This year, China’s “overseas land grabbing” trend has been booming, and many Australian farms have become key targets for acquisition. With China’s rapidly growing population, food shortages may occur in the future, leading to an increasing demand in the market. Additionally, with rising per capita income and the growth of the middle class, there is a growing desire for higher-quality products. As a result, Australia’s abundant and high-quality agricultural products are naturally very attractive to Chinese investors. The outlook for this sector is expected to be very promising in the future.
It is no longer a new phenomenon for Chinese companies to purchase farmland in Australia. According to media reports, an unnamed Chinese company recently conducted an inspection of farmland in the southwestern part of Australia, accompanied by several Australian real estate agents. The company is expected to return to Australia in a few months to complete the acquisition of multiple farms, with an estimated total investment of $30 million. In April this year, Australia’s largest farm, Cubbie, was facing the prospect of being sold. Executives from McGrathNicol, representing the farm, visited China to find buyers, with the entire project valued at over $600 million. Some analysts suggest that this move may be aimed at relieving local government financial pressure.
Experts believe that Chinese companies acquire land for two main reasons: first, to export agricultural products, and second, to potentially exploit mineral resources beneath the land. However, as more and more agricultural assets are being acquired by Chinese buyers, concerns among local Australians have grown. They worry that the influx of foreign investment may lead to “sovereignty conflicts” with the Chinese government and even diplomatic tensions. The National Farmers’ Federation of Australia has expressed concerns that this trend could pose a threat to Australia’s domestic food security, with farms increasingly exporting food to other countries, potentially diminishing the survival space for Australian farmers. The Australian government has been urged to review foreign investments to safeguard the country’s food security.
Australian Assistant Treasurer Bill Shorten emphasized in a media interview that while concerns about foreign ownership of Australian agricultural land are understandable, it is important to avoid giving the impression that foreign investment is unwelcome.
Australian Trade Minister Craig Emerson also stated in early August this year that Chinese investment in Australian agriculture is welcomed. While there are negative perceptions among Australians about Chinese companies purchasing Australian farms, the reality is that China’s overall investment in Australian agriculture is currently quite small, accounting for only a minor portion of foreign investments in Australia. Throughout Australia’s nearly 200-year history, land has frequently been bought and sold by foreign investors.
Chinese Eyes on Western Australia’s Agricultural Real Estate: Farmers Welcome the Investment
According to reports, foreign investors have long been an integral part of Australia’s agricultural sector. However, news that a large Chinese state-owned company is eyeing the prime grain and dairy land in Western Australia has caused alarm among Australian farming groups.
It is reported that Beidahuang Group (BDH), one of China’s most powerful agricultural companies, has made acquisition offers to several farms in the southwestern part of the state, with an estimated land acquisition plan of up to 80,000 hectares.
This Chinese state-owned group employs nearly a million people globally. The company is also looking to expand its investments in Australia, Russia, the Philippines, Brazil, Argentina, Zimbabwe, and Venezuela. While BDH primarily leases land in other countries, its investment policy in Australia has shifted: it now aims to purchase rather than lease.
Mike Norton, president of the WA Farmers Federation, stated that companies like BDH pose a risk to Australia’s future food security. “This company (has taken) a unique approach to investment here, and clearly there is more behind it. Based on the information we have, they plan to turn Western Australia into China’s rice bowl, to meet China’s long-term demand and secure China’s food safety.”
Norton described this as a worrying trend. “Countries from North East Asia and Southeast Asia are scrambling to buy real estate in Australia. They are seeing the looming shadow of global food production and are starting to buy up strategic resources. For instance, China’s state-owned enterprise Brite Food recently bought up to 75% of Australia’s largest food producer, Manassen Foods.”
However, farmers have differing views. Doug Clarke, a farmer from Lake Grace, mentioned that BDH staff had visited several farms in the eastern part of his county a few weeks ago, and he had met with them briefly. He expressed that he welcomed the interest from investors in his sheep and grain business. “If a company offers twice the market value for a property, who wouldn’t be happy to accept it?”
Clarke believes that foreign investment will only strengthen Australia’s agricultural sector. “I think this is a good thing. China has many research facilities, so if they’re interested in Western Australia or Australia’s farmland, we can gain many tangible benefits from it.” He also pointed out that the discussions around Chinese investment in Australian farmland have veered off track. He argued that farmers should decide how to manage the land, not politicians and bureaucrats in Canberra.
Corporate Agriculture Australia, which assists overseas companies in investing in Australia’s agricultural sector, stated that seeing foreign investment as a threat to Western Australia’s agricultural real estate sector is a short-sighted view. Ken Sevenson of the organization emphasized that Australian farmers can benefit significantly from foreign investment.
Foreign Ownership of Agricultural Land in Australia Shows No Significant Change
A report from the Australian federal government reveals that the proportion of foreign ownership of Australian agricultural land and agricultural businesses has remained largely unchanged since the early 1980s. Although China’s interest in Australian agricultural resources has grown significantly since the global spike in food prices at the end of 2007, the scale of Chinese investment in Australia’s agricultural sector remains relatively limited.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released its report, Foreign Investment and Australian Agriculture, on Wednesday. It found that of the 135,648 agricultural businesses in Australia, only 1% are fully or partially foreign-owned. Of the 44 million hectares of agricultural land across Australia, 11.3% is fully or partially foreign-owned.
Among all states and territories, the Northern Territory has the highest proportion of agricultural land owned by foreign investors, at 23.5%.
The report also noted that about 91% of agricultural water resources in Australia are owned by Australians.
While specialized land ownership data and corporate acquisition intentions are limited, the report suggests that “since the global rise in food prices at the end of 2007, Chinese investors’ interest in investing in Australian agriculture has steadily increased.”
The report specifically mentioned a few examples, including the acquisition of the Queensland-based Tully Sugar mill by China’s state-owned COFCO Corporation’s Australian subsidiary, Top Glory. This acquisition is widely viewed as a move to ensure a long-term supply of resources. Currently, COFCO and two other foreign-owned sugar mills control 60% of Australia’s raw sugar production. Meanwhile, COFCO has also been very active in the Australian real estate, hotel, and financial services sectors.
Data from the Foreign Investment Review Board (FIRB) shows that in the 2009/2010 fiscal year, foreign investments totaling $13.95 billion were approved. However, most of these investments (58%) flowed into the mining sector, with only 1% going to agriculture, forestry, and fisheries, and 2% to the food, beverage, and tobacco manufacturing industries. Despite an acceleration of Chinese investments in the mining sector during that year, no approvals were granted for agricultural investments.
On the other hand, China’s interest in the mining sector has indirectly led to a reduction in agricultural land available for food production.
Last year, Shenhua Watermark Coal, a Chinese company, purchased 43 agricultural properties near Gunnedah in New South Wales to mine coal. Recent data from Queensland also shows that in 2010, around 60% (by value) of agricultural land purchased by foreign investors was acquired by mining companies.
The report also cites a survey from the Organization for Economic Cooperation and Development (OECD), which ranked Australia 17th among 48 major economies in terms of the strictness of agricultural investment restrictions. Japan, China, South Korea, and New Zealand were among the top-ranked countries.
Federal Minister for Agriculture, Simon Crean, stated that the report confirms foreign investment will continue to play a significant role in diversifying food processing and adding value to Australian agricultural products. Assistant Treasurer Mark Arbib said that the Gillard government will conduct more frequent and wide-ranging investigations to ensure the public receives timely information about foreign investments.
Australia’s Food Processing Industry Under Foreign Control: Over Half of Milk Production by Foreign-Owned Plants
Foreign investors have already acquired a tenth of Australia’s agricultural land and irrigation water, but more concerning is that they have monopolized the country’s key food processing industries.
ABARES’ report has reignited the debate over whether Australia is “selling off its assets,” with the Gillard government stating that it will not introduce new restrictions on foreign investment, while the opposition has called for more stringent reviews of foreign acquisitions.
Since 1984, the proportion of agricultural land in Australia owned by foreign investors has roughly doubled, from 5.9% to 11.3%. In Queensland, foreign-owned agricultural land has quadrupled over the past five years to 4.4 million hectares, with mining companies accounting for 60% of foreign agricultural investments in 2010.
The report reveals that Australian agricultural businesses have traditionally been cooperatively operated by farmers, but due to lax regulations, foreign investment has been encouraged, leading to many traditionally cooperative enterprises becoming targets for foreign acquisition.
Over Half of Australia’s Milk Processed by Foreign-Owned Companies
Currently, over half of Australia’s milk is processed by foreign-owned companies, such as New Zealand’s Fonterra, Japan’s Kirin, and the Sino-Italian joint venture Parmalat. At the same time, half of the wheat export business is controlled by foreign companies, with foreign entities owning 12 of Australia’s 23 licensed wheat exporters. Three major foreign food groups dominate nearly 60% of Australia’s raw sugar production, including China’s state-owned COFCO Corporation, which acquired Tully Sugar last year. Additionally, 40% of Australia’s beef and lamb is processed by foreign companies, with the Brazilian company JBS accounting for a quarter of the total processing volume.
However, Assistant Treasurer Mark Arbib stated that the report clearly indicates that foreign investment is beneficial for Australia. He explained that foreign investment has increased productivity, driven technological innovation, and improved production standards.
Arbib insisted that the government has implemented a “rigorous national interest test” for foreign acquisitions of agricultural land. He also released a two-page “policy statement” detailing how the Foreign Investment Review Board (FIRB) evaluates foreign acquisition applications. According to the statement, all acquisitions by foreign government-controlled enterprises must be approved by FIRB, and non-government purchasers must seek approval for acquisitions totaling over $231 million.
In contrast, the opposition’s agriculture and food security spokesperson, John Cobb, argued that the Coalition Party would lower the $231 million threshold once in power. He pointed out that the average sale price of large farms is likely between $1 million and $10 million, making it difficult for FIRB data to fully reflect the scope of foreign acquisitions.
News source: http://www.investmentaustralia.net.au/cn/product.php?id=50
