With Chinese buyers eyeing farmland in Australia and New Zealand, authorities are coming under growing pressure to balance the need for foreign investment against accusations of “selling out.”
Currently up for sale is the S. Kidman and Co Limited cattle empire — a vast Outback estate which covers 1.3 percent of Australia’s land mass and has an average herd of 185,000 cattle.
Australian Treasurer Scott Morrison blocked its sale to all foreign investors in November last year, including from China, saying it was contrary to the national interest given part of the holding overlaps with a military testing range.
However, Morrison recently approved the sale of Australia’s largest dairy farming business to a Chinese buyer, despite criticism that Chinese businessman Lu Xianfeng’s (盧先鋒) A$280 million (US$211.74 million) purchase of Tasmania’s Van Diemen’s Land Company could impact food security.
In a statement headed “Sell Out,” independent Australian Senator Nick Xenophon labeled the decision “wrong, wrong, wrong,” saying Morrison failed to give sufficient weight to an alternative Australian bid.
“It’s certainly a very emotive issue,” University of Sydney Business School professor Hans Hendrischke said.
“The anxiety about Chinese ownership is part of a larger anxiety with demographic change, with economic change, it is part of Australia having to cope with the idea... that we are coming much closer to Asia economically,” he added.
Hendrischke, who last year co-authored a KPMG report which found that agribusiness accounted for only 1 percent of Chinese direct investment in Australia in 2014, said while the nation was not yet a major foreign investor in Australian farmland, politicians were wary of a public backlash as its stake grows.
It is a similar story in New Zealand, where a KPMG report last year found the US was the biggest buyer of that nation’s dairy land, purchasing almost five times as much as China, although Chinese purchases tended to attract more attention.
Such is the concern about valuable assets passing into foreign hands, that Australia last year tightened scrutiny on overseas investment in agricultural land — lowering the level at which investments are screened to a cumulative total of A$15 million. Previously only purchases of more than A$252 million were screened.
The government is also creating a foreign ownership register of farmland, after politicians with rural constituencies warned against selling farms to overseas investors, including to top trade partner China.
The National Farmers’ Federation’s Tony Mahar said such a register would “remove the emotion or the hearsay” by showing exactly how much land was owned by Chinese interests.
“You know, 10 or 20 years ago it was Japanese investment, prior to that it was UK investment, it was Canadian investment... so the country for us is to some extent irrelevant,” Mahar said. “The issue for us is making sure that we continue to attract investment.”
In New Zealand, the world’s largest dairy exporter, critics said the government has shown an inconsistent approach to Chinese ownership of farmland, bowing to populist pressure from political opponents.
China is the biggest foreign investor in the South Pacific country’s dairy industry, which includes milk processing, according to the New Zealand-China Council.
In 2012, New Zealand Prime Minister John Key strongly defended the right of China’s Shanghai Pengxin to buy the 16-property, 8,000 hectare Crafar farms group in a deal reportedly worth NZ$210 million (US$141.63 million at today’s exchange rates).
While opposition parties labeled it a “land grab” and “economic betrayal,” Key said Chinese investors deserved the same treatment as those from elsewhere.
However, Key’s administration in September last year blocked Shanghai Pengxin’s NZ$88 million bid to buy another farm, the 13,800 hectare Lochinver Station, despite New Zealand’s Overseas Investment Office recommending it go ahead.
Australian Minister for Agriculture and Water Resources Barnaby Joyce has said that while his preference was for domestic ownership, foreign bids had to be considered.
Last month Joyce told local media that “people would be screaming at me” if he let all bids through, but if he blocked them “they’d rightly say I was parochial and xenophobic... I think we’re trying to find a happy medium.”
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