Time to fly the flag for rural land ownership regulation

The NSW Merino stud property Raby Station at Warren flew an Australian flag proudly at its front gate during the Muir family’s lengthy ownership.

Measuring six metres by three metres, fastened to a 14-metre steel flagpole, it represented a display of nationalistic pride in the middle of the Macquarie Valley.

From time to time some larrikin stole the flag, but John Muir always replaced it.

Not sure if the flag still flies, and even if it does, whether it represents that same sentiment since the sale of the showplace 8,560-hectare holding last year for $9.72 million to Hassad, Qatar's sovereign wealth fund.

Raby had previously traded in 1982 when the Muir car dealership family bought it during CSR’s divestment of its drought-stricken pastoral properties.

Estimates earlier this year ranked the Arab Gulf state wealth fund as the second-biggest agricultural investor in NSW rural land during the previous 12 months, second only to Macquarie's pastoral fund.

That was before its latest buying spree. Hassad Food, the agriculture arm of a Qatari sovereign wealth fund, has now spent a further $28 million since June, taking its expenditure on sheep and cattle stud farms to $65 million. Its holdings total about 26,000 hectares.

It’s an investment strategy replicated across the world, with the primary purpose of achieving food security for the Gulf states.

The federal government would have us believe some 89% of Australia's agricultural land is owned by Australians.

Its recent Australian Bureau of Statistics survey, the Agricultural Land and Water Ownership report concluded that 353 million hectares of Australia's 398 million hectares of farming land was entirely Australian-owned.

It was the first official figure on the subject in more than 25 years, but the voluntary nature of the survey was one of its flaws and the ABS indicated it had surveyed a sample of 11,000 agricultural businesses.

Another recent study was undertaken by PRDnationwide which shows just how rapdily acquisitorial foreign buyers have been in recent years.

PRDnationwide NSW research manager Oded Reuveni Etzioni says Australia represents good value to foreign buyers targeting distressed agricultural assets. The researcher says the figures reveal the strength of foreign investment in the state.

Figures on foreign investment show China has the highest spend – forking out more than $189 million to purchase land in mining regions, with a smaller share of funds invested into vineyards. 

Etzioni says the top owner of land in NSW in terms of dollars invested was Shenhua Watermark, with total funds exceeding $158 million.

“The Chinese coal miner owns approximately 33,000 hectares in the Gannedah region, with arable land purchased over the past two years accounting for a large portion of it,” he says.

It noted the biggest offshore primary production land investors were from the UK, with land ownership over 613,000 hectares. This was followed by Korea with holdings inexcess of 227,300 hectares and the US with land ownership of 55,560 hectares.

PRDnationwide found UK’s John Swire and Sons were the largest foreign land owner in NSW – accounting for 92% of the total UK holdings identified in NSW through wholly owned subsidiary Clyde Agriculture – however the company is in the process of offloading a significant part of its portfolio.

“Another UK investor in mixed farming – MHPF fund – is now in expansion mode, acquiring agricultural land across the state,” Etzioni says. It’s backed by expatriate Michael Hintze, the London-based hedge fund boss who PRD ranks as the third in terms of dollar investments, with a total land ownership exceeding $100 million and growing.

The Korean Young An Group has been investing in Wanaaring near Bourke since 2010 and now holds approximately 215,600 hectares in the region.

The PRDnationwide research found foreign investment in grazing properties is largely concentrated in the state’s west, while mixed agriculture and cropping operations are found in the Orana, Central West and Riverina districts.

The researcher recalled former Queensland Premier Joh Bjelke-Petersen's comments that the Japanese had sold many of their Queensland assets, realising losses of over a billion dollars.

While appreciating the Japanese role in job creation and a strong infrastructure base for the state of Queensland, the PRD report noted the Japanese experience had prompted the state to establish a foreign ownership of land registry, the only one to do so in Australia.

It is clear that the extent of current land ownership by foreign countries – and especially foreign government-owned entities – requires further scrutiny and regulation.

PRD wisely recommends the establishment of a state registry to track the foreign ownership of land.

It also suggests the current Foreign Investment Review Board’s threshold of $231 million per transaction should be lowered, to capture an increasing number of assets purchased by foreign investors.

Foreign ownership and utilisation of our farms - and food supply implications - has the potential of being a significant issue in the next Federal election. An informed debate would be worthwhile, hopefully without any xenophobic dog whistle undercurrents.