private overseas purchases from its current level of $231 million, although the Opposition is saying that this should be lowered.

QFF agrees that foreign investment must be carefully monitored and measured so that we all know what is happening, but it must be done in a way that doesn’t create solutions to problems that aren’t there.

So, yes, let’s increase the knowledge about foreign investment, but let’s remember that the flow of capital, both foreign and domestic, is extremely important for the overall performance of the agricultural sector.

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