Local Foreign Ownership

There’s been quite a lot of talk in rural media over recent months about foreign ownership of Australian farms. But with many locals all this talk has hit much closer to home as a large foreign acquisition has happened only about 30-40km from where we live and farm. I was contemplating writing a blog post on this purchase myself, as I’ve been surprised that until a day or 2 ago this deal had received no media coverage at all. Belatedly it seems, the Weekly Times finally published this article about the deal:

More Farmland in Foreign Hands

It’s as interesting issue. Locally, nobody blames the farmers that sold to the Qatari owned ‘Hassad Group’. This is where one quote from the article warrants a a second look:

He would not disclose the Telopea Downs land purchase price, but said Hassad did not pay above valuation.

If we take this comment at face value, why would all those farmers sell at or below market value? I know a couple of the farmers who have sold and they are very good business people. They wouldn’t have sold unless they were getting a good deal.

Whether these kinds of acquisitions are a good thing or not remains to be seen. I was chatting to one of the sellers the other day and he was convinced that the deal would be good for the area. He thought the investment in land improvement that the deeper pockets bring would result in more productivity and employment locally. What we know is that the Hassad Group are going to work with Telstra to improve phone coverage in that area. That’s a good thing. Then of course there are the potential negatives. Profits going offshore, instead of being spent locally, reduced food security for Australia, selling off more productive assets etc.

I personally don’t blame the Qataris for buying up farm land either. Their country is energy rich, but water and resource poor. So as a matter of national security and long term preservation, they’re trying to secure food supplies. They even say as much on their Hassad Food website:

These focus areas guide Hassad Food’s approach at every level. They also form the basis of our five year strategic plan.

  • Achieving food security for Qatar.
  • Investing in worldwide long-term key projects/companies/operators.
  • Developing strategic alliances/partnerships.
  • Ensuring geographic diversification and flexibility.
  • Being in compliance with International standards.
  • Producing branded products of international standard.

It’s like a re-worked ‘food for oil’ program. I find the different perspective on agriculture fascinating from a country that has little arable land. Despite being the richest country in the world, Qatar has no ability to feed itself. Oil isn’t food. It’s amazing to me that people in this situation seem to recognize the importance of secure, quality food supplies more than we do here in Australia.

Maybe that’s the takeaway from all this. Australia is blessed with ridiculous over-abundance in almost every natural resource. The only thing that the Qataris have more of than us is energy. Perhaps because we don’t know just how amazing our natural wealth is we aren’t appreciative of it and are happy for it to be sold off. We don’t value it and look after it like we should. If that is the case, if we don’t value what we have and aren’t willing to develop it, then maybe it’s good that others who do value and need quality food production are getting a chance here in Australia.

Personally, I’m undecided as to whether the principle of foreign ownership is a good one or not. We don’t yet know what the knock-on effects of these changes will be. I guess we shall see in the coming years what it means for us here in rural Australia.

What do you think? Are we selling off our national wealth? Or should we be encouraging responsible investment and development of the resources we have that others need.

Jonathan

Web developer turned farmer. Interests include: my faith, my wife, technology, cricket, farming, ice cream & world events.

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9 Responses

  1. Great post, Jonathan. All in all, I think it’s a good thing for the reasons you’ve already outlined, plus one more: confidence. Down here in southern Vic, there’s an air of despondency hanging over dairy. Many farms are for sale but very, very few are being sold. This in itself breeds a lack of confidence and a viscious cycle has been set in train. If we are going to have a vibrant ag and food sector in Australia, we need to have the confidence to invest – this may just be a welcome injection of energy.

  2. Great blog post as usual, Jonathan. Wonder if there are examples from other countries that can guide our thinking. Has there been a time and a place where foreign ownership has significntly changed the dynamics of the food industry?

    Marian – Yours is a good point and like Jonathan’s post it highlights the absurd dilemma facing farmers. Apparently they’re essential for food security and the future of the country but they’re not adequately rewarded for the work they do. I think there’s more to say about this.

  3. You’re right, Matt. The rhetoric certainly doesn’t mirror the harsh reality of making a living from farming. I think this was one of the factors behind the 40% “no” vote from dairy farmers when it came to investing in R&D recently.

  4. Wow you were right Jonny, this was worth a read. Do you really want to know what I think ha ha? I think you’re right, we in Australia as a community including more the non farming community, but certainly some of the farming community take for granted what we have here. You only have to see what the Greens party does here to see they haven’t a clue. And for many Australians in the cities to vote green suggests they haven’t a clue either.

    Personally I think there needs to be a bit of a change of mindset, though I don’t see it happening. Yes we need more confidence in the farming line of work, but I would suggest we’re in a bit of a bad way if it’s taking foreign investment to bring it about. The confidence needs to be starting here at home with our own government, showing support to the industries. And it’s not likely that we will see that sort of change while the government here is so clearly swayed by the greens.

    But having said that, as a whole, if we’re not going to see what we have in abundance as the blessing that it is… It might as well be used and treasured by others who see it as a blessing. That’s not to say that I like the idea of ownership of our Australian farm land and grain businesses (ABB being bought by Vitera) being transferred offshore. I think it’s sad.

    The question then also could be asked. What happens to these farmers who sell out? Are they buying another farm elsewhere, or have we lost that farming business as a part of our economy? Are we now going to be buying some of our produce from farms whose profits exit our economy the very moment we bought our item. I m aware that this has been going on for some time now, but I do worry about the knock on affects to our economy.

    I have moved to the city and I may or may not go back to farming. But I will not ever be selling the land that I own. At least it will be an investment in the future of my family and our country.

  5. Qatari jack says:

    As a qatari citizen I personally think its great that we can buy land in your country, do whatever we like with it, take all the money with no responsibility to the people of the area. Enjoy your broadband!

    • Jonathan says:

      Congratulations Qatari Jack! You are my first ever troll. I must be on the way to making it as a blogger.

      Sarcastic as your comment was, your point about profits going overseas is a legitimate concern. As for responsibility to locals, that’s potentially a concern also but the Hassad Group has to abide by all Australian laws and pay tax etc.

  6. Ravs says:

    I believe the land should remain in Australian ownership. Leasing arrangements might be entered into. But better if it was develop and supply arrangements – some investment to improve farming practices for the long term (organic, non-GM, mixed farm) and value adding here in Australia prior to sale at home or OS. Keep the control, food security & the profits here.
    It’s true – our farmers are not rewarded for the work they do, or encouraged & assisted to improve methods.
    And how can paying below production costs be justified by the big 2? Talk about cutting off your nose to spite your face.

    • You have to ask why farmers are selling their land and it does not take much thinking – declining on farm incomes and little support from our government. All but one food commodity beyond the farm gate is majority controlled by foreign owned companies so farmers are price takers not price makers. The majority of our exports are foreign owned so Australia does not get the full benefit of these because of our tax laws favour foreign companies. You cannot buy land in many of the countries buying our land. Food security has only recenlty been raised in Australia – AUSBUY has raised it several years ago. Here is how we think – in 2003 Mr Bush gave his farmers $231B because of the issue of food security. In 2005 we signed FTAs with the USA giving free access but many of our exports were to have tariffs for 20 years. Recently the USA have their farmers $1Trillion. And we are told to be productive and competitive.

  1. May 4, 2012

    […] was with all this in mind that I read Jonathan Dyer’s (@dyerjonathan on Twitter) blog post on foreign ownership of Australian farmland this morning. Referring to the purchase of farmland near his own property by a Qatari corporation, […]

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