Article – Foreign cash key to food bowl

9 December 2013
Jason Scott
North Queensland Register

Northern Territory pastoralist, Ian McBean, says foreign investment is crucial for rural development in the Top End. Photo: GLENN CAMPBELL.

SOME cattle producers in the Top End have warned that Prime Minister Tony Abbott’s vision to turn Australia’s remote north into a food bowl for Asia will fail unless he allows greater Asian investment.

The government’s decision late last month to block the US-led $2 billion purchase of GrainCorp has put a cloud over Mr Abbott’s vow after his election win that Australia is “open for business”.
“Politics are getting in the way of commonsense,” says Ian McBean, 82, who last month hosted a group of potential investors from Indonesia on his cattle property in the Northern Territory.
“It’s not like the Indonesians or Chinese can chuck a rope around the land and drag it away.”
The economic importance of Australia’s north, which now accounts for 76 per cent of live cattle exports, is set to grow, with its gross value of production from industries such as agriculture, mining and tourism forecast to double from 2000 levels to $35 billion by 2030.
Meeting that goal requires further investment in railways, ports, dams and irrigation in areas where it may not rain for half of the year, and flood at other times.
“If foreign investors are willing to take up the costs of establishing a northern food bowl, the government shouldn’t stand in their way,”
says Saul Eslake, chief Australia economist at Bank of America Merrill Lynch.
“There isn’t sufficient capital in Australia to undertake the sort of investment required, so if we don’t accept investment from overseas, it’s not going to happen.”
Mr Abbott sowed doubts about his stance on foreign investment in July 2012 when he told a Beijing forum that investment from Australia’s biggest trading partner China was “complicated” by that country’s state-owned enterprises.
During the election campaign, Mr Abbott promised to lower the threshold for official review of land deals to $15 million from $244 million.
While the government regards “foreign investment as vital for our future prosperity, it’s got to be the right foreign investment,” Mr Abbott told reporters after blocking the $3.4 billion sale of GrainCorp.
“It surely should be argued that developing a northern food bowl would be in the national interest,” said Jeremy Low, a partner at Allens who advises Chinese investors.
In the north, farmers such as Fritz Bolten say they need foreign money. He was born in Germany 44 years ago, then moved here at 11 with his family.
His 2000-hectare farm is near land being cleared for the second stage of the Ord River expansion project to improve irrigation. China’s privately held Shanghai Zhongfu Group was chosen by the Western Australia government in May to spend $700 million to lease and develop 13,400 hectares, doubling the area’s irrigated farmland.
“These Chinese have a 50-year vision; it’s not about just producing profits at the next annual meeting,” Mr Bolten said. His farm has doubled in size the past year and recently ­produced a crop of the Omega 3-rich “superfood” chia.
China was the ninth-largest overseas investor in Australian agriculture at the end of 2012 with three per cent, compared with the US with 24pc and Japan with 10pc, according to research published by KPMG and the University of Sydney. Chinese companies owned less than one per cent of Australian farmland, it said.
Spike Dessert, a third-generation seed producer in the Ord irrigation area who migrated from southern California in 1972, said government regulations and wage costs from an elevated Australian dollar are other hurdles to Mr Abbott’s plan.
“Countries like Italy and Mexico can do it for a third of the price. Mexico pays workers $35 a day – we’re paying $30 an hour,” he said.
On his property 220 kilometres south-west of Darwin, Mr McBean said he wanted to sell up and retire.
“If it hadn’t been for foreign investment in the top end, the area would still be back in the 1800s,” he said, referring to Australia’s far north.
“You can’t have the country lying idle and dormant – that would be absolutely criminal.”
Courtesy of the North Queensland Register