Should Australia be selling the farm?
The Lawless patch at Burramine outside Yarrawonga has been in the family for five generations.
The Lawless patch at Burramine outside Yarrawonga has been in the family for five generations. THE Lawless patch at Burramine outside Yarrawonga has been in the family for five generations. It lies among vast tracts of some of the best and most productive farmland in Australia, and since 1880 has fed and nourished 30 children born on the property.Back then it was back-breaking manual labour from dawn to dusk. The times, history tells us, were not easy, and farmers oftenproduced just enough to feed themselves.But things have changed in farming, and on the Lawless land, over the years. The patriarch, Peter Lawless, 57, has quadrupled the size of the property since he took over 200 hectares from his father. And this year, the family farm will feed an estimated 600 people in Australia and overseas.The family have become expert producers, with sustainability a key component of their farming. The 800 hectares that every year are sown with wall-to-wall crops, mostly wheat, contain 10 houses where small farmers used to live before they left the land and sold up.Lawless then set about turning the land into not only an increasingly productive medium-sized farm, but also a national resource with a crucial role to play in feeding people; and which, he says, is not for sale, particularly to foreigners. "I would put up a 'not for sale' sign,'' he says.The estimate of how many mouths around the world Lawless feeds comes from Mick Keogh, executive director of the Australian Farm Institute, an agricultural research group. According to Keogh, the average Australian farmer grows enough food annually to feed 600 people for a full year, 450 overseas and 150 at home.He bases the calculation on the amount of food grown each year and the amount exported. Each year, roughly two-thirds of Australia's agricultural production is exported. And for some key products that proportion is even higher. The Australian Bureau of Agricultural and Resource Economics and Sciences says 73 per cent of sugar production, 70 per cent of wheat and 65 per cent of beef production was exported, on average, in the years 2006-07 to 2008-09.''I think governments and the industry have recognised, going way back, that Australian agriculture is almost unique. Australian and New Zealand farmers almost entirely rely on export markets. And in the absence of those export markets there would be an absolute disaster,'' Keogh says..With a huge agricultural surplus every year, the security of Australia's food supply seems guaranteed; the national pantry is full to the brim and overflowing. But there is growing evidence that concerns about food security overseas, particularly in Asia and the Middle East, are contributing to a surge of interest and foreign investment in Australian agribusinesses and farms.The evidence is in the sweep of purchases in recent years by foreign companies, private equity groups and individuals. The sales have involved everything from prime grazing and cropping land in south-east Australia to huge cattle stations in northern Australia, sugar processors in north Queensland, forestry plantations in Western Australia and Victoria and large-scale vineyards.The biggest deals involved enormous sums of money. In July last year, CSR completed a deal to sell the sugar business Sucrogen to the Singaporean agribusiness group Wilmar International for $1.75 billion; in 2009 ABB Grain was bought by the Canadian agribusiness Viterra for $1.64 billion; while in January this year a syndicate dominated by a Canadian pension fund, Alberta Investment Management Corporation, bought 252,000 hectares of land formerly owned by the failed MIS forestry company Great Southern for $415 million.An agricultural analyst at Citi Investment Research, Tim Mitchell, recently calculated that ''rural raiders'' from overseas had spent ''well in excess of $12 billion'' over the past four years on Australian agribusinesses and farms. In an interview with The Saturday Age, Mitchell concedes that $12 billion was probably an underestimate. ''There's a lot that would have gone through to the keeper, slipped through the cracks. So there could have been at least $2 billion you could expect on top of that, but it's probably actually likely a lot more,'' he says.His figure does not include the purchase of farms by foreign mining interests, which would have lifted the number substantially.The purchases raise tricky questions for governments and the agricultural industry. Should foreign private or government-controlled companies be allowed to own vast tracts of Australian farmland? What does foreign investment mean for local jobs? And what will it mean in the long term for Australia's own food supply?Agricultural banking experts and industry leaders predict that the strong foreign interest will continue.New figures released to The Saturday Age reveal an intense recent interest in Victorian agriculture and agribusiness assets. In 2009-10 the Foreign Investment Review Board approved proposed purchases by foreign investors of $650 million of Victorian assets classified as agricultural, forestry or fishery.To protect the confidentiality of the parties involved, no information was released on the names of the buyers, vendors or assets, but the figures remain instructive nonetheless. In the four years prior to 2009-10, the FIRB was not asked to consider a single proposed purchase in Victoria under the agriculture/forestry/fishery category.Nationwide, the FIRB approved 17 proposed foreign investments in the agriculture/forestry/fishery category in 2009-10, valued at $2.33 billion. The FIRB's 2009-10 annual report noted that $2.33 billion represented just 2 per cent of the value of all FIRB approvals that year, and was down from $2.8 billion in this category a year earlier.But the figures are not exhaustive. Proposed private investment in Australian agricultural assets by foreigners is only considered by FIRB when the asset is valued at $231 million and above. For American private buyers the threshold is a massive $1.005 billion.This means that enormous amounts of private foreign cash can be splashed on large Australian farms without FIRB scrutiny.HOWEVER, it must be noted that all proposed purchases by foreign government-controlled entities are considered by FIRB, regardless of the value of the asset.Bankers and agricultural industry figures who spoke to The Saturday Age this week attributed the foreign interest in Australian agriculture to a range of factors including Australia's stable economy, stable system of government and ability to produce an enormous amount of food.The wish of some governments to provide security of food supply for their people is also cited as a key driver. But other important factors include a wish to shorten the supply chain and guarantee supply, to diversify into the southern hemisphere, be close to large Asian markets and to simply buy what is a good agricultural business or property.Mitchell says the ''rural raiders'' have not limited their interest to particular industry segments, such as dairy or cropping land. ''It was all over the place,'' he says. ''They like Australia for a number of reasons, but it's mainly due to being able to supply Asian demands. The growth in GDP and output in Asia and population growth is creating increased demand for food,'' he says.''Because Australia is close to Asia we have a comparative advantage over some of our northern hemisphere competitors, so we can ship the products there much cheaper. We've got high standards on production quality and the fundamentals supporting industry at the moment are quite positive, so it's a good time to be investing,'' he says.Another agribusiness banking expert, Michael Whitehead from ANZ, says Australia's position in world agriculture is unique. ''One of the biggest issues in global food supply is reliability. And when you come down to it, in terms of political issues, climatic issues, seasonal issues - there are only a small number of countries in the world who can have that kind of reliability and Australia is at the forefront,'' he says.Whitehead says that while foreign buyers have always had an interest in Australian agriculture, this seems to be intensifying. ''There's two things. There's the level of actual investment and the level of interest and research into the Australian market, and it's a level of global interest that hasn't been there before.''Rupanyup grain grower David Matthews, also the owner of the Wimmera Grain Company grain export business, says his company has received significant inquiries over the past year from international trading companies, companies representing governments and processors wanting to get closer to Australian producers.''There's no doubt in my mind there's a lot of concern internationally about food security, and different companies and different countries are responding in different ways. Some are looking to purchase Australian land or Australian farms, others are looking to invest in the supply chain within Australia ? others are looking to align themselves with growers or groups of growers,'' he says.''I think it is actually far more logical for countries interested in securing food to align themselves with grower groups in Australia or to participate in the infrastructure.''It doesn't necessarily make sense for them to own farms, because in the majority of cases they don't really know a lot about producing food or about the business of farming in Australia.''So I think that in the end the farmers will continue to do the farming, the Australian farmers are the ones that are the best skilled to do that, but we will have much closer relationships with the destination countries, whether it be processors or whether it be some of the large supermarket networks that will emerge in those developing economies,'' he says.Back at Burramine, Peter Lawless has already made up his mind about foreign ownership of Australian farms: the federal government, he says, should ban the sale of Australian farms to foreign investors if a threat to our own food supply exists, a view he concedes would put him at odds with a lot of his fellow farmers.''I don't really give a damn,'' he says. ''I am old enough to say that I don't think it is a good thing for the economy of Australia ? We should stop foreigners buying our land, for sure.''For Lawless, selling family farms to foreign corporations when there is no absolute guarantee that Australia can continue to be a major producer of quality food is selling the nation short. ''Suppose we sell one third of our land to the Chinese and we have a drought in Australia. What happens then?''His philosophy is to ensure his family gets a decent living from the farm and to leave it in better condition than when he took it over. But he considers his family to be mere custodians of the land. It should remain in Australian hands, he says, producing quality food for Australia and for countries where food shortages now threaten lives, including 11 million in East Africa alone.But such a vital task cannot be left to farmers alone, he says.''While it makes us proud to think that we are feeding the world, people in the cities and those who buy our food have to realise they have a role to play as well.''They have to understand how much it costs to produce food, and that farmers have to get good prices for their produce if they are to survive and continue to feed people in a world facing possible food shortages,'' he says.