FTA could boost rural values by 15pc

24 Nov, 2014 05:15 AM
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6
 
The long-term viability of the farming industry in Australia is becoming a ­reality

AUSTRALIA'S free trade agreement (FTA) with China is expected to boost property prices for dairy, beef and sheep farms by about 15 per cent as it stimulates investment and strengthens the long-term viability of major commodities, which will lead to longer-term growth, according to industry experts.

There should also be knock-on benefits for commodities that were not included in this round of tariff elimination, such as rice and sugar, they claim.

Ventures being discussed are typically joint ventures, or leasehold arrangements, to secure supply of commodities and develop an integrated field-to-factory supply chain, rather than ownership of the land, they claim. Andrew Tout, a former banker and rural adviser who is now co-principal of Raine and Horne Rural Sydney, expects a 15 per cent increase in coming years will realise land's full value, which is equivalent to recent losses in property values.

"It will drive up land values, simply because it will dramatically increase the viability of those farms producing agricultural commodities through increased competition and reduced price volatility," Mr Tout said.

He estimates many farms are currently selling 15 per cent below full value. "It won't be immediate, but the long-term viability of the farming industry in Australia is becoming a ­reality," he said.'Too early to call'

However, Neil Clark, principal of Neil Clark Business Intelligence, which provides rural analysis for banks and rural institutions, added: "Everybody is getting carried away about property prices. It's too early to call. It's a boost to confidence but prices were starting to move anyway."

Mr Clark believes farmers and many commentators have been too pessimistic about the industry's future, which he believes is robust and improving.

The agreement will be rolled out at different speeds to accommodate different commodities.

According to the National Farmers' Federation (NFF) the dairy, beef, veal, sheep meat and horticulture industries will be the biggest beneficiaries.

NFF chief executive Simon Talbot, who was involved in negotiations, said: "I've spoken to a lot of Chinese investors and they are very serious about ensuring supply through joint ventures, leaseholds and processing, rather than ownership of land.

"It is opening up a new market so there is going to be some upward pressure on property prices," he added.

Mr Talbot called on the federal government to maintain momentum by boosting port and rail infrastructure to reduce costs and delivery times and improve reliability.

New Zealand's agricultural exports to China have increased threefold since the two countries signed a free trade agreement in 2008.

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READER COMMENTS

Archibald
24/11/2014 10:16:30 AM

These are not free trade agreements!!!
Bushie Bill
24/11/2014 10:33:50 AM

Hey Archie old son, would you list the key characteristics of a free trade agreement for us please (and do try to be coherent!).
Mad Matt
24/11/2014 7:08:53 PM

Increase in property prices only disadvantage Australian buyers who struggle to fund purchasing of property. This a double edge sword. Good for those own bad for those that do not. Oh sorry, BB, you would be happy to see every Australian farm sold off to china?
wtf
25/11/2014 6:36:27 AM

bushie, FTAs as I see it are this. We have basically nothing in regards tariffs etc, so we have no leverage, we are at the mercy of the other side. We have politicians trying to convince us of as a freemarket, when the rest of the world is full of subsidies. We have a banking system with no transparency, as the full story would show the role they have played. Our politicians are educated by a system which is really just a propaganda source from the elites. When we negotiate, we give up things we shouldn't, as we have no bargaining chips, access to industries like food processing, infrastructre
Bushie Bill
26/11/2014 6:31:34 AM

wtf, thank you for answering for Archie (are you also Archie?) and thank you for another irrelevant and ridiculously ignorant diatribe on banking. You are rapidly becoming as boring, as repetitious, as irrelevant and as wrong as our dear old antiquated friend, Jock. Do try harder, wtf.
Hungryhipp
9/02/2015 1:43:24 PM

What a load of bull! You have to love people trying to lift farmers morale to produce more food so local produce is cheaper and more plentiful. wtf is spot on, politicians make out they are bargaining hard for fta, but there is little to bargain for. I mean just look at aussie beef going into Japan, politicians negotiated a 30% tariff - is that a good outcome to gloat about, really!

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