The Federal Government has released, for the first time, a register of foreign investment in agricultural land.
The belief by many Australians that China is buying up the family farm has received intense debate and rightfully so – it’s important. But we need to look at this very complex issue based on the facts and also develop and encourage a model of Australian – Chinese food partnership, investment and trade growth rather than straight out ownership or control.
Today’s data, compiled by the Australian Tax Office, is welcomed and should do much to dispel public anxiety. Transparency of information is essential if ongoing public discussions are to be based in facts.
Let’s recap the information in the report.
The register shows 13.6 per cent of Australia’s farmland is foreign-owned with UK investors owning 27.5 million hectares or almost 53 per cent of that portion. This is primarily a result of our nation’s history of colonial settlement.
The United States is the second highest country on the register, followed by the Netherlands with almost 3 million hectares, Singapore with almost 2 million hectares, and China with 1.5 million hectares — or less than 0.5 per cent of total agricultural land across the country – a rounding error compared to UK and USA investment.
Most of this foreign owned land (accumulated foreign owned) is in Queensland and the NT and between 70-100 percent of that land is leasehold rather than freehold. We officially welcome and encourage foreign investment in northern Australia. Foreign ownership in NSW and Victoria agricultural land was less than 5 percent.
This is consistent with our expectations. Based on 2015 Chinese investment data collected and analysed by KPMG and University of Sydney, there were 12 completed deals valued at $375 million representing only 3 percent of total Chinese investment. Much of that was in dairy agribusiness rather than primary land and was mainly from private Chinese investors.
Australia remains heavily reliant on China. Nearly one third of all Australian exports is heading to the world’s most populous nation. Agriculture is less dependent but it is still 20 percent: over AUD 8 billion, goes to China across meat, wheat, dairy, wool and cotton. We must recognise and respect the fact that Australians are truly dependent on China for export driven prosperity.
We are an export nation with enormous capacity for increased scale. This is a blessing more than a risk but it’s important we manage the risks carefully.
Chinese companies recognise the demand and potential profit opportunities to feed China and Asia’s ever growing consumer populations with high protein, safe, fresh food. Even non-agricultural companies can make profits by sourcing here and using their well-established marketing and sales distribution networks back in China. Some Chinese private equity funds have bought high quality yet undervalued Australian food / consumer companies here and listed them on Chinese exchanges at P/E ratios in the 30-40 range. This is all business.
This data does much to dispel the myth of Chinese ownership, but the data will not necessarily calm the fear and negative sentiment. This will take much more robust discussion and debate by both the media and the parliament.
Foreign ownership of Australian agricultural land (and water) is sensitive and deserves careful and specific consideration. I hope this report shapes a more constructive discussion with our largest agri export trade partner. We must work together for growth with more clarity of policy and certainty in process for reconciling disparities and attracting foreign investment.