FOREIGN investment makes up 13.8 per cent of Australian agricultural land and during 2019-20 the Foreign Investment Review Board (FIRB) approved 174 applications in the agriculture, forestry and fishing industries, according to FIRB's 2019-20 Annual Report.
These applications totalled $8.3 billion worth of capital investment.
These figures indicate that while the number of approvals has decreased every year since 2016-17 (223 approvals), the proposed investment has increased every year ($7b in 2016-17), except in 2018-19.
Compared to other industries, agriculture, forestry and fishing had the lowest level of proposed investment, with the services sector ($73.6b), commercial real estate ($38.8b), manufacturing, electricity and gas ($33b), finance and insurance ($13.6b) and mineral exploration and development ($11.2b).
The largest source countries of investment by value in agriculture, forestry and fishing by value were Canada ($2.55b) and Singapore ($1.37b), the United States ($716 million) and the Netherlands ($496m).
Based on the latest figures from the Australian Taxation Office, foreign investment has slowly been on the rise, having increased by 1.7pc in the 12 months to June 30, 2020.
Since June 30, 2016, foreign investment in Australian farmland has increased by 1.6pc.
Coorow farmer and Catalina Farms managing director Rod Birch said that foreign capital played an important role in all Australian capital markets, including agriculture.
"My view is that agriculture is just another asset class that will be reviewed and analysed as a worthy investment opportunity for foreign capital to be deployed," Mr Birch said.
"I don't see it as a threat by any means; to the contrary, for foreign capital to be invested in Australian agriculture is an acknowledgement that our industry demonstrates a positive climate for returns and a confidence in our economic and politically stable environment.
"It therefore strengthens our industry capital baseline, by increasing the number of participants, and ensuring stronger and more realistic values are achieved."
Just as foreign investment has played a key role in the mining and resources sector, Mr Birch said agriculture should have the same opportunity.
"Any industry reaches a higher 'health point' when it is not starved or constrained by capital resources, so I believe it is essential to have an investment market that is open to foreign capital resources," he said.
Liberal Party Federal Member for O'Connor Rick Wilson said that a lot of Australian agriculture had been built on the back of foreign capital over several decades.
"I'm a strong supporter of foreign investment in agriculture," Mr Wilson said.
"Australian agriculture has been built on foreign investment, because areas like Esperance probably wouldn't have been developed to the extent that it is today without the United States investment back in the 1960s.
"Now more recently we are seeing an increased interest in Australian agriculture by some foreign sovereign wealth funds and also pension funds.
"Agriculture has been a very good investment and some of the savvier investment funds have invested significantly in Australian agriculture and that's a good thing.
"We have the potential to produce much more intensively if we have the capital investment in the industry to increase our intensity of production."
Mr Wilson said one of the more recent foreign investments in agriculture that caught his eye was the Saudi Agricultural and Livestock Investment Co's (SALIC Australia) purchase of several mixed farming properties in the eastern Wheatbelt from John Nicoletti in 2019.
With Saudi Arabia being now the biggest feed barley market in the world after having significantly increased its imports last year when China put an 80pc tariff on Australian barley, Mr Wilson said "foreign investment in agricultural land and trade go hand in hand".
"If a country has an understanding of and a stake in Australian agriculture, then I think our opportunities to trade with them are greatly enhanced, so I think that's a really positive relationship where countries which have significant agricultural investments in Australia are also strong Australian trading partners," he said.
Mr Wilson said through the Australia Live Exporters Council, he will be meeting with the Saudi Arabian ambassador during the next parliamentary sitting week to discuss agricultural trade.
"That meeting will be discussing the re-opening of the live export trade into Saudi Arabia, which is the (Middle East and North Africa's) largest market for live sheep of about eight million head per annum, while at the moment our largest market is Kuwait which is about 1m head.
"So I'm looking forward to having some productive discussions around opening and expanding those particular trade opportunities on the back of the significant investment that the Saudi Arabians have made in our agriculture sector."
Rural Bank WA regional manager - south, John Reilly said foreign investment could be one of the reasons behind Australian farmland prices increasing.
"Anecdotally, I think foreign investment has contributed to the upward movement in land prices," Mr Reilly said.
"There has been pressure on price because foreign investors have come in with a lot of money looking to buy good property and have been prepared to pay for it.
"They have still demanded a reasonable return of 4-5pc on capital."
Australian agriculture appeals to overseas investors due to Australia's "stable political framework and green image," according to Mr Reilly.
"The world demand for Australian produce is strong, which underpins an inherent capital value in the land," he said.
"Australian interest rates are probably not much of a factor, because our rates have consistently sat just above the rest of the western world.
"People are comfortable investing here because the capital risk is relatively low and they know they'll be able to get their money out when they want to."
Foreign purchases require approval by FIRB before acquiring agricultural land and business assets when their cumulative value of agricultural land holdings exceed (or would exceed with the proposed investment) $15m.
Foreign government investors require approval for all acquisitions of agricultural land, regardless of their cumulative holdings or the consideration of the proposed investment.
Mr Birch believed the regulations in place through FIRB provided adequate control of foreign purchases.
"An important function for our agricultural industry is to know that there is an accurate register of foreign land ownership and in what capacity it is being operated under - if we can measure it, we can manage it," he said.
Alongside foreign investment increasing, the number of Australian farm businesses has decreased, as the Australian Bureau of Agricultural and Resource Economics (ABARES) reported in its Industry Snapshot 2021 that the number of farm businesses has decreased from about 120,000 in 1978-79 to less than 60,000 in 2018-19.
Mr Reilly believed that these two changes were likely unrelated, and that the consolidation of the industry was due to farm businesses needing to achieve economies of scale.
"It mainly comes down to farmers trying to get economies of scale," he said.
"Base costs continue to increase - there's many expense items that go into overhead costs that farmers have limited ability to control.
"The search for efficiency is probably what has created the fewer number of farm businesses."
Mr Birch said that foreign capital was a "healthy competitor" in the industry.
"The foreign capital element, I believe, adds a healthy competitor to the finance market and as such competes with the traditional funding sources, keeping rates tighter along with adding strength to the rural land values," he said.
"Any market with strength has a better foundation to discover growth and opportunities so my belief is that foreign agricultural investment has an important role to play.
"Their participation is a vote of confidence and therefore recognition of our agricultural industry's future going forward."
Foreign investment's presence in the industry is a subject that Mr Birch said regularly comes up for discussion within his own business group, wider farming network and also urban-based network.
"I share their healthy concern about Australian agricultural land falling into the hand of foreign investors," he said.
"The supply and sustainability of Australia to provide fresh food for its own population is a sensitive and emotive topic and as such, gets greater scrutiny by any thought of foreign farmland ownership challenge.
"This is divergent to any thoughts of foreign investment in the mining industry, where the notions of food safety and security are far removed from most daily lives - agricultural produce however is passed under people's noses daily at the dining table.
"Of course this sets the scene of the 'family farm' competing head to head with corporate agribusiness.
In the shootout however, the agribusiness principles of return on capital investment, economies of scale, adoption and utilisation of technology etc, all have to fulfil the objectives of any business plan and philosophies for whichever entity.
"The contribution of the widely ranging entities towards the fabric of local community involvement is often a discussion point and it would seem the outcomes are hugely variable; some for better, some for worse," Mr Birch said.