FDI rises in Australian agriculture

Foreign investment in Australian agriculture has seen a notable increase.

Foreign direct investment in Australian agriculture in 2013 rose 1.1 percent on 2010 levels, according to the Agricultural Land and Water Ownership Survey 2013 (ALWOS). This full year data, isn’t reflective of the Australian agri investment market at present. “While the 1.1% rise since 2010 might appear minimal, the reality is that this data is very much out of date. This situation is set for a major turnaround as we are currently seeing a growing number of foreign investors lining up to invest in Australian agriculture,” said Detlef Schoen, managing partner of farmland investments at Aquila Capital. He also commented that FDI in the sector had been significantly lower 6 or 7 years ago,making this current figure not so minimal. “Foreign investment in Australian agriculture went from 0.1 percent in 2006/7 to the quoted 2.1 pct in 11/12, amounting to AU$3.6 billion [$3.41 billion; €2.49 billion]” he added.

The Australian agriculture industry has been calling for increased foreign direct investment in recent months in an effort to increase the sector’s productivity and bail out some highly leveraged farming operations in the country.

The report, published last week, revealed that 12.4 percent of agribusiness in Australia is now owned by foreign investors.

 Source: The ABS

The grape-growing sector has the highest proportion of foreign-owned investment at 13.2 percent. Sheep, beef cattle and grain farming is the second highest at 13 percent.

Geographically, the Northern Territory has the largest portion of foreign-owned land – 31.7 percent of its agricultural land is owned by overseas investors – and Queensland State comes next with 13.2 percent owned by foreign investors.

Reception to this news has been mixed, and some point out that parts of the Australian media have been unnecessarily negative to some extent. “There has been a bit of [negative comment] in the domestic press in Australia with regards to foreign ownership, but the stats show that there is nothing to worry about,” said Peter Ryan, international business development manager at Agriculture Investment Development Corp.

“There has been an increase [in FDI] but it is nothing unusual,” Ryan added. “The Australian agricultural sector needs about AUSD450 billion ($423 billion; €311 billion) in capital to meet its growing needs in the region over the next 20 years, so foreign investment would be welcomed like it always has been.”