‘Foreign investment’. These two words have become so fraught, especially for the Australian farm community. To me, it is hugely disappointing.
The scare-mongering and hysteria around investment in our industry from international sources raised its head again this week.
Figures, made possible by the Foreign Ownership of Agricultural Land Register, revealed that overall foreign ownership of Australian farmland has actually marginally decreased, from 14.1% to 13.6%. What caused a stir was analysis showing ownership by Chinese interests had increased. China is now the second largest international holder of Australian farmland, behind only the UK.
The numbers do not concern me. They did not come unexpectedly. We knew this would be the case following the purchase of Kidman and Co. by Gina Rinehart and a Chinese co-investor. (Kidman and Co. though, remains largely (67pc) Australian-owned).
Between now and 2025, we face the prospect of a $110 billion shortfall in required capital
What does have me worried is the shortsighted sentiment of some (dare I say, leaders) who do not seem to grasp the benefit of, and frankly, the REAL need for foreign investment in Australian agriculture.
The following facts paint a clear picture of what’s at stake.
- In 2016-2017, agriculture became the fastest growing of all 19 Australian industries and the largest contributor to GDP growth.
- In 2016-2017, the industry achieved record production valued at plus $60 billion.
- It is plausible that agriculture could achieve a production value of $100 billion by 2030.
We are indeed in a golden era, and it’s not only the bush that benefits. Aussie farmers (more than 99% of farms are still wholly Australian owned) are feeling optimistic and hungrily looking for more opportunities to expand and grow their businesses.
However, to fuel that growth, we need investment – in the form of cold hard cash. Specifically, between now and 2025 we face the prospect of a $110 billion shortfall in required capital!
Good decision making must be centred around facts and transparency.
This is not a sum of money we can raise on Australian shores. Despite the farm sector’s red-hot growth, we are not on the radar of Aussie superannuation funds who tend to invest in ASX-listed businesses rather than pursue direct investment. They do not buy the farm – they buy shares in the company that owns the farm. Likewise, super funds are not lining up to invest in the essential infrastructure that our sector would benefit from. Processing facilities, roads, rail and ports are all investment opportunities waiting to happen.
There are deep structural changes needed to expose the farm sector to Australian super funds, but in the meantime, where does that leave us?
Common sense would say: let us at least have a discussion with the global investors who are willing to fund our growth. Let’s leave the door open for a conversation about how different investment models might look and work?
The NFF understands the community’s concerns about who owns our agricultural land and advocated strongly for the establishment of the Foreign Ownership Land Register. And, it is working. Good decision making must be centred around facts and transparency.
With the checks and balances of the register now in place (complemented by the work of the FIRB, ACCC and others) let us now go forth and explore the opportunities that may lie untapped in the pockets of global investors.
Australian farmers are smart. Among the most innovative in the world. They are experts at taking calculated risks and being the masters of their own destiny.
Any move to stifle such innovation, including when applied to how farmers access capital, is not only insulting but against the grain of what has put Australian agriculture in the good stead it finds itself in today.