by Duncan B.
A
lot of attention has been given lately to foreign investment in Australian
agriculture. High profile take-overs such as the recent sale of Queensland’s
Cubbie Station (below) to a Chinese consortium have generated much controversy.
Although the government insists that
the percentage of foreign ownership of agricultural land is small, this is hard
to verify. Pressure from farmers and the wider community has forced the Gillard
government to finally agree to establish a register of foreign land holding.
Despite the millions of investment
dollars already pouring in to Australian agriculture, we have not seen anything
yet!
Overseas-owned major financial
institutions, such as pension funds and managed investment funds, are looking
to invest in agriculture in a big way around the world.
Government-backed corporations from
Asia and the Middle East are also investing millions in agriculture in the US,
the former Soviet Union, South America and North and Sub-Saharan Africa. They
are also looking to Australia
The recent Australian Grains Industry
Conference was addressed by the managing director of a firm which advises large
investors where to allocate their money in agriculture. He said that financial
institutions have $1.2 trillion to invest in agriculture, and want to raise
more than $8 trillion in the next three years.
The global agriculture market is
estimated to be worth $6.4 trillion, and is the world’s third-largest market
behind the currency and energy markets. The rewards are high for investors.
Agriculture has historically generated real returns of 8-10% in developed
countries and returns as high as 15-22% in less developed countries. These
major investors want to invest in all aspects of agriculture including
cropping, livestock operations, agricultural infrastructure and commodity
trading operations.
Another speaker at the Grains
Conference, the executive chairman of the grain trader Emerald Group said,
“Many of the global players are now quite active in Australian grains, seeking
access to production, distribution and food assets. Further consolidation will
occur until we reach a similar pattern to global oil and mining conglomerates”.
He said that the current spate of rapid consolidation and integration of
agribusinesses around the world resembled a “rush to grab assets before the
music stops.”
His prophetic words were borne out recently
when an American agribusiness company, Archer Daniels Midland purchased a 10%
share in Australian grain handling company Graincorp. A take-over bid for
Graincorp by ADM is considered likely.
Graincorp is seen as the last
remaining significant grain company capable of being taken over in Australia,
and experts are tipping a bidding war may emerge for Graincorp.
According to the Rural Industries
Research and Development Corporation, foreign investors now own half the
country’s 23 licensed wheat exporters, half the country’s milk production, 60%
of raw sugar production and 40% of Australian red meat production.
There are many factors driving the big
capitalists to invest in agriculture. Food security is becoming increasingly
important due to world population growth, a developing shortage of agricultural
land due to urbanisation, and growing standards of living in countries such as
China resulting in greater consumption of meat.
Climate change also threatens a loss
of agricultural land and possible population displacement. Australian farmers
face being forced off the land as agribusiness monopolies take into their hands
ever growing swathes of Australian land; use their connections with the banks
and other corporations that farmers have to deal with to impose terms more
favourable to themselves; and exercise monopoly control over the marketing of
farm products. With these developments, some farmers will be turned into wage
workers for the agribusiness giants. Others will be forced to move to the
larger towns and cities in search of a livelihood.
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