Selling off the farm?

Published on Food Crisis and the Global Land Grab, by Mike Pope, June 24, 2011.

There is nothing new about foreign investment in Australian agribusiness. It’s been going on for over 200 years. Many investors create something new, something not tried before. It may be a different approach to management, the use of new technology or crop varieties, better handling of produce, consolidation of smaller properties and larger scale operations or new markets and new competition … //

… What we find is that a number of things are happening which have not occurred before. Land and established agribusinesses are now being purchased to: 

  • Strengthen food supply, particularly for China.
  • Consolidate agricultural land holdings for mining.
  • Control processing of farm produce by purchasing infrastructure.

These are acceptable practices because they are either condoned or approved by government. Whether they meet with public approval is quite another matter.

Food Supply:

China is actively purchasing agricultural land in a number of countries, including Australia, seemingly to ensure a food supply for its large (1.2bn) and growing population. It is said this measure is made necessary because of expected effects of climate change on its own agriculture.

Those effects are predicted to include reduced water flows for agriculture due to melting of glaciers which feed its major rivers. They also include reduced rainfall over significant parts of China where crops are grown for domestic consumption and loss of agricultural land due to inundation from rising sea levels later this century. Combined, these are expected to significantly reduce China’s capacity to produce food or feed its population by 2100.

China is unique among foreign investors in Australian agriculture in that land purchases are being made by Chinese government controlled organizations, not by the private sector. This means that the Chinese government is able to (and will) determine how the land is to be managed, the crops which are to be produced, to whom they are to be sold and, if to China, at what price … //

… Conclusion:

It has been argued that the Australian attitude towards foreign investment in land and primary industries is too liberal, even open slather and should be tightened. There are cases where this might be appropriate, particularly where the investor is a foreign government that may seek to act in a way which is not in our national interest.

However, it has to be said that at present, foreign investors are not permitted to operate other than in accordance with our laws and regulations. Regular inspections ensure they do.

The area of land purchased by foreign companies is a small fraction of the total land area suitable for primary production. Federal and State governments monitor proposed and actual land sales and investment in Australian companies.

Where any one investment exceeds $230m., FIRB is required to make a recommendation to government on whether the transaction would be in the national interest and the Minister then decides if it should proceed.

In the case of freehold land, particularly agricultural land, the $230m threshold could be reduced, possibly to $100m.

Public confidence that we are not selling off the farm could be further enhanced if the government was required to publish FIRB reports in full and not just their recommendations.

(full long text).

(Mike Pope trained as an economist (Cambridge and UPNG) worked as a business planner (1966-2006), prepared and maintained business plan for the Olympic Coordinating Authority 1997-2000. He is now semi-retired with an interest in ways of ameliorating and dealing with climate change.
Source: ON LINE opinion).

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