Foreign investment in Australian agriculture has recently received high volume exposure in international and domestic Press, with most days seeing multiple articles in newspapers, business channels and online news.
Agriculture seems to pull the heart-strings of the Australian public and politicians alike. Beyond the Press, extensive attention to foreign investment in Australian agriculture has been drawn from Australia’s political leadership including Opposition Leader, Tony Abbott, his deputy, Julie Bishop, Nationals Senator, Barnaby Joyce, Federal Treasurer, Wayne Swan, and the Prime Minister, Julia Gillard.
High profile Australian business leaders such as James Packer, Kerry Stokes, Mike Smith, Malcolm Turnbull and Dick Smith have all weighed in on the debate with a common theme of welcoming investment before it turns to another opportunity.
Countries such as China have recently experienced price hikes in food and soft commodities as a factor of supply and demand – vanilla economics. Could this be reminiscent of the 2007-2008 food price spikes? If so, expect to see sustained, increased investment activity.
As demand outstrips supply, countries such as China, look for security of supply internationally. Various regions throughout the world have competitive advantages for producing commodities, although Australia seems to tick all the boxes: production diversity, scale, sovereign stability, governance, transparency, expertise and access to growth export markets.
What better investment fundamental for an industry than supplying the primal needs of a rapidly growing population with an increasing middle class of 100 million people per year in China alone! One would think countries like Indonesia should be on Australia’s investor target list also.
Why should foreign investment into agriculture receive negative press? Foreign investment formed Australian agriculture and has had an ongoing involvement since day dot. During the 1970’s it was UK and USA, the 1980’s, Japan and now China, Malaysia and Singapore investors as well.
Access to domestic capital is limited compared to the international market therefore foreign investors should be welcomed to recapitalise an industry that requires capital to develop and increase productivity through innovation and efficiency gains. If Australia does not welcome foreign investment, it will go elsewhere.
Most of the large domestic agricultural sales have been available to the domestic market also. It is clear that the market determines the sale and if domestic interests are concerned over foreign interests owning these assets, where was their bid?
- Cranston, M. 2012, ‘Food needs drive Chinese overseas’, Australian Financial Review, 25 September 2012
- Daley, G. Dunckley, M. Massola, J. 2012, ‘Dairy sale would face FIRB, jobs test: Swan’, Australian Financial Review, 24 September 2012
- Dunckley, M. 2012, ‘States back Chinese money’, Australian Financial Review, 25 September 2012
- Dunckley, M. Massola, J. 2012, ‘Investment needed on the farm’, Australian Financial Review, 25 September 2012
- Grigg, A. Massola, J. 2012, ‘China targets dairy industry’, Australian Financial Review, 24 September 2012
- Liondis, G. 2012, ‘Agribusiness ‘about to boom’, Australian Financial Review, 24 September 2012
- Murray, L. 2012, ‘ANZ boss critical of stance on China’, Australian Financial Review, 24 September 2012