In October 2011, the Australian government announced it would introduce a national land register of foreign-owned agricultural farms and businesses as one of the first steps in ensuring transparency surrounding foreign investment into the agricultural sector.

Farmer checking wheat crop at Warracknabeal, Victoria. Source: Getty Images

But six months later, the National Farmers’ Federation called on the Labor government to deliver not only a national register but to also monitor future foreign investments via reports to ‘inform…Government policy settings on foreign investments made in Australian agricultural land and water’.

Former head of the NFF, Jock Laurie announced in an April 2012 media release that “foreign investment has provided a much needed injection at a time when limited financial investment was occurring within Australia…our members remain concerned about any changes in the motivations behind investment towards ensuring food security for other countries”.

Labor MP Tony Zappia believes concerns about an increase in the level of foreign ownership are groundless. He says data from an ABARES report shows the level of foreign ownership of farming land in Australia has remained relatively stable over the past three decades.

Within the last four years, however, a number of agricultural businesses in Australia have come under partial or full ownership by a foreign company. They include  Teys Brothers, which owns cattle in five states and has processing plants in Queensland, South Australia and the Northern Territory. USA-based Cargill now own fifty percent of the company.

Another is the Timbercorp Almond Project in Victoria, which comprised a total of 8096 hectares and 40, 825 litres of water licences. It was formerly owned by Australian company Olam and purchased in 2009 by the country of Singapore for $128 million.

Deputy Senate leader of the Nationals, Fiona Nash has echoed the same concerns about foreign entities looking to Australia to ensure their own food security. In March this year, Senator Nash voiced her own concerns about the level of foreign ownership and its future impact on the agricultural sector and the nation as a whole. “Some people say at the moment ‘well, you know, that’ll all be fine, we export 60-70% of what we produce so it’s never going to be an issue’, but … we’re just not thinking long term about what the potential ramifications might be”.

“We’ve got companies like (Qatar-based) Hassad Foods…and China and other nations saying quite openly that they’re looking at setting up pipelines from our paddocks back to their home nation to shore up their future food security”.

One of the issues surrounding such ‘pipeline productivity’ is whether such foreign activity is in the national interest. The Foreign Investment Review Board of Australia profiles foreign investment by using a national interest test. Some of the ‘national interest considerations’ include effects to national security, competition and the impact on the economy and the community.

Senator Nash believes several aspects of the test need to be reviewed.

“Personally, I don’t think it’s transparent enough or strong enough or stringent enough or … even understood. Even the head of the Foreign Investment Review can’t really give us a good … explanation of what they look for when they say ‘no that is not against the national interest’ when an application comes before them,” she said.

There have also been concerns that the Foreign Investment Review Board’s experience and knowledge of Australia’s farming sector is inadequate. Of the four members, all of which are part-time, only one member, Ms Anna Buduls has ‘commercial experience’ in the agricultural sector.

Senator Nash also says there needs to be more ‘rural expertise’ on the Board so that “the national interest assessment can be done rigorously”.

Tony Mahar, the NFF’s General Policy Manager and Manager of Trade and Economics also believes the national interest test needs to be redefined to allow for greater scrutiny of foreign entities looking to purchase or invest in Australia’s agricultural sector.

“My view is that we need a bit more transparency around that and a bit more certainty … I think there’s not a good enough understanding of what the national interest test is…”.

It is not only the national interest test, which is in need of improvement. The lack of data recording what foreign businesses own which Australian properties is also being brought into question, and is a key issue in the NFF’s continued push for a national register.

“…What we have called for and have done so for a while is to get a transparent, robust and reliable, accurate register that documents and reports on what the level of investment agricultural assets has been, where it’s currently at and what the trends … are so we can use evidence to base our policy decisions on and use that to inform policy development around investment in agriculture in Australia’,” Tony Mahar says.

“… What we’ve been seeking is a ‘one-stop shop’ of investment in agriculture and data from a national perspective to say, ‘ok, here’s what’s happening in particular states, particular sectors and here’s what potentially the next steps from that are’ or, ‘ok what are the impacts of that investment?’ because that’s where the real issue is … it’s the impact that it (the investment) has on the sector and on the supply chain”.

Australia’s prime agricultural land is attracting the interest of foreign businesses looking to create a supply chain back to their countries. Something, which Senator Nash says, should be of great concern to the Labor government, and also the Foreign Investment Review Board who are yet to reject a foreign investment proposal across any of Australia’s property and business sectors. The current approval rate by the FIRB of foreign investment applications is over 90%.

“The question that I keep asking – that we’re not having a debate around – is how much foreign ownership is appropriate? Is 100% of our prime agricultural land appropriate? … If the community sense is that it’s not, well then, what are we going to do about it?”, Nash says.

Another factor contributing to the rising presence of foreign entities in Australia’s farming sector is the pricing of land when it changes hands. Good transition

“…With the foreign ownership coming in, in some instances they’re paying well over the market value price for those parcels of land and it’s actually pricing local people out of the market. Also, a lot of these deals are apparently done directly so that locals don’t even have an opportunity to put a bid in on a property,” Nash says.

Although the purchase of a single property may exceed whatever the market value of the property is, it will still be well under the $244 million threshold set by the Foreign Investment Review Board. This threshold, however, only encapsulates single tracts of land being bought by any one foreign entity – it does not identify an accumulation of tracts of land.

The Nationals released a discussion paper in August last year, which proposed lowering the value threshold to $15 million.

“So, if you’re a foreign entity and you’ve bought a property million, if you go down the road 12 months later and buy another property for just $1 million, well it still comes under FIRB because it’s cumulative once it’s hit that $15 million target, which I think is probably reasonable,” Nash says.

The threshold was also an issue raised by the NFF’s Tony Mahar.

“…We do need to get information on cumulative purchases to see what is happening in the regions or states and, again, to see what that impact is. So, we need to have information on the nature of the company … whether it’s a state-owned enterprise or if it has links to state-owned enterprises … What we need to do is get an understanding of what the nature of those businesses are and how they’re linked, so we don’t end up with 10 companies with a parent company owning all of them and having massive tracts of land,” he says.

“… We don’t want to discourage investment; what we do want to discourage is negative impacts on the supply chain”.

Mahar says foreign investment has contributed greatly to Australia’s agricultural sector, and it is still needed if Australian farmers are to remain globally competitive and take advantage of opportunities, which may be presented.

This includes opportunities such as continuing to contribute to the global food task.

The Task Force on Global Food Security was introduced in 2008 by the Center For Strategic and International Studies, and includes framework for ‘raising agricultural productivity’ – something, which Australia will need to maintain with the proper security measures in place to keep prime agricultural businesses under Australian ownership.

These opportunities such as the global food task, will feed directly into the future of Australia’s food security, and, according to Nash, that future needs to be secured.

“We need to start thinking now about how the Australian landscape’s going to look in twenty and thirty and forty years and is a potential increase in foreign ownership going to impact our agricultural productivity to the extent that … essentially one day our food security might be compromised?”.