Busting Chinese myths

Busting Chinese myths


Agribusiness
Minter Ellison Lawyers partner and co-chair China Interest Group Adam Handley said there was a stark difference between perception and reality when it came to foreign investment in the Australian agricultural sector.

Minter Ellison Lawyers partner and co-chair China Interest Group Adam Handley said there was a stark difference between perception and reality when it came to foreign investment in the Australian agricultural sector.

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THERE is a stark difference between perception and reality when it comes to foreign investment in the Australian agricultural sector.

Aa

THERE is a stark difference between perception and reality when it comes to foreign investment in the Australian agricultural sector.

Speaking at the China Agribusiness Co-operation Conference last week, Minter Ellison Lawyers partner and co-chair China Interest Group Adam Handley said the issue of foreign investment in agriculture had generated a lot of public debate in Australia.

But he said it was incumbent on all stakeholders to ensure that it was an informed and educated discussion.

"In some parts of Australia there is a community perception that there is too much foreign investment in agriculture and that we are losing control of Australian-owned agriculture," Mr Handley said.

"There are perceptions that Asian concerns regarding food security and scarcity of resource are driving a nation grab of farming land in Australia."

Mr Handley said much of the dialogue was fuelled by a media cycle which looked to incite controversy, and by contributions made by ill-informed commentators.

"There have also been some very high profile investments into agricultural land, where land usage is diverted from agricultural output into mining, those circumstances have generated some kind of concerns," he said.

Mr Handley said concerns about foreign investment into Australian agriculture had been passed on to foreign investors who questioned whether they were welcome to invest in WA.

Discussing the facts and myths surrounding foreign investment in Australia, Mr Handley said the nation had long relied on foreign investment to fuel its growth, create jobs and underpin its prosperity.

"The first myth is that China is the largest foreign investor," he said.

"Well China ranks in ninth place as the largest foreign investor in Australia and is indeed a long way behind the leading competitors."

Mr Handley said the USA had 10 times more foreign investment stock than China.

He said there was a perception that China was purchasing large amounts of farming land.

"Chinese investment accounts for one per cent of farming land and for all Chinese investment in Australia, agricultural investments are less than 2pc of total Chinese investment," he said.

Mr Handley said the notion that Australia had many Australian-owned large farming businesses that China wanted to buy was a myth.

"The Australian agri-sector is dominated by small family farming parcels," he said.

"Chinese investment patterns to date do not show a significant desire to buy small scale parcels and aggregate them to try and reach economies of scale."

Mr Handley said the reality was that most large scale Australian agri-farms were already foreign owned.

"So the majority of most large scale agriculture-based transactions are in fact 'foreign-to-foreign' transactions," he said.

Finally, Mr Handley said it was a myth that Australia had a competitive advantage that other countries couldn't replicate and that China would invest only in Australia and on Australia's terms.

"There are more than 120 countries that count China as its largest trading partner," Mr Handley said.

"We have a great platform, but other countries, including countries such as New Zealand and Brazil are highly competitive compared with what we offer in Australia.

"We can't take for granted that China will invest here on any terms and that Chinese capital won't find welcoming arms in our agricultural competitors."

Mr Handley said almost 88pc of investment into Australian agriculture from 2006-2012 went to New South Wales and Queensland, with WA only receiving 5pc of the investment share.

"So the future of WA is clear, there is a lot of room for improvement and there is a lot of room for opportunity when it comes to Chinese investment in WA agriculture," he said.

"Between 2011 and 2012, of the total approved foreign investment in the Australian economy of $170 billion, investment in agriculture was only $3.6 billion, or only 2.1pc of total investment.

"The share of agriculture in total FDI has increased from 0.1pc in 2006-07 to only 2.1pc in 2011-12."

Mr Handley said the biggest investors in Australian agriculture were Canada, the United Kingdom and the United States, with China only accounting for a very small percentage.

"For the whole period of 2007-08 to 2011-12, the total approved investment in agriculture stands at $12.6 billion, or about 1.5pc of total foreign investment for $844.8 billion," he said.

"I think this point demonstrates quite well the point I am trying to make, the majority of Australian farms and agriculture are overwhelmingly Australian-owned."

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