CANBERRA, Australia—Australia has tightened rules for foreign investment in agricultural land in an effort to soothe growing concern about prime farmland passing into foreign hands.
Prime Minister Tony Abbott said Wednesday the government would also set up a registry for farmland that is foreign owned. Tax officials will record new land purchases beginning in July.
The rule change was flagged in trade agreements that Australia reached last year with China, South Korea and Japan. Beginning in March, Australia’s secretive Foreign Investment Review Board will scrutinize foreign purchases of agricultural land in excess of 15 million Australian dollars (US$11.7 million), down from a previous threshold of 252 million Australian dollars.
“The government will continue to welcome foreign investment, but the community must have confidence that this investment is coming in on our terms and for our nation’s benefit,” Mr. Abbott said on a farm visit with rural-focused lawmakers from the National party. They triggered the shift in rules and are part of Mr. Abbott’s ruling coalition.
Foreign farm ownership has been the subject of intense political debate in Australia, despite figures released by the government’s statistics agency last year showing that farmland remains overwhelmingly in Australian hands.
The most recent data from the Australian Bureau of Statistics shows that about 99% of Australian farm businesses are in Australian hands while slightly less than 90% of farmland was fully Australian owned. Most foreign interest has been in Australian dairy farming, which was followed closely by sheep, beef and grain farming, with several recent high-profile purchases.
While most public concerns have centered on Chinese investment, a recent parliamentary report showed the biggest investors in Australian agriculture were countries with mature agricultural sectors. Canada accounted for nearly a quarter of the total, followed by the U.K. and the U.S.
Last year, Canadian dairy giant Saputo Inc. won a hard-fought bidding war for control of Australia’s Warrnambool Cheese and Butter company for about 500 million Australian dollars, while several Chinese companies have invested heavily in agricultural projects ranging from sugar, beef and fruit juice products.
The shift to tighten control over agricultural land will be cumulative, meaning that successive land purchases will be scrutinized by the Foreign Investment Review Board to avoid creeping land accumulation. The government has also stressed a preference for greenfield farming investments, rather than purchases of existing agribusinesses.
“Anyone that holds, for example, [10 million Australian dollars] of investment now and then wants to purchase another [5 million Australian dollars or 6 million Australian dollars] of agricultural land that will be brought into the net for further approval,” Australian Treasurer Joe Hockey said.
By Rob Taylor
Source: Wall Street Journal