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Selling off the farm?

By Mike Pope - posted Thursday, 23 June 2011


These and other areas of potential conflict need to be clearly spelt out to the Chinese government now. This will not stop future demands being made by China but at least there will be clear, if not fully accepted, understanding of the extent and the non-negotiability of Australian sovereignty.

There is no limit to the number of properties which may be purchased by foreign interests, though sale of land for $230m or more does require Australian government approval. Approval is usually given, or withheld, on the basis of a recommendation of the Foreign Investment Review Board (FIRB). The Board considers the views of State government, farmers' and other organizations and individuals before making a recommendation to government.

It has been asserted by some that FIRB involvement should occur when the proposed purchase exceeds $100m. or involves an area in excess of 5,000 hectares. Others have suggested that purchases made by Chinese interests should be subject to the same or similar conditions which would apply to foreign investment in China. To date, neither Federal nor State governments have shown interest in adopting such measures.

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Mining

Less common is the purchase of land by foreign interests so that they can undertake mining operations on the land. This enables mining to proceed, subject to government approvals, without objections from land owners hostile to such operations, or litigating for damages arising from pollution beyond the mined area.

One such case involves the purchase of 65 properties covering an area of 19,000 hectares of rich agricultural land near Gunnedah on the Liverpool Plains of NSW. So far, 25 properties have been acquired at a cost of $130m. by Shenhua Watermark Coal, a company wholly owned by the Chinese government. Prices paid so far have mostly been above market valuation.

The purpose of these acquisitions is not food production but to conduct coal mining with product being shipped to China. The Chinese government will, through its wholly owned subsidiary determine the rate of coal production and sales price should mining proceed. The concern of farmers is three-fold. It takes fertile farmland out of production, could pollute neighboring farmland and may pollute the aquifer used by farmers.

Those concerns would arise irrespective of the nationality of the mining company. They would be addressed by State and Federal laws, particularly those relating to protection of the environment and on-going inspection to ensure strict compliance with imposed mining conditions would apply. With these protections foreign investment in the mining industry in generally welcome.

However, there are exceptions where it can be argued that FIRB examination and ministerial approvals should apply. For example foreign investment and control of mining and export of rare earth minerals, particularly by a government, should not be permitted without FIRB review and Ministerial approval. This arrangement currently applies to all large foreign investment in mining.

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Infrastructure

Many companies, some very large, others relatively small, provide infrastructure for the purchase, processing, storage, packaging and transport of agricultural, livestock and fisheries products. They provide vital services for primary producers, providing them with the orderly and speedy marketing services needed for successful commercial operations.

Some primary producers are concerned that many of the larger companies on which they depend have recently been sold to overseas groups. Their concern is based on the suspicion that the new owners will conduct their Australian businesses with primary regard to their overseas based operations, rather than the needs of Australian farmers.

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About the Author

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.

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