Australia, the world’s driest inhabited continent, went through its worst drought in 2009, which resulted in its farm land prices dropping nationally by almost 20%, and in some extreme cases, by almost half, when compared to 2007. This extremely depressed land prices, and the prospect of better rain-fall, has lured a number of offshore funds, that are expecting a bumper crop this season. Anglo-Australian Southern Agricultural Resources is planning to raise A$150 million in London to buy land in Australia, while, in July, China’s Cofco won control of Tully Sugar Ltd. Queensland’s MSF Sugar Ltd. (MSF) was snapped up by Thailand’s Mitr Phol Sugar Corp. in November, with a bid valuing the company at A$313 million. Chinese buyers also bought vineyards in the Hunter Valley north of Sydney, and data released by the Australian Bureau of Agricultural and Resource Economics and Sciences points out that almost half of Australia’s 23 licensed wheat exporters are foreign owned. According to Peter Corish, managing director at Queensland based Prime Ag, “There’s unprecedented interest. The outlook for production is much improved as a result of coming out of the long drought in 2009 and early 2010.” Asset managers in general buy land and then lease them out, while some invest jointly with the owners.
Government data reveals that, compared to 1984, the proportion of agricultural land, wholly or part-owned by overseas entities almost doubled to 11 percent, at the end of 2010. South Australia saw the highest jump in foreign ownership, the proportion there almost tripling to 12 percent. 11.3 percent of agricultural land in Australia is under foreign ownership, or held by companies that have foreign investors, and almost one percent of Australia’s agricultural businesses are wholly or partly owned by foreigners. This growing foreign ownership of farmland and agribusinesses has fueled concerns among legislators there. A bill was introduced in the Australian Senate in November 2010, to enforce greater scrutiny of foreign land investment. According to this bill, purchases of agricultural land of more than A$5 million would require the sanction of the Foreign Investment Review Board. The government has however defended the benefits of foreign investment in agriculture. A report commissioned by the federal government suggests that overseas capital boosts production and creates jobs in rural communities. Andrew Parkes, managing director of Customised Farm Management Pty, an agricultural consultancy says that the marriage of capital and farmland can suit both parties.
Australia, which was claimed by the British in 1788 as a penal colony, has been a surplus agricultural producer since the time the convicts started clearing the bush land to grow wheat and rear livestock. Australia currently produces more than twice the food consumed by its population of 22.8 million. After theU.S., Australia is the second biggest overseas seller of wheat, which is its largest agricultural export.
