Chinese investment in Australian macadamia farms on the rise, as demand for native nut soars

Chinese investors are buying up macadamia orchards in Queensland and New South Wales to protect their own supply (Photo: David Sparkes)
ABC | 20 January 2016

Chinese investment in Australian macadamia farms on the rise, as demand for native nut soars
By Marty McCarthy and Kim Honan
Chinese investors are keen to buy up multimillion dollar macadamia orchards in Queensland and New South Wales, as they move to protect their supply.
AUDIO: Marty McCarthy reports that Chinese investors are becoming increasingly interested in buying Australian macadamia farms (ABC Rural)
Australia exports nearly a quarter of its national crop to China, and local growers are already struggling to keep up with the strong demand.
This year Australia produced 48,300 tonnes of nuts in-shell, up 10 percent on last year, and those numbers are tipped to rise again in 2016.
China is demanding record amounts of macadamias from Australian growers while it builds up its own local industry.
Bundaberg rural real estate agent Bayden Lowrie says until that happens, Chinese processors are looking to protect their supply by investing in large farms in Australia.
"Their interest has been for the larger type farms, but unfortunately there is not a great deal for sale given the strength of the market," Mr Lowrie said.
It's not just coming from China, it is coming from other parts of Asia too.
Bayden Lowrie, real estate agent, Bundaberg
"The main goal is the possibility of [them] being able to secure their own nut, rather than go on the open market to buy nut.
"It makes [good] business practice if they own the farm, then at least they have the advantage of securing that nut."
Mr Lowrie said interest from Chinese buyers spiked in the past year, largely due to the rising price of macadamias.
"The past 12 to 18 months has seen the most activity come forward, driven mainly by the excellence of the nut in shell pricing."
In the 2014 season growers were getting paid about $3.50 per kilogram of nut in shell, but in 2015 the price skyrocketed to around $4.50/kg.
"From the level of inquiry I get within the Bundaberg area I know demand is strong, but it's not just coming from China, it is coming from other parts of Asia too."
Investment trend not a cause for concern
Jolyn Burnett, the chief executive officer of the Australian Macadamia Society, says about 10 percent of macadamia farms are foreign owned, but he is not worried the trend is increasing.
"There has been overseas investment in the Australian macadamia industry for many years and to date has not been a significant increase in that level of foreign ownership," he said.
"We don't have the precise details of how many farms have sold [in the past 12 months], but it would be no more than a dozen out of 80 or more farms sold."
A large macadamia farm with tens of thousands of trees in a high producing region like Bundaberg can cost between $2 and $4 million dollars.
This means foreign acquisitions go largely unnoticed, because the Foreign Investment Review Board only needs to scrutinise sales $15 million and above.
However, as of July last year all foreign sales need to be listed on a national register, regardless of price.
Mr Lowrie said most people are oblivious to foreign sales.
"A lot of these sales also have confidentially deeds and agreements in place, so no private information can be passed on, which is why they typically fly under the radar," he said.
Foreign funds needed to grow sector
Those involved in agribusiness often argue that Australia's agriculture sector needs foreign investment to grow, and Mr Burnett says the macadamia industry is no different.
In the macadamia industry we desperately need investment.
Jolyn Burnett, CEO, Australian Macadamia Society
"In the macadamia industry we desperately need investment, we need investment in new productive capacity, such as planting new orchards," he said.
"We also need investment in improving the productive capacity of existing orchards, so investment - whether foreign or domestic - can do that."
Mr Burnett said Australian companies are investing in macadamia businesses in South African, China and Hawaaii at similar levels.
"An Australian is the biggest grower of macadamias in South Africa, an Australian company owns about a third of the macadamias in Hawaii," he said.
"There are Australian shareholders in at least two orchards in China, so this foreign cross ownership goes both ways."
Who's buying?
Mr Lowrie said the investment interest was coming from family and corporate farmers in China, looking for orchards with upwards of 30,000 trees.
"The buyers are mixture of larger growers who are possibly processors as well, down to smaller mum and dad operators," he said.
However, despite the misconception of the Chinese investors as cashed up, Mr Lowrie said they are not out-pricing Australian buyers with exorbitant offers.
"They are quite diligent and they are quite au fait with land values and current day pricing, and typically they use independent consultants with macadamia experience," he said.
Mr Lowrie said that in most of the sales he's been involved with, the investors want to keep Australian managers and workers on site.
Original source: ABC

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