Opportunity behind dragon's grin

If we’re smart, we’ll be seeking out the opportunities the Chinese can help us with

WITH a $15 million trigger for Japanese land purchases now the cut-off for Foreign Investment Review Board scrutiny, plus China indicating a desire to develop business partnerships (not just takeovers) we could be heading toward a better position to grow some of our industries.

We have seen the potential for competition to be squashed with the Archer Daniels Midland deal, which was blocked last year.

The US grain trading giant almost gained a majority ownership of our east coast grain supply chain.

This wholly foreign owned supply chain business model is risky for Australia because we lose control of supply and the important cash flow that is created along the chain.

We’re also seeing a gradual increase in the area of land being bought by countries with food security in mind, such as the oil-rich Qatar, and last September Indonesia announced its intentions to buy Australian land for beef production.

The big difference with these buy-ups compared with previous foreign investors is they are seeking to supply direct to their own countries, or have control direct from the farmgate to a foreign market.

Previous investors mostly traded through other businesses as their produce made its way off our shores.

The government backing behind some of these businesses gives them a competitive advantage, and these sovereign-backed entities are growing in prominence.

JBS Swift is a major beef supply chain owner with backing from The Central Bank of Brazil, and Singapore agri-commodities trader and processor Olam, which owns Queensland Cotton and Western Wool, is a part owner of the Newcastle Agriterminal, and a big player in the Australian almond market.

The Singapore government is presently edging its way back into Olam as a major backer.

China – the biggest player in the sovereign-backed game and possibly the player Australians have feared most as a foreign investor – is seeking its share of the action.

The Chinese desire for partnership arrangements, despite so far being light on detail, could give us the ability to attract much-needed capital injection without completely “selling the farm”.

If we’re smart, we’ll be seeking out the opportunities the Chinese can help us with, such as infrastructure and research investment.

TheLand
Andrew Norris

Andrew Norris

is the editor of The Land
Date: Newest first | Oldest first

READER COMMENTS

Qlander
22/04/2014 12:37:05 PM

If we're smart, we'll approach any engagement with a, One party, Communist, Military Super-power. Very carefully! Having said that, I agree with the thrust of the article. Which highlights just how delusional the current 'free trade' fantasy is.
wtf
22/04/2014 1:43:25 PM

Yes good article, now can someone come up with an economical feasible option for people who want to become farmers as 70% equity restricts it to old money and a few with lazy cash. Most who want to be farmers,such as shearers and contractors will never have the capital unless farms drop in price or the banks change the rules. if this is not achieved we will be serfs to state owned food security.
A matter of opinionA selection of editorials from around the Fairfax Agricultural Media group covering the issues of the week.

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