Crikey | 16 June 2011
With the world’s population set to hit 7 billion later this year — and 10 billion by the end of the century — top quality agricultural land has never been more valuable.
Perhaps it’s with an eye for a good investment opportunity or, as some concerned observers believe, to protect against any potential future food shortages, but government-backed companies have begun buying up farmland around the world, with Australia’s vast tracts of top quality primary production land a prime target.
Qatar-based Hassad Foods has been a major player in the big local farmland buy-up. Backed by the Qatar Investment Authority, the company has invested more than $60 million in prime Australian sheep grazing land in the past year, with more properties in the company’s sights. As well as prized Kaladbro Estate in western Victoria and Queensland’s Clover Downs, Hassad’s burgeoning portfolio also includes 6800 hectares of sheep grazing land in Canowindra in New South Wales.
And they’re continuing to look to add to their string of acquisitions. Last week The Weekly Times reported Hassad were poised to snap up a further 8500 hectares of land in Victoria’s western district in a deal worth $35 million — about 20% above market price.
Meanwhile, China state-owned conglomerate Bright Foods has also been hungrily looking to acquire local agribusinesses because of the favourable local environment for overseas investors. The Shanghai-controlled company have reported to be interested in Foster’s wine division, while last year they made a failed $1.7 billion tilt for sugar producer CSR. The company has also signed a memorandum of understanding with the NSW government to explore local wine, diary and sugar investment opportunities.
In the south-east of Australia, Brazilian beef giant JBS has been busy buying up abattoirs and meatworks, while Singapore-based Olam International now control almost 45% of Australian almonds — thanks to its purchase of Timbercorp and its 8096-hectare plantation.
Crikey has begun mapping the recent purchases of prime Australian farmland by overseas interests (click the image to view the map)
Ausbuy CEO Lynne Wilkinson says the issue of food security is paramount to the rest of the world and should also be to Australia.
She says there have been many recent instances, including the sale of over 100,000 hectares of farmland in Western Australia to the Arab States, which show the Foreign Investment Review Board (FIRB) and the ACCC are not looking after Australia’s long term security interests.
“When countries buy our land it raises issues of sovereign risk, and in our grab for cash we lose the intellectual property of generations of Australian farmers,” she told Crikey. “We cannot guarantee the food grown on this land will stay in Australia or that the profits from exports will be here.”
Entrepreneur Dick Smith says he has “no doubt” there has been an increase in foreign-controlled companies buying up local agricultural properties. Smith has recently been advocated a push to a more sustainable level of economic growth.
“What people don’t realise is that if someone buys prime agricultural land, we can’t force them to sell us the food from that land,” he told Crikey. “They can ship the food form the land directly to their country and I think that should be looked at.”
Hassad chairman Nasser Mohamed Al Hajri has previously tried to allay fears that his company is setting oil-rich Qatar up for any future food shortages. But that hasn’t stopped the United Nations expressing concerns over foreign multinationals buying up swathes of farmland.
Independent SA senator Nick Xenophon is worried that corporations who aren’t state-owned but are “effectively arms of foreign governments” are going under under the radar in purchasing farmland. Under FIRB rules, state-owned companies must get approval for any local investment.
“If these foreign governments are planning how they are going to feed their people in the future, surely the Australian government should also been considering this issue more seriously,” he told Crikey. “We should be selling the food, not the farm.”
Because the sale of agricultural land in Australia is exempt under Foreign Investment Review Board (FIRB) regulations, there is rarely much attention given to the overseas purchases of farmland unless the purchase of assets exceeds the $231 million threshold.
This means that there is no central source of data on just who owns what farmland — and what country they represent.
That’s something Shadow Minister for Agriculture and Food Security John Cobb hopes will change with the passing of a motion in parliament earlier this year, which will see the Australian Bureau of Statistics (ABS) collate a list of direct foreign ownership of agricultural land, water rights and businesses for the first time.
“This motion gives parliament the information needed for sensible safeguards. It will ensure the future of Australia’s food security and economic interests as they relate to foreign ownership,” said Cobb at the time.
Nationals leader Senator Barnaby Joyce believes the motion is a good step towards understanding the level of overseas investment in Australian agribusiness: “I think you should always take the temperature before you make the prescription,” he told Crikey.
But Joyce also thinks more needs to be done to protect local food security. He says if overseas investment continues unabated a situation could arise where food prices become more expensive.
“These countries are treasuring something that perhaps we don’t, because they know what it’s like to be hungry,” he said. “To be honest, we can build another Sydney Opera House but we can’t build more primary agricultural land once it’s gone.”
Dick Smith agrees, but doesn’t think any political party will do anything about because of the economic advantages of foreign investment: ”I think we should just say any land that produces food should not be sold to overseas interests,” he said. “To end up with large amounts of foreign ownership of farm land when there will undoubtedly be food shortages is unsustainable.”
*Additional research by Crikey intern Iona Salter
**Are you a farmer who has recently been propositioned by an overseas conglomerate? Or have you already sold the farm? You can email us with your story at [email protected] or alternatively via our anonymous tip offs section.