Published on Food Crisis and the Global Land Grab, by Larry Schlesinger, December 19, 2011.
Foreign investors have spent a record $12 billion buying up Australian farmland and agricultural businesses over the past year, but have put off investing a further $14 billion until the outcome of a Senate inquiry in March 2012, a new report by Ferrier Hodgson says.
The purpose of the Senate inquiry is to determine whether the current foreign investment threshold of $231 million, the benchmark where transactions require the approval of Foreign Investment Review Board, should be adjusted since the vast majority of agribusiness transactions fall below this mark.
The inquiry kicked off in July and will make its findings know in March next year, having pushed back an earlier November 2011 deadline.
According to Ferriers, an argument against foreign investment on the basis of “food security” is hard to support.
“It is hard to imagine a day when Australia’s bountiful produce will be unable to meet domestic demand. Of signiﬁcant concern to the agribusiness sector are media reports suggesting that as much as $14 billion of potential foreign investment has been put on hold pending the outcome of the enquiry.”
“The delay or denial of that sort of investment would have a damaging impact on any industry. If nothing else, it has injected the sector with uncertainty about the future and clouded the outlook for many Australian agricultural businesses.
“As the emotive rhetoric surrounding the topic continues to ratchet up, we are waiting to see whether the Senate Committee’s report in March 2012 will suggest changes to the current national interest test and/or the current review limits for foreign investment.”
The influx of foreign funds has coincided in a turnaround in the fortunes of the sector over the past 12 months … (full text).