Farm Weekly | 12 August 2011
by BOBBIE HINKLEY
A NUMBER of growers in the Great Southern have been approached by a prominent Chinese company with offers to buy farms.
It is believed the company is firmly focused on buying about 80,000 hectares of farmland in the Albany Port Zone, in order to run cropping enterprises and provide further food security for the Chinese nation.
But concerned WA growers are worried about the long-term impact this kind of buying might have on the WA grains industry's supply chain and long-term buying power.
"This company crops about five million hectares worldwide, produceing about 20 million tonnes of grain, which is nearly Australia's whole production capacity," one grower said.
"I have no problem with the company wanting to invest in Australia but as far as it wanting to take WA produce out of the WA supply chain, I don't think that's right."
The grower, who wanted to remain nameless, said the company had meticulously approached a number of farmers in the Great Southern whose farms fitted the company's buying criteria.
The farms needed to be predominantly cropping enterprises, larger than 4000ha and with good grain infrastructure.
"If the company is willing to pay good money then anybody is going to sell at a price," the grower said.
But it was the long-term ramifications on WA's grains industry that the grower was really worried about.
"The company is also looking to import all its own fertiliser and chemical inputs and then export the grain straight out through the ports," they said.
"That's the issue I want to raise because once it's gone it's gone and nobody is going to have any idea that it has happened.
"That 80,000ha is equivalent to about 250,000 tonnes that will be snatched away from our local traders and industry people.
"And that's fine while the company is keen to work with the locals but in five to 10 years time it will want to be self-sufficient, even to the point of bringing in its own machinery.
"Everybody talks about foreign investment like it's not happening, or it might happen but it is happening and growers need to be aware."
The grower said concern mainly surrounded the company's ability to take valuable tonnes out of the WA supply chain to fill markets which WA could potentially fill in it's own right.
"The company obviously believes it can produce crop cheaper so they're buying land and they're buying it fast," the grower said.
Corporate Agriculture Australia director and principal consultant Ken Sevenson didn't agree that foreign investment ignited imagery of foreign invasion and said most of the hype around the subject resulted from the NSW situation where one Chinese company had looked to mine agricultural land.
"There's obviously a lot of interest from various overseas sectors in agricultural land but Australia and in particular WA is a low priority and there are a lot of higher priority places in the world," Mr Sevenson said.
"The percentage of land in WA under foreign ownership is quite small and we know it's under five per cent, possibly under three per cent Australia-wide."
He said he didn't get much negative feedback from growers surrounding the debate but it had been interesting to see agri-politicians taking an anti-foreign investment attitude.
"And that's not good really," he said.
"Foreign investment is a positive thing and in this instance one of the key issues we've identified in WA is that we're short of working capital.
"The level of equity in a lot of family-owned businesses has plummeted due to the variation of seasons in recent years and the issue really is the need for capital to come into agriculture."
Although Mr Sevenson wouldn't comment on the Great Southern situation at the moment he did say he didn't believe the Chinese company would buy huge parcels of land in all areas throughout the State.
But industry commentators like executive director of the Australian Farm Institute, Mick Keogh, believed the growers in the Great Southern need be more concerned about the potential for unfair practices within the foreign ownership space, rather than who owned the land.
"In comparison with the issues of mining and coal seam gas production on agricultural land which are very significant and important debates in themselves, the question of whether or not the farmland is owned by an Australian or a foreigner seems somewhat immaterial," Mr Keogh said. "But it has gained plenty of attention because so little is known about how much farmland is owned by foreigners.
"Mandatory transparency of pricing along the supply chain, as is the case in many international locations and disclosure of foreign ownership, would have a double benefit in reassuring farmers about the scale of foreign investment and also acting as a preventative measure to ensure even in concentrated markets, unfair competitive behaviour does not occur.
"But in some respects it doesn't matter whether it's one company that's Australian owned or one company that's overseas owned.
"If there's not competition in the marketplace and there's opportunity for unfair practices then we've got a problem.
"If you want to get serious about foreign ownership, one of the most prominent places that it takes place, is post-farm and it has the potential to make more of an impact than a few people from overseas owning a bit of farm land."
Although he didn't know enough about the Great Southern case to comment, he said the idea foreign investors would take valuable tonnage out of the WA supply chain was certainly a valid concern.
"If it's a matter of the control of a supply chain then that should raise concerns and people should be worried or at least have more knowledge available to them," he said.