Published on Food Crisis and the Global Land Grab (first on The Australian), by Jock Laurie, July 4, 2011.
READING recent commentary on the debate over foreign investment, it has become clear the topic has become muddied with the mining v agriculture debate. Both issues are complex, but they are also distinct.
The concerns about mining on agricultural lands have little to do with the source of investment. Whether the funds come from home or abroad, mining on prime agricultural land is an issue of extreme concern for farmers due to the impact on the sustainability of the land’s vital resources: soil and water. The issue of foreign investment is a whole different ball game.
As food security concerns escalate around the world, Australian agriculture and its supply chain are increasingly seen as strong investment prospects for international investors … //
… In this light, a new wave of foreign investment in Australian agriculture is starting to emerge.
Rather than being underpinned by genuine commercial forces where profits are the driver, food security has emerged as a new factor for investment. With state-owned enterprises entering the market, it is becoming blurred as to whether all of this investment is still interested in the profitability of the venture, or rather in ensuring that a consistent stream of food can be delivered to the nation’s people.
This raises the question of transparency in the supply chain, potentially jeopardising competition at the farm gate and depressing the local market. At an extreme level, this could also lead to Australia’s own food security goals being compromised.
The federal government must ensure that effective regulations are in place to avoid these outcomes. But how?
In the first instance, a better understanding about the control of Australia’s rural land and water assets would be beneficial. The Foreign Investment Review Board examines proposals by foreign interests for investment in Australia against the background of the government’s foreign investment policy. However, even the FIRB acknowledges that many land and water asset purchases may fly below the disclosure thresholds, therefore avoiding scrutiny.
From this perspective, it is appropriate that the government’s program to strengthen transparency of foreign ownership of rural land and agricultural food production is allowed to run its course before any policy decisions are made in this complex area; as long as it is completed in a timely manner.
This two-track approach involves the Australian Bureau of Statistics and the Rural Industries Research and Development Corporation, which will in turn work with the Australian Bureau of Agricultural and Resource Economics and Sciences to undertake the program.
There must also be assurances from government that foreign investment, or indeed investment from any source, does not undermine the existing marketing mechanisms and pricing transparency needs of Australian farmers where these underpin farm gate price determination.
Finally and importantly, if there is one thing that this recent trend does demonstrate, it is that Australia needs to establish a clear food policy of its own. Other nations are well ahead of Australia in this regard and are taking steps to ensure the needs of their domestic populations are secured in the long term.
Australia, as a net food exporter, has rested on its fortunate position for too long and taken a she’ll be right approach. Now is the right time to get on the front foot and get clarity on where we want to head as a successful food-producing nation. We’re pleased that this process has started with the development of the government’s national food plan.
Ultimately, we want to see more, not less, investment in Australian agriculture for the benefit of our industry, but we need to be very clear about the motives. (full text).
(Jock Laurie is president of the National Farmers Federation).