News / Asia

Australia Divided on Farm Sales to Foreigners

FILE - A farmer walks next to his tractor at a farm near Parkes, 357 kilometers west of Sydney, Australia.
FILE - A farmer walks next to his tractor at a farm near Parkes, 357 kilometers west of Sydney, Australia.
Phil Mercer
The sale of prime farmland to overseas firms continues to divide Australia. Those who argue that overseas investment is vital for prosperity are challenged by those who do not want control of the nation’s food supply ceded to foreigners. In the middle of the fractious debate is Prime Minister Tony Abbott.
Prime Minister Abbott believes that foreign investment, especially in agriculture, is vital for Australia’s future prosperity, but insists that it should be strictly monitored to ensure it is in the national interest.
As the country’s lucrative decade-long mining boom begins to come to an end, the government in Canberra feels Australia is well placed to meet surging demand for food among the growing middle classes in the Asia-Pacific region.
The Abbott government wants Australia’s sparsely populated north to become Asia’s food bowl, and a detailed plan is expected later this year.
On his first overseas trip after winning last September’s federal election, Abbott went to Indonesia to encourage more investment in Australian farms.
“Australian business has never been keener to explore investment opportunities and to build partnerships that transfer skills and build local industries here and at home. I also welcome Indonesia’s desire to invest in Australia, including in agriculture. We are open to investments that will help to build the prosperity of both our nations,” said Abbott during the visit.
The Abbott government now faces political pressure from within its own ranks. Some conservative lawmakers are warning that selling farmland to foreigners will mean Australia risks losing control of its food supply.
That view is shared by Bob Katter, an independent federal member of parliament, who complained that Australia is giving up key agricultural assets.
“Every single dairy plant in Australia was Australian-owned. Now, four-fifths of the main part of the industry is now foreign-owned. Our six great mining companies - all Australian-owned 16, 17-years ago. They are now all foreign-owned,” said Katter.
The debate over foreign ownership is likely to become more divisive as wealthy foreigners increasingly consider purchasing Australian farms, according to Keith Suter, a foreign affairs analyst. 
“This creates tensions, particularly in the political parties not on ideological grounds; left and right. I think it splits both parties. You have got on the one hand with more economic concerns saying, ‘Well, we have got to have foreign investment. We need that money coming into the country.’ And you have got others saying, ‘No, we should try to close off the economy. We should try to restrict the amount of foreign ownership,’” said Suter. 
At the end of 2012, the Chinese were the ninth-largest overseas investors in Australian agriculture, holding three percent of output, while U.S. investors owned 24 percent and Japan 10 percent, according to research published by finance firm KPMG and the University of Sydney. The study reported that China owned less than one percent of farmland in Australia.
Keith Suter believes there are three main reasons why Chinese investment in agriculture will increase. 
“One is that they want land to guarantee food security. Secondly they want to have alternative places for investment, and thirdly Australia is a good place to invest. We do not have a tradition of being erratic in our political activities. Some might even say we are comatose in our political activity. We do not suddenly seize people’s assets. We are a friendly, welcoming country,” said Suter.         
Tony Abbott’s plan to boost agricultural production in northern Australia will depend on foreign money because there is insufficient domestic capital to bankroll such a grand scheme.
Ben Saul, a professor of international law at the University of Sydney, believes an investor’s country of birth should not be a decisive factor.
“You know, most of the time my own view is why the nationality of the investor matters, you know, whether a rich, self-interested Australian owns a lot of agricultural land or a, you know, rich, self-interested Chinese company owns a lot of land does not particularly matter as long as you have the right regulatory settings governing the use of land and environmental protection, and labor standards or whatever it is you want to regulate. It is hard to see why ownership itself is a problem,” said Saul.   
An Indonesian company recently bought two large farms in Australia’s Northern Territory farms, and last May the Western Australian state government chose a Chinese firm to develop 13,400 hectares of irrigated farmland.
However, analysts said the rejection of a U.S. company’s bid to buy crop handler GrainCorp Ltd. in November shows that Australia’s conservative government still remains deeply cautious about selling key assets to foreigners.

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