17 September 2014
Two Chinese investment groups have established a $3 billion fund to invest in Australian agriculture, as Australia edges closer to securing a free trade deal with China.
The fund, known as the Beijing Australia Agricultural Resource Cooperative Development Fund, is a joint partnership between state-owned Beijing Agricultural Investment Fund and the Shenzen-based Yuhu group.
It will focus on supplying produce back to China, especially infant milk formula, beef, lamb and seafood.
Australian Trade Minister Andrew Robb has welcomed the fund, saying it’s a strong signal from the country’s largest export market for agricultural produce.
“It’s a great signal that the Chinese investors are looking, in a fairly significant way, to position themselves in Australia, and they are doing it in a sensible way,” Mr Robb said.
He says negotiations on a free trade agreement with China are progressing and he’s confident a deal can be achieved by the end of the year.
“These things are very complicated. There are, for instance, 11,500 individual tariff lines that have to be negotiated. A lot of that work is done.
“But as always, with any negotiation, the really big important issues invariably end up in the final stages of the negotiations.
“So whilst we’ve been talking about it and have got a sense of where one another hopes to be, in many cases we haven’t finalised the very critical issues.”
Mr Robb has given Australian dairy farmers an assurance that he is aiming to get them an equal footing with their New Zealand competitors, who finalised a free trade agreement with China several years ago.
He acknowledges that the New Zealand dairy industry has had a huge advantage over the Australian industry, by already having a trade deal in place with China.
“We’ve seen a $3.7 billion increase in revenue to the New Zealand dairy industry since their free trade agreement came into force four years ago.
“At the same time, our revenue from China in the dairy space has increased by $173 million. So $3.7 billion versus $173 million, I think, tells the story.”
Dairy investment opportunity
Several Chinese investors attended a dairy investment forum hosted by Dairy Australia in Melbourne this week.
Amy Qiao, of Esson International Investment group, says her company owns farms in China milking 10,000 cows and is keen to expand into Australia.
Ms Qiao says Australia is popular with Chinese agricultural investors for its clean environment, and its reputation for quality produce.
“For the dairy industry back in China, the market likes the product from Australia and it seems it cannot be replaced by other countries’ products.”
She says there is a huge and growing market for dairy products in China.
“Traditionally, my fellow people, we don’t consume a lot of dairy products, but recently we all realise how important dairy is for people’s health.
“In my generation and my parents’ generation they did not like cheese at all, but my children, daily they consume that.”
While Chinese investors, like Ms Qiao, are in Australia looking at farms, an Australian real estate company has headed to China to find buyers for Australian farming properties.
They are hoping to sell properties ranging from a single vineyard in Victoria for just $1 million to a large dairy business in Tasmania for $120 million.
It’s the second time real estate group Landmark Harcourts has showcased rural properties in China. The group’s director of China business development Jason Hellyer says they’ve learnt a lot about what Chinese buyers want.
“Fundamentally, most Chinese investors that we’ve currently met with, this is a bit of a generalisation, don’t really have any intention of flying out here and building a house and living here and running the property themselves.
“What they are after is partnerships with current Australian producers that have the skills and expertise to run an efficient and profitable farm, so that’s where the real opportunity is.”
Courtesy of ABC Rural