WHILE this morning’s much-anticipated Federal Government report sheds some valuable light on both the width and depth of foreign interest in Australian agricultural land assets, it is not without its flaws, it seems.

The Registry of Foreign Ownership of Agricultural Land was introduced in a bid to provide transparency about Australian land bought and owned by foreign investors.

“The land register is giving us the first comprehensive baseline picture of foreign ownership of agricultural land,” agriculture minister Barnaby Joyce proclaimed this morning. “From now on the annual reports from the register will give us more accurate data on which to base public discussion.”

But closer scrutiny suggests caution should be applied in the interpretation of some of the statistics it includes.

One of the obvious oversights is a lack of any attempt to distinguish between outright ownership of a land asset, versus a lesser or even minority shareholding.

The key point of the exercise in the register was surely about trying to determine ‘effective control’ of any given Australian agricultural asset. But there is a very large difference in sphere of influence between the two.

The report’s methodology and definitions section states that individual investments as low as 20 percent of an asset’s worth are included in the register, and for group investments, down to 40 percent.

Early post-release comments on the report from across industry suggest some stakeholders are struggling to account for how the United Kingdom, for example, can be apportioned with more than half of all foreign-owned Australian farmland, totalling 27 million hectares. Australian Farm Institute’s Mick Hay had a go, calling it ‘perhaps a hangover from colonial days.’

A large part of the answer to why the UK is so dominant on the list – almost four times the second largest entry, the US – appears to be in the allocation of ‘ownership’ to a country, even when the investor holds a relatively small share of the business.

Here’s an example. UK-based Joe Lewis’s Tavistock Group currently owns just 34.98pc of AA Co’s listed stock, yet under the guidelines set out under the register, AA Co’s entire land area of around 7 million hectares is apportioned to the UK. That’s akin to suggesting that Sumitomo owns NuFarm, or that ADM owns Graincorp.

Similarly, at the time the register was compiled, England’s MP Evans owned 34 pc of shares in the North Australian Pastoral Co, adding another 5.8 million hectares to the UK ownership figures.

Kidman and Co’s shareholding also includes a significant UK based component, adding another 100,000sq km, so it is not hard to see how the UK has racked-up a figure which appears out of all proportion with other foreign investors, and arguably, extremely inflated.

The minority shareholding issue outlined above also distorts the figures allocated to each state/territory for the extent of foreign ownership. In the NT, for example, a figure of 15.2 million hectares is described as ‘foreign owned.’ But a large proportion of that is held in companies where foreign interests are minority shareholders.

What’s disappointing is that the Federal Government did not learn from earlier mistakes.

The Queensland State Government undertook its own extensive study of foreign land ownership in the mid-1990s, including a register process backed by heavy penalties for non-lodgement.

Exactly the same flaw in the data gathering process applied then, making much of the information at best, ambiguous, and at worst, misleading. The Federal Government apparently learned nothing from that Queensland experience.

What constitutes a ‘foreign’ person?

The foreign-owned land register also defines a ‘foreign person’ as an “individual not ordinarily resident in Australia.”

That partly explains why investment sources such as Singapore appear so highly ranked on the list, as the fourth largest investor in Australian agriculture – even in front of China – with 1.8 million hectares.

But that figure is heavily skewed by Singapore-resident Australian citizen Brett Blundy, who since 2010 has acquired 1.3 million hectares of NT pastoral land through its acquisition of Beetaloo, Mungabroom, OT Downs, Amungee Mungee and most recently, Walhallow.

Simple land area a crude measure, at best

Another point of concern with the signals coming out of the register is its absolute reliance on land areas as a gauge of foreign investment impact in Australia. That’s a crude measure, by any standard.

An irrigated 1000ha almond orchard in western Victoria, together with its water rights, could easily have a higher capital value, and turnover, than a 500,000ha mulga country breeder block in western Queensland. Yet its significance on the foreign ownership register appears simply as a pocket-handkerchief sized area of land.

The statistical reference to number of individual foreign owned properties identified in each state as foreign owned is also open to scrutiny.

The Northern Territory provides an example. The register suggests there are 71 holdings held by foreign interests in the NT. On face value, that sounds like an extremely high concentration, given that there are only 220 Pastoral Leases across the entire NT land area.

But property market contacts spoken to this morning said that while there were, indeed, some very large pastoral assets in the NT held under offshore ownership, the proportion of all pastoral land in the region was nowhere near as concentrated as the statistic suggests. It suggests that some of those land assets, at least, are very small, if not insignificant in size, in the context of the NT grazing industry – the dominant form of agriculture across the Top End.

Other examples of report figures that property market valuers and other analysts are struggling to come to terms with include an allocation in the report of 700,000ha of agricultural land across Australia to Japanese interests. Nobody Beef Central spoke to this morning could come within a bull’s roar of that figure, given known assets held by Japanese investors, which tend to be focused much more heavily on feedlot and processing assets rather than extensive grazing. Partial-ownership investment in forestry ventures might provide part of the answer, one valuation contact said. But again, if that’s true, it provides a very distorted view of Japan’s position as a foreign ‘owner’ in Australia.

Click here to view this morning’s main story on the foreign land register.

Click here to access the full foreign ownership register report.