China puts down roots in Australian farm sector
The local head of HSBC Bank is predicting significant growth in Chinese investment in Australian agriculture, as Asia's powerhouse economy steps up its expansion into strategic industries beyond mining.
With the federal government forecasting a 45 per cent rise in food-related exports by 2025, mainly into Asian markets, investors from the region are tipped to play a growing role in Australia's farming sector.
HSBC Australia chief executive Tony Cripps said China would be an especially important source of funding due to its sheer size, and because it viewed Australia as a safe and reliable food supplier.
"China in particular, but Asia in general, sees Australia as a secure place to get access to food because it's got a clean reputation, like New Zealand," Mr Cripps said.
"So in my visits and conversations to Chinese customers in Australia, there is an increasing interest in that sector because of the known growth profile of the demand for food in Asia."
The comments come after foreign ownership in farming became a political issue last year. Opposition Leader Tony Abbott promised to lower the mark at which agriculture investments are assessed by the Foreign Investment Review Board.
Figures from 2011 show 45 million hectares - 11 per cent of Australia's farming land - was at least partly foreign-owned and this is tipped to rise.
While the first wave of the China-induced resources boom has centred on "hard" commodities such as coal and iron ore, the second wave is tipped to focus on food.
"If the sector's looking at 45 per cent growth over the next decade, then every year there is going to be pretty strong growth. And we need billions of dollars in investment, which has got to come from somewhere," Mr Cripps said.
"Australia's always, over its entire history, attracted foreign capital to grow its agricultural sector, from the US, from Britain, from the traditional sources of investments from Australia's long history, and now we're seeing more of that investment coming out of Asia."
China was the third biggest foreign investor in Australia with total inflows of $16.2 billion in the 2011-12 financial year, the latest year for which Foreign Investment Review Board statistics are available.
While only a small share of this amount was invested in farming, since then there have been several high-profile deals involving Chinese firms. In November conglomerate Shanghai Zhongfu won a tender to spend $700 million developing Western Australia's Ord River irrigation area, while Cubbie Station was sold last year to Shandong Ruyi for about $300 million.
Despite the debate over foreign ownership of farmland, Mr Cripps argued that Australia was "very much open for business".