In March the Treasurer Scott Morrison quietly approved the sale of Carlton Hill, a 476,000 hectare (that is 1.176 million acres) NT property, to the Chinese company Shanghai Zhongfu for $100M. That works out at $21 a hectare (or $8.50 an acre)!
Should we be concerned about ‘selling the farm’, especially to the Chinese? And what about that price?
If ‘selling the farm’ is our biggest fear then the Canadians are the enemy on our borders because they account for 25% of all agricultural land purchased by foreigners in the five years to 2104. China, around 1% but growing. In 2015 they paid out $375M for Australian farms.
Selling the farm?
There is a lot of emotion around ‘selling the farm’ and I am as guilty as anyone on this – at best it is disturbing and at worst it is ‘selling up our kid’s future’.
But investigation tells a different and salutary story.
First up, Australians didn’t ‘sell’ this particular NT property to the Chinese – the Poms did. It was owned by Britain-based investment firm Terra Firma. Its Consolidated Pastoral Company owns 18 other Australian properties as well.
A lack of local investment
The major reason foreigners are buying up these big farms is because we Australians are not prepare to – because we do not understand the agricultural business and we don’t like the risks, says a Parliamentary Research Paper in 2014:
“Australian fund managers have been unwilling to invest in agriculture enterprises. Australian fund managers have had little exposure to Australian agriculture, because of limited opportunity, or lack of market knowledge”.
This is pathetic. We have over $600 billion in super funds and the fund managers say it is too hard to learn how to invest here? Yet Canada, the same size as Australia and with a similar super scheme (their pension funds) can be our No.1 agricultural investor. Go figure.
The same Parliamentary Report says:
“As a consequence of a series of deregulations in recent decades in agricultural markets, both at the federal and at the state levels, Australia’s commercial agribusiness sector has become intensely integrated with the global supply chain”.
“It is not surprising, then, that foreign funds have mostly become the major operators of agricultural businesses over the years, with their better capacity and scale of operations”.
Foreign ownership now the norm
This means our governments have made it easier to have our products flow to world markets. And the foreigners have seen the opportunity and grabbed it – but not us.
In the grains industry, Viterra (Canada) bought ABB, Agrium (Canada) acquired Landmark and resold AWB business to Cargill (USA). Viterra was the acquired by Glencore (Switzerland).
In the dairy industry, Lion (Japan), Fonterra (New Zealand) and Parmalat (France) now dominate Australia with about 50% of milk processed now foreign owned.
Foreign companies now account for more than half of all sugar production. Finasucre (Belgium) owns Bundaberg Sugar, Wilmar (Malaysia) owns Sucrogen-CSR and COFCO (China) acquired Tully sugar.
More than 40 per cent of all Australian red meat production is owned by foreigners. JBS (Brazil), Cargill (USA), and Nippon Meat Packers (Japan).
Cotton, vegetables, pigs, feed and oil processing, the same.
A future for our farms
Getting back to the Chinese buying Carlton Hill, the Chinese are planning to invest another $400M to build processing facilities in Kununurra for fermented sorghum baijiu, a sugar and biofuel mill, cotton processing and an abattoir. This is all good news for the Northern Territory.
You have to ask what the Chinese know about farming in Northern Australia that we don’t. The land is there to be farmed because we built the Ord River Scheme in 1972 – but we could not make a go of it. Or will the Chinese employ Australians, with our knowledge, to make the project work? The answer is yes. What they have is vision and the will to create something.
It appears that we don’t. On that basis, we should be grateful for their investment in Australia.
