SYDNEY: With Chinese buyers eyeing farm land in Australia and New Zealand, authorities are coming under growing pressure to balance the need for foreign investment against accusations of “selling out.”
Currently up for sale is the S. Kidman and Co. Ltd. cattle empire — a vast Outback estate which covers 1.3 percent of Australia’s land mass and has an average herd of 185,000 cattle.
Treasurer Scott Morrison blocked its sale to all foreign investors in November, including from China, saying it was contrary to the national interest given part of the holding overlaps with a military testing range.
But Morrison recently approved the sale of Australia’s largest dairy farming business to a Chinese buyer, despite criticism that businessman Lu Xianfeng’s Aus$280 million ($210 million) purchase of Tasmania’s Van Diemen’s Land Co. could impact food security.
In a statement headed “Sell Out,” independent Senator Nick Xenophon labelled the decision “wrong, wrong, wrong” saying Morrison failed to give sufficient weight to an alternative Australian bid.
“It’s certainly a very emotive issue,” said Hans Hendrischke from the University of Sydney Business School.
“The anxiety about Chinese ownership is part of a larger anxiety with demographic change, with economic change, it is part of Australia having to cope with the idea . . . that we are coming much closer to Asia economically,” he told Agence France-Presse.
Hendrischke, who last year co-authored a KPMG report which found that agribusiness accounted for only 1.0 percent of Chinese direct investment in Australia in 2014, said while the Middle Kingdom was not yet a major foreign investor in Australian farmland, politicians were wary of a public backlash as its stake grows.
It is a similar story in New Zealand, where a KPMG report last year found the United States was the biggest buyer of that country’s dairy land, purchasing almost five times as much as China, although Chinese purchases tend to attract more attention.
Investment needed for growth
Such is the concern about valuable assets passing into foreign hands, Australia last year tightened scrutiny on overseas investment in agricultural land—lowering the level at which investments are screened to a cumulative total of Aus$15 million ($11.3 million). Previously only purchases over Aus$252 million were screened.
The government is also creating a foreign ownership register of farming land, after politicians with rural constituencies warned against selling farms to overseas investors, including to top trade partner China.
The National Farmers Federation’s Tony Mahar said such a register would “remove the emotion or the hearsay” by showing exactly how much land was owned by Chinese interests.
“You know, 10 or 20 years ago it was Japanese investment, prior to that it was UK investment, it was Canadian investment . . . so the country for us is to some extent irrelevant,” Mahar said.
“The issue for us is making sure that we continue to attract investment.”
‘A happy medium’
In New Zealand, the world’s largest dairy exporter, critics say the government has shown an inconsistent approach to Chinese ownership of farmland, bowing to populist pressure from political opponents.
China is the biggest foreign investor in the South Pacific country’s dairy industry, which includes milk processing, according to the New Zealand-China Council.
In 2012, Prime Minister John Key strongly defended the right of China’s Shanghai Pengxin to buy the 16-property, 8,000-hectare Crafar farms group in a deal reportedly worth NZ$210 million ($142 million).
While opposition parties labelled it a “land grab” and “economic betrayal,” Key said
Chinese investors deserved the same treatment as those from elsewhere.
Yet Key’s government last September blocked Shanghai Pengxin’s NZ$88 million ($59 million) bid to buy another farm, the 13,800-hectare Lochinver Station, despite the Overseas Investment Office recommending it go ahead.
Australia’s Agricultural Minister Barnaby Joyce has acknowledged while his preference was for domestic ownership, foreign bids had to be considered.