Foreign investment, national interest questioned

FOREIGN investment in Australian farmland and agricultural enterprises has featured in the news throughout 2013. In this article, KIRRILY SCHWARZ explores the question of foreign investment and the national interest.

VICTORIA’S rate of foreign investment is currently the lowest in the country, at less than one per cent. 

Nhill farmer Robert Eastick speculates this is likely to increase soon. 

“There are a lot of farmers my age and older,” he says. 

“When I look around this area, there are tens and tens of thousands of acres that will be sold, I reckon in the next 20 years. And there are no young people to buy it.” 

Mr Eastick is a grain, fat lamb and wool producer. He is concerned that Australia could miss out on future export profits. 

“Foreign investors could own thousands of acres in this area, and grow crops, grow fat lambs, deliver them to the markets we have, and life would go on as per normal,” he says. 

“But if they’ve just got their own interests, and they grow that produce and export it straight from the farm to their country, well, that would be disappointing.” 

Before being elected in September, Prime Minister Tony Abbott said he was in favour of continued foreign land investment where it was in the ‘national interest’. 

This phrase was recently used as grounds to reject the GrainCorp takeover bid by Archer Daniels Midland, but its meaning is not clearly defined.

Undoubtedly ‘national interest’ is about economics and politics, but it should also take into account the next generation of farmers and rural communities.

Agriculture is on the increase. In the past three decades, agricultural exports rose five per cent every year, from $8.2 billion to $32.5 billion.

The government’s Asian Century white paper predicts Australia will be a global food bowl, supplying food to an estimated three billion consumers by 2030.

Despite a forecast of this magnitude, the Australian Bureau of Statistics reports the number of farmers is declining, because smaller farmers are selling up to large-scale operations, and fewer young people are taking over family farms.

Nationals Member for Mallee Andrew Broad wants to be in a situation where a young farmer can buy land.

“It seems we’re going to say to young farmers you’ve got to compete in an international market to buy a farm, and compete with anyone around the world just to buy a farm,” he says.

According to Mr Broad, land should be valued by its productive capacity.

Nhill stock and station agent Gary Driscoll says foreign investment strengthens the property market.

“Sometimes that’s not a good thing for people who sell, because they can’t get back in,” he says. “If the rate goes up and stays strong, it also makes it difficult for new people to buy in.”

But he notes most young farmers are not new entrants to the market.

“Many young farmers have a generation of land behind them, passed on to them by a father or grandfather,” he says. 

“They’re not buying farms. They’re usually buying smaller parcels to add to their existing holding.”

Mr Driscoll says charging foreign investors the same dues as Australian producers could achieve a level playing field.

In the meantime, foreign investors are buying land in huge proportions nation-wide.

The Wimmera already has one example: the 100,000-acre sale at Telopea Downs to Qatar-based Hassad Australia in 2012. 

This is the kind of sale young farmers might struggle to keep up with. 

Ironically, it could be the kind of sale that saves rural communities.

In Nhill, more than a quarter of the population is above the age of retirement, with only a tenth of the community aged between 15 and 24.

Hindmarsh Shire Mayor Rob Gersch says his reason for staying in Nhill is as simple as three words: ‘quality of life’.

“But with young people, there have to be jobs and there have to be opportunities, and we’re fully aware of that,” he says.

“We are working very hard on trying to retain as many people as we can.”

In May 2012, Hassad Australia’s chief executive Tom McKeon said in the Mail-Times that Hassad implemented a ‘buy local’ policy, designed to protect small-town businesses.

Hindmarsh Shire councillor and businesswoman Wendy Robins says policies like this are important.

“Farming and agriculture employ 63 per cent of all the people in our shire,” she says. 

“I’d say 99 per cent of my customers are farmers. My business alone wouldn’t exist without farming and agriculture.”

Foreign investment also offers the possibility of more rural jobs, if foreign-owned properties are managed by local staff. But will this help retain young people?

‘National interest’ is a complex phrase. 

It’s about sovereign risk, ensuring that profits from produce grown in Australia are kept here, and giving young farmers a go. 

It’s also about ensuring long-term viability of rural communities, small businesses, and keeping up with global markets.

These two words have the power to decide the future of Australian farmers and rural communities.

Food giant Archer Daniels Midland has been found guilty of paying $21 million in bribes – see the January edition of Wimmera Farmer on Wednesday for more.

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