Public affairs campaign necessary to counter widespread concerns over foreign investment in agriculture

It should be a matter of concern that 80 per cent of Australians are opposed to foreign ownership of the nation’s farmland. That was the result of the ABC’s Vote Compass survey published yesterday. We should be concerned not because it indicates a massive level of xenophobia across the nation; but, rather, because it demonstrates a huge degree of ignorance of the basic facts. It behoves our politicians and farm lobby to commence a public affairs campaign to educate the broader community on the benefits of foreign investment in agriculture.

First, the fact of the matter is that the level of foreign investment in Australian agriculture is low. Foreigners own only 12 per cent of our agricultural land. That leaves a whopping 88 per cent still in the hands of Australians. This hardly amounts to a foreign invasion. Indeed, the truth is that the majority of our land is not “at risk” of falling into foreign hands.

But, secondly, Australian farms need foreign investment to innovate and grow. And they need it now more than ever before. Australia has always been dependent on foreign investment into our agriculture for innovation and expansion. If the sector is to continue to innovate and expand, particularly to capture the opportunities presented by the growing demand of the Asian region for high quality, clean and safe foods, it requires significant amounts of investment.

The fact of the matter is that family-owned farms lack the funds to make the necessary investments to capitalise on these opportunities. Indeed, research by the Australian Farm Institute in 2012 found that only 28 per cent of family farms in Victoria had the scale and profitability to remain self-sufficient. Clearly, an irreversible drift to corporate farming is underway.

But Australian corporate farms are not well placed to take up the opportunity by themselves. Homegrown investment funds are not sufficiently capitalised to support Australian farms make the necessary transition. Take note of the failed attempts by Australian interests, including a crowd funding initiative, to keep the Kidman & Co properties in Australian hands. We just don’t have the wherewithal to make the necessary leap to meet regional demand.

That leaves foreign investment as the best funding model for farm sector innovation and expansion if we are to capture the opportunities presented by the growing markets to our north. And the countries of the Asian region, including China, offer the best sources for that funding. Apart from being cash-rich and interested in the Australian farm sector, their knowledge of their home markets means a higher chance of success exporting to those markets.

But Australia needs also to understand that the environment for investment is highly competitive. If we make it too difficult for foreign corporations to invest in our farm sector they will start looking elsewhere. Consider that in the same week that Shanghai Pengxin saw its bid for the Kidman properties frustrated it successfully purchased one of Brazil’s largest agricultural businesses for $378 million – more than it had bid for the Australian property.

If potential foreign corporations find Australia a difficult marketplace in which to invest in agriculture they will take their money to the nations we compete against. That is something we can ill afford. It is akin to handing our competitors the Asian food bowl on a silver platter.

It is incumbent on the government (regardless of which party wins the 2 July election) and the farm lobby, which supports the need for foreign investment in the farm sector, to communicate these truths to the Australian electorate. A public affairs campaign to educate the broader community about the benefits of foreign investment in the farm sector is necessary before anti-foreign investment sentiment leaves us scrambling to export our farm products to second tier markets while our competitors capture the most prized markets of the region.


Written by Alistair Nicholas, Executive Vice President – Director, Special Projects. Alistair was based in China for 13 years prior to returning to Australia in 2013. He is a former Australian Trade Commissioner and a former trade advisor to the Federal Coalition.