Foreign investment into Australian agriculture is growing, according to a Parliament of Australia research paper published in mid-February. Between 2011 and 2012 A$3.6 billion ($3.3 billion; €2.4 billion) of foreign capital was invested into Australia, representing 2.1 percent of total foreign investment during the period. This represents a sizeable jump from five years before when just 0.1 percent of foreign investment was channelled into agriculture between 2006 and 2007.
Western countries with mature agriculture markets and high quality technology are the biggest investors and Canada leads the pack accounting for nearly a quarter of all agriculture investment. The UK and the US were next in line, according to Kali Sanyal, the report’s author. As at the end of 2012 11 percent of Australia’s agricultural land was owned by foreigners.
Grain, sheep and beef farming were by far the most popular types of agricultural investment by overseas investors that partially, or wholly-owned, 43, 713 businesses in these industries. Just 123 dairy farms and 172 fruit and nut growing operations were foreign owned as at the end of 2010 according to the report.
But despite the partial or full ownership of some 44.9 million hectares of Australian agricultural land by foreign firms, Australia ranked seventh out 34 OECD countries on the FDI Restrictiveness Index in 2012. More importantly the country was classed as the tenth most restrictive to foreign direct investment into agriculture owing to the government’s rigorous management of investment applications, according to Sanyal.
The Foreign Investment Review Board (FIRB) reviews proposed acquisitions and advises the Treasury, which under the Foreign Acquisitions and Takeovers Act of 1975 (FATA) has the power to reject proposals or impose conditions depending on whether the investment is contrary to the national interest. Under FATA, all proposals by foreign government organisations must be submitted to the Treasury and for foreign private firms acquiring an interest of 15 percent or more in an Australian business valued over A$248 million, FIRB approval is required.
The criteria on which these proposals are assessed include the quality and availability of agricultural resources like water, land access and value, productivity, biodiversity and local employment opportunities.
More restrictive countries include New Zealand that has a long history of government intervention in land ownership, according to Sanyal. New Zealand ranked seventh most restrictive country to foreign agricultural purchases.