Both major political parties in Australia agree that foreign investment has played a critical role in building Australia’s agricultural sector. However, opinions are divided as to whether similar levels of investment should be allowed into the future.
Federal Agriculture minister Joe Ludwig recently told an Australian Farm Institute forum that foreign investment in Australia provided an important source of capital for producers. It also provided flow-on benefits to regional communities, investment in research and development and value-boosting competition for agricultural land, he said.
Criticisms that the Australian Government was “selling the farm” and putting the country’s future food security at risk by allowing foreign investors to buy up agricultural assets were unjustified, he said.
Australian was a net food exporter by a significant margin and produced more fresh produce than its population could possibly eat.
Australia exported close to 60% of the food it produced, and grew and supplied 98% of the fresh produce eaten by its own population.
One of the factors that had significantly contributed to the agricultural sector’s success was investment in Australian agriculture and agribusinesses from foreign sources.
However the Government would not allow proposed foreign investments of significant magnitude to go ahead without further thought, he said.
Australia had a long standing foreign-investment policy that allowed the Government to review significant proposals on a case-by-case basis to consider whether the investment was in the national interest.
“In addition, all foreign governments, agencies and state-owned enterprises must notify the Foreign Investment Review Board – and receive approval – before making a direct investment in Australia. This applies whether the transaction involves one dollar or a billion dollars,” Mr Ludwig said.
The Coalition has argued that Australia’s approach to foreign investment is outdated and risks surrendering control of its food supply.
Opposition agriculture spokesman John Cobb said food security had become a bigger international issue in recent times with natural disasters, population growth, diminishing world supplies and debates over future population growth and climate change.
The issue was exacerbated by the emergence of new economic superpowers like China and India who were now international investors and in the market for foreign food producing assets; and “the sleeping giant Brazil was now awake”.
While food security might not seem to be a problem for a country that exports two-thirds of its broadacre production, it was becoming evident that Australia risked losing control of its supply lines as other countries and foreign entities, forward planning for their own needs for the next 50 years, strategically bought foreign agricultural assets, Mr Cobb said.
“While Australian heartstrings are pulled by the notion of selling off the farm, in actual fact the bigger issue is foreign ownership of agribusiness,” Mr Cobb said.
“It makes a lot more sense to buy the processor, the trader or the wholesaler of agricultural production than buy a hundred or a thousand farms with all the problems of government bureaucracy, regulations, interference from the green lobby and animal liberationists, rising input costs and variable weather conditions.”
Mr Cobb said the current rules for foreign investment were outdated and did not address food security concerns.
The $231 million trigger for review by the Foreign Investment Review Board for agricultural investments would almost never trigger a review of land or even many agribusiness purchases, he said.
He said a private members bill recently proposed to curb foreign investment by Senators Nick Xenophon and Christine Milne went to the other extreme, triggering costly reviews for agricultural land purchased for as little as anything over five hectares.
The Coalition has tabled a notice of motion that would task the ABS and the Australian Bureau of Resource Economics (ABARE) to gather information on foreign investment and then task Productivity Commission to recommend safeguards for national food security interests. This would look beyond individual cases and evaluate the cumulative impact of foreign ownership.
“Foreign investment is important for Australian agriculture, but it is also important that while we encourage investment we safeguard our nation’s food security in a changing world environment.”