The Australian government has tightened regulations surrounding foreign investment into farmland. Purchases worth A$15 million ($12 million; €10 million) or more will be subject to approval from the Foreign Investment Review Board (FIRB). The previous threshold was A$240 million.
This is the same threshold that was negotiated in the free trade agreement with China last year. It will come into force next month. The government also announced the creation of a foreign-owned land register.
The move irritated some in the investment community who cited the importance of foreign investment for the country’s agri industry. However, market players largely dismissed the possibility of a negative impact.
“This won’t have any real impact on investment; it’s just another process to go through,” said one UK-based investment professional working in Australia.
“There are three elements to this that could deter some investors,” said Marcus Elgin, executive chairman of AAG Investment Management, the agribusiness consultancy. “The potential slow-down in the investment process as the FIRB struggles to cope; the fact that this is cumulative, so a number of smaller deals will be captured if they exceed A$15 million in total; and the creation of a detailed foreign investor and land ownership register. But the serious players, versus the speculators, won’t really care.”
“For us it will be a bit more red tape on future acquisitions, but not a major issue,” said a UK-based Australian farmland fund manager. “New Zealand has had a similar approval process in place for some time and it has not inhibited foreign investment in NZ dairy farms,” he added.
The new rules are a response to complaints among rural constituencies about increasing foreign investment into the sector and the National Farmers’ Federation welcomed the move.
“The NFF has long been calling for greater oversight from the Foreign Investment Review Board and a transparent register of foreign ownership of agricultural land,” reads a statement responding to the news on NFF’s website.
“Foreign investment in Australian agriculture is welcome; it is essential for our continued growth and future prosperity,” wrote Brent Finlay, president of NFF, in the statement. “We are open for business. However, proper scrutiny of investment proposals and a transparent register form the necessary architecture for successful and sustained investment, and ensure that investment is in Australia’s best interest.”