Foreign land purchases causing concern

Vanguard May 2012 p. 4
Duncan B.

There is continuing concern that vast areas of Australian farm land are being purchased by overseas

investors.

The Macquarie Group is believed to have purchased two grain properties in NSW and WA worth a combined $40 million.

Macquarie is already one of Australia’s largest landholders, operating more than 3 million hectares of land.

The chief executive of Ausbuy attacked regulators for sitting on their hands while Australian farmland is snapped up by overseas investors.

“It’s like with the managed investment schemes or private equity groups; we don’t really know who they (Macquarie Group) represent,” she said.

We can see why there is a scramble by governments and investors to acquire farming land, when we consider that the world’s population is expected to increase by 2 billion to 9.2 billion by 2050. On the other hand, the UN Food and Agriculture Organisation estimates that the amount of arable land per person (that is the amount of land capable of producing crops per person) has fallen from about 0.45 hectares in 1960 to 0.25 hectares in 2010. It will likely fall to below 0.20 hectares by 2050.

The agribusiness sector will become increasingly more profitable, and we will see more land purchases and takeovers, such as Glencore’s buy-out of grain handler Viterra.