Chinese want slice of rural Australia

Chinese want slice of rural Australia

• Jan 17 2012

Chinese interest in Australian ­agricultural land is intensifying, with about $500 million of intended investment planned ahead of the release of a key federal government report that will reveal the extent of foreign ownership in the sector.

A diverse group of Chinese delegates from private and state-owned companies met in Sydney just before Christmas with Austrade representatives, corporate advisers and industry heads, to discuss opportunities in rural Australia covering more than 100,000 hectares of prime land.

The Chinese delegation included three representatives from China’s Ministry of Commerce, which recently forecast that the country’s private companies and wealth funds would invest up to $560 billion overseas by 2015.

The presidents of companies such as Shandong Taifeng Textile Co Ltd and the Shanghai Xiangfu Real Estate Investment Co attended the private lunch in order to discuss their plans, ranging from a $25 million purchase of 20,000 hectares of ­cotton property to investing $US350 million in farmland in ­Western ­Australia and Queensland. Other major Chinese companies included in the discussions were the Bright Food (Group) Co, Shandong Ruyi Technology Group Co and Nanshan Group Co Ltd.

Documents seen by The Australian Financial Review, titled The China Food Security Study, reveals the Chinese companies were interested in investing more than $500 million in agricultural ventures ranging from dairy farming and ultra-fine wool production to animal husbandry and frozen vegetables. One of the documents indicates that the Nanshan Group, ranked 188 in the top 500 enterprises of China, is intending to secure four properties with an area of about 30,000 hectares in NSW and Tasmania for the ­production of superfine wool.

Another Chinese government-backed company, Shaanxi Kingbull Livestock Co, is intending to buy a 5000 hectare cattle station in Australia as a stepping stone to importing 10,000 high-quality beef cattle and calves from Australia each year.

The meeting between delegates and Australian corporate and industry representatives was arranged by Austrade and the Department of Foreign Affairs and Trade.

Meeting at the Marigold restaurant in Sydney’s Chinatown, several interpreters were seated with the investors and helped facilitate introductions and discussions.

The meeting comes just as the federal government is due to receive a review of foreign investment in rural land, by the Australian Bureau of Agricultural and Resource Economics (ABARE) and the Rural Industries Research and Development Corporation. The review was commissioned more than a year ago amid rising debate about foreign investment. The first part of research by the Australian Bureau of Statistics was released last September and showed that 99 per cent of Australian agricultural businesses were owned by Australians.

The ABS data showed 5.8 per cent of agricultural land was foreign owned and 5.5 per cent was majority owned by Australians with some foreign involvement. Releasing the ABS figures, former assistant treasurer Bill Shorten said: “As a capital-importing country, foreign investment is crucial to ensuring our continued economic growth and prosperity – including in the agriculture sector.

“However, foreign investment is changing around the world. It is vital we protect the national interest and continue to strike the right balance between attracting foreign investment and ensuring Australia’s agricultural sector and food security are maintained." The issue of foreign purchases of agricultural land has been a hot topic because of the threat of overseas government-backed enterprises outcompeting domestic private companies on land purchases for the sake of food security.

In the past six months the Chinese government-owned COFCO, led by president Patrick Yu, took control of Tully Sugar, one of the last major sugar assets in Australia, for $136 million. Several prime agricultural properties such as the well-known Bobbara Station, west of Yass, NSW, and the Upper Murray’s famous Mt Falcon Station have also recently been sold to Chinese buyers – but names and details of the buyers have so far been withheld from the public. There have been concerns raised about the secretive nature of foreign purchases of rural land, and the lack of transparency on ownership details.

Last year the New Zealand government introduced new laws requiring government approval for land purchases greater than five hectares and taking account of whether “economic interests" had been safeguarded. In Australia, the current rules require foreign investors to obtain federal government approval only when purchases cost more than $231 million.

In central Queensland, cattle station owner and Richmond Mayor John Wharton said he was “dead against" unabated Chinese buying- up of rural land.

“I don’t mind the Chinese lending money to us for us to go out and buy the properties, but as far as the Chinese coming in and buying everything up, we are dead against that idea," he said.

“We can’t go and buy their land, so why should they be allowed to run amok here?"

He says that at the very least there should be some cap on how much the Chinese can buy and that there should be a register.

But Trade Minister Craig Emerson recently argued that foreign investment in agriculture was beneficial because it linked Australia more into global trade networks and brought new value-added processing to the sector.