Selling vast tracts of Australia's farmland to foreigners is not in our national interest

The main arguments against allowing large scale foreign buy-ups of our farming land relate to national sovereignty (our independence is somewhat nominal, if foreigners own much of our country) and to a belief that the accelerating sell-off is poorly timed in terms of the dive in our dollar and the opening of new markets (especially in China). The price Australian sellers are receiving for land also seems poor relative to what we might have to pay to buy the land back in the future (if indeed the new owners were prepared to sell). There is a question of possible insider trading, if foreign investors are privy to non-public information (e.g. related to future demand or market access) from their home country. Vertical integration by foreign food companies also brings risks of transfer pricing and market manipulation.

While foreign landowners are still subject to Australian laws, in reality Australian authorities already have only limited knowledge or control over what actually happens on very large remote properties, even when they are locally-owned. The opportunity for monitoring or policing foreign-owned stations, especially if they are managed or staffed by non-nationals, is even less. This clearly creates some vulnerability in strategic or defence terms. Thus there is an inconsistency in Australia spending about $32 billion annually on defence, while at the same time selling off vast expanses of our largely empty north for a relative pittance.

By way of example, a senior Chinese Communist Party member is reportedly behind the purchase of the NT's Wollogorang Station and several other large northern properties. While I would emphasise that there is no evidence that anything untoward is being contemplated, it is notable that in the past Wollogorang (due to its size, isolation and sea frontage) was notorious as a site for marijuana growing and drug smuggling. Thus it would be easy in its vast expanse to hide activities contrary to our defence interests

If you add up all the major purchases of Australian farmland over the last year, the billion and a bit dollars involved is not much more than the Victorian Government (both sides of politics) squandered on the now-cancelled East-West Link or the Turnbull Government plans to spend on the PM's pet $1 billion Innovation Package (another likely waste of money). Worse still it is most unlikely that foreign buyers will sell these lands back easily or cheaply. China's plan, in part, is to gain control of its food chain to ensure long term supply. A forced future buy back would be both expensive and probably create a diplomatic incident with our biggest trading partner.

A parallel to the recent and continuing buy-up of Australian land by foreign companies can be found in the mass purchase of Eastern European farmland that occurred prior to the eastward expansion of the EU zone around a decade ago. According to an EU report, the relatively low price of land in the new Eastern European member states compared to prices in existing EU member countries (as well as land reform processes in the former socialist countries) provided a major incentive for investors to acquire cheap farmland in these countries. In Romania, up to 10 per cent of agricultural land is now in the hands of investors from outside the EU, with a further 20-30 per cent controlled by investors from EU countries.

Foreign investment in Australian farmland should only be supported, where it passes a rigorous national interest test. Where purchases are accompanied by major additions to infrastructure or to employment, or where introductions of expertise (not otherwise available) come about, a strong case for approval exists. On the other hand, if none of these benefits are likely, then foreign ownership seems undesirable.

Appendix: Summary of Significant Recent Land Sales to Foreign Interests

Currently there is controversy over the attempted sale to Chinese interests for about $350 million of Australia's biggest private landholder (S. Kidman and Co), whose holdings cover 11 million hectares or 2.5 per cent of our agricultural land. The sale has been (only temporarily?) blocked, mainly due to proximity of one station to defence facilities at Woomera. Insiders expect a deal of some sort to be eventually approved, probably excluding Anna Creek Station bounding Woomera.

Some of Australia's largest landowners already feature substantial foreign ownership. UK private equity firm Terra Firma bought the Consolidated Pastoral Company (which operates 20 cattle stations over 5.8m hectares) from James Packer in 2009 for about $450 million. Bahamas-based investor Joe Lewis controls about 30 per cent of AACO, Australia's largest beef producer (holding around 7 million hectares), while other overseas investors own substantial minority shareholdings.

Chinese investors have been buying Australian beef properties at a rate of about one major station a fortnight during much of the past year. The bigger purchases have included the 705,700 hectare Gulf stations Wollogorang and Wentworth for $47 million, the 205,000ha Douglas Daly flood plain property Elizabeth Downs for $11.5 million, the 294,000-hectare Singleton Station north of Alice Springs for about $10 million, the 35,000-hectare Hollymount Station and neighbouring 15,000-heactare station Mount Driven in SW Queensland for about for about $42 million, the 30,868 hectare Glenrock Station in the NSW Hunter Valley for $45 million, and the 31,000-hectare Woodlands near St George, Queensland for $28 million. In October Shandong Delisi announced an outlay $140 million to buy 45 per cent of large-scale abattoir operator Bindaree Beef.

Chinese companies have also acquired a lot of dairy country, and Chinese miners (in common with their Indian counterparts) have bought extensive farmlands surrounding their coal-mining interests (e.g. in the Gunnedah district of NSW).

Chinese owned Moon Lake Investments in November announced the purchase from New Zealand interests of Australia's largest dairy farmer, Van Diemen's Land Company. The sale (for $280 million) includes the iconic 16,800 ha Woolnorth dairy farm (Tasmania's largest property).